Another Bartelli & Sullivan Lie: $11 Million Library "Slush Fund"

Have you heard that the Lisle Library District has an $11 million "slush fund?" That's another lie from Lisle Library District (LLD) Trustee candidates Marjorie Bartelli and Liz Sullivan. The Lisle Watchdog gleefully promoted this lie.

Bartelli and Sullivan have built their campaign on a series of brazen falsehoods designed to undermine public trust in the current Board. They're particularly anxious to malign both me and my fellow Trustee, John Huff, because we're up for re-election on April 4.

When Bartelli and Sullivan claim the library has an $11 million slush fund, they're not just telling another lie. They're showing an astonishing disregard for the laws that govern the use of those funds, and for the proper stewardship of your tax dollars.

It's easy to throw out a lie about a slush fund, but explaining the truth is more complicated. I'm sure Bartelli and Sullivan are hoping it's so complicated that voters won't understand.

I need to take you through part of the library's audited annual financial report to explain why they're lying. Unlike Bartelli and Sullivan, I think voters are sharp enough to understand it, and they deserve a full explanation.

The Truth

I've learned a lot about governmental accounting regulations as LLD Treasurer. Per Governmental Accounting Standards Board (GASB) regulations, the library's FY2015-16 audited financial report includes a Statement of Net Position and a Governmental Funds Balance Sheet. You can find the FY2015-16 report (independent audit) on the library's website under the "About Us/Financial Information" tab. There's lots of other LLD financial information there as well.

Bartelli and Sullivan are using the Summary of Net Position (pgs. 6 & 10 of the report) to justify their "$11 million slush fund" lie. The Statement of Net Position does list an "unrestricted" amount of $11,135,519, but calling it a slush fund implies that the Board can use the money any way it wants. However, there are very real restrictions on these funds.

To understand these restrictions, we need to look at the Governmental Funds Balance Sheet on page 12 of the report. The Balance Sheet reveals information that Bartelli and Sullivan deliberately ignored.

Deferred Inflows

On 6/30/16, LLD had $4,852,749 in deferred inflows. These are tax funds that were transferred from DuPage County to the library in May and June 2016. The funds are classified as deferred because the library couldn't touch any of this money until the 2016-2017 fiscal year started on July 1, 2016.

It certainly isn't slush money. It's a big chunk of the tax funds used to pay the library's operating expenses during the current fiscal year (FY2016-17). This is the money that we're using to pay our bills and keep our doors open right now.

Fund Balances

LLD has five restricted funds that were created to promote the long-term financial stability of the library. These five funds are found in either the Non-Spendable, Restricted, or Assigned Fund Balance categories on the Balance Sheet. Regardless of which category they're in, by law, all five funds have restrictions that limit the way in which they can be used.

Non-Spendable Funds: On 6/30/16, LLD had $442,937 in a restricted Working Cash Fund. On the Statement of Net Position, this money is included in the unrestricted total of $11,135,519, but as you can see, the Balance Sheet says the money is non-spendable. Why? Because by law, Working Cash funds can only be used in a major emergency.

Restricted Funds: The Statement of Net Position and the Balance Sheet both list $533,208 in restricted funds. This represents three segregated accounts: Building Maintenance ($84,980); Illinois Municipal Retirement Fund ($273,082); and Social Security ($175,146). The Building Maintenance Fund supports annual maintenance, technology, equipment, and replacement of things like carpeting and furniture. The money in the IMRF and Social Security Funds can only be used to cover IMRF and Social Security expenses.

Assigned Funds: There is $2,209,177 in assigned funds on the Balance Sheet. Although the Statement of Net Position includes this money in the unrestricted total, it's in a restricted fund called Special Reserve. This is where LLD saves money for major future expenditures, reducing the likelihood that we have to borrow money to pay for those expenses. For example, we've used Special Reserve funds to pay for a new HVAC system and a new roof.

Unassigned Funds: On 6/30/16, LLD had an unassigned fund balance of $3,631,532. This is the library's Corporate Fund, which is used to pay for general operating expenses (payroll, utilities, materials, etc.). Although it's called "unassigned," a large chunk of this money is actually obligated by the District's Fund Balance Policy. This policy requires the library to maintain an operating reserve equal to a minimum of 6 months of operating expenses, and allows for a maximum cushion equal to 12 months of operating expenses.

Why? This is a common policy for district libraries. It's designed to ensure that the library has enough reserves to cover its operating expenses if tax payments are delayed, or if it receives less funding than expected.

The amount that must be held in reserve is based on the library's most recent audited general expenditure figures. FY2015-16 general expenditures totaled $3,648,034, an average of $304,003 per month. Therefore, the library is required to maintain a minimum reserve of $1,824,018 ($304,003 x 6 months) in the Corporate Fund during the 2016-17 fiscal year, in order to meet the minimum requirement of the Fund Balance Policy. The policy allows the library to maintain a reserve of up to $3,648,036 ($304,003 x 12 months).

The Lie is Revealed

This review shows that $9,328,005 of the $11,135,519 that's listed as unrestricted dollars on the Statement of Net Position is in fact legally restricted per the Balance Sheet: $4,852,749 in Deferred Inflows; $442,937 in the Working Cash Fund; $2,209,177 in the Special Reserve Fund; and a minimum of $1,824,018 in unassigned funds set aside as an operating reserve, as mandated by the Fund Balance Policy.

Therefore, only $1,807,514 of the unrestricted amount listed on the Statement of Net Position is truly unrestricted. This amount is below the additional $1,824,018 in unassigned funds that can be held in our operating reserve per the Fund Balance Policy.

As you can see, all $11,135,519 in unrestricted dollars on the Statement of Net Position are properly restricted and allocated under laws and policies designed to safeguard tax dollars and ensure the long-term operational and financial stability of the library. This isn't an $11 million slush fund; it's careful and prudent financial management!

Please check out my candidate Facebook page and Daily Herald candidate profile to learn more about my accomplishments as an LLD Trustee, and my commitment to the responsible stewardship of your tax dollars. My Facebook page includes a list of Bartelli and Sullivan's lies, along with more information about those lies.

I also encourage you to check out the Facebook pages of my colleagues, John Gardner Huff and Emily Swistak. John and Emily are both committed to maximizing the impact of your tax dollars while providing a great library for our community. I'm proud to be running alongside them.

Please vote Huff, Sehy, and Swistak on April 4 for honest and open government!