Task Number Five: Planning Administrative Structures

Some of the administrative changes that might occur when a library district is created or enlarged have already been mentioned under Task Number Three: Planning Library Services. Other changes will also come about. These fall under the areas of governance, financial management, legal services, library policies, and risk management. Much of this work cannot be finalized until a new board is appointed, but the working group should do the groundwork for these policies and procedures.

Some of the possible administrative changes are described below:

Name Change. In many districting projects, a district will need to change its name, since its geographical boundaries will change significantly. In many cases, the name change will be made through the order of the county commissioners after a successful election or consolidation. However, for financial reasons, the
district may want to retain its old name, while also creating an official alias which best describes its service area.

For example, let us assume that District A is collecting sales tax revenue from the state because it was in existence in 1999. That district consolidates with District B that was not in existence in 1999. It is beneficial for District A to maintain its identity, so the new district can collect sales tax monies for that portion of the
new district that is currently receiving sales tax revenue. Thus, the new district will need to maintain the identity of District A by maintaining its name, sales tax number, and federal tax numbers. However, District A’s name may not provide an adequate description of the geographical service area of the new district. [See I.C. § 63-3638(10)(d).]

To create the additional name of the district, the district will need to make it official by filing a “Doing Business As (DBA)” form with the Idaho Secretary of State’s office. This form allows the new or enlarged district to carry over the assets of the previous district or districts in a legal manner under this new name,
while retaining the identity of the old district as well. You will need to inform the county of this name change as well.

Any change of name — whether created by a county commission order or a DBA — should also be sent to:

• Governmental agencies
  • Internal Revenue Service
  • Idaho State Tax Commission
  • Idaho State Insurance Fund
  • Idaho Commission for Libraries
• Vendors
  • book and periodical jobbers
  • service contractors
• The library’s attorney
• Idaho Counties Risk Management Program (ICRMP)
• Professional organizations with which the library has an institutional membership

Board Structure and Trustee Zones. Most library districts do not operate with trustee zones. However, in some cases, trustee zones already exist, or the creation of trustee zones may help to establish or expand a district. Trustee zones are described in I.C. § 33-2718. Because trustee zones are required to have “approximately the same population,” a change in the population or geographical dimensions of the library district may require a realignment of the zones. Similarly, to add new territory to the district, the board may have to promise to create trustee zones to assure that new parts of the district are
represented on the board.

Financial System. If a new district is being established, financial books should be set up to meet generally accepted accounting standards for local governments. Within this definition, the procedures should be kept as simple as possible, so that bookkeeping can be carried out as economically as possible for the size of accounts that the new district is expected to handle. An accountant (preferably a Certified Public Accountant) should be employed to set up the new district’s financial procedures. For more information, click here.

Banking. Plans should also be made to set up accounts with financial institutions. These accounts should be in accordance with the Public Depository Law: chapter 1, title 57, Idaho Code. In addition to looking at local financial institutions as the possible recipients of the district’s deposits, the working group might also want to investigate the possibility of placing the new district’s funds with the Local Government Investment Pool (LGIP), which provides relatively high interest rates and liquidity.

Audits. A new or expanded library district will also need to plan for audits, as required by I.C. § 67-450B. Audits under these requirements are to be performed by independent auditors in accordance with generally accepted governmental auditing standards, as defined by the United States General Accountability Office. The auditor shall be employed by the library district on written contract. The library district’s board shall be required to include in its annual budget all necessary expenses for carrying out the provisions of I.C. § 67-450B.

Collecting Sales Tax. If the proposed district will be selling tangible goods — such as books, nonresident library cards, photocopies, print jobs from a computer, or receiving faxes for the public — it will also need to request a sales tax permit and number. These forms can be requested from the Idaho State Tax Commission. The exemptions on collection of sales tax by political subdivisions, such as a library district, are enumerated in rules 053.02 and 094.05.a of 35.01.02 – Idaho Sales and Use Tax Administrative Rules.

Library Districts Do Not Pay Sales Tax Within Idaho. As a government agency, the proposed library district will also be exempt from paying sales tax for purchases it makes. Upon first using a vendor, district personnel should inform the vendor that the library district is exempt from sales tax. The vendor should
then ask you to fill out a Sales Tax Resale or Exemption Certificate (ST-101). In theory, this form needs to be submitted only once for each vendor and should suffice for the life of the district. In practice, vendors may ask you to fill it out more often.

Memorandum of Agreement. In cases where existing libraries are going to become part of a new or enlarged district, memoranda of agreement should be written about how the transfer of funds will be handled. A memorandum of agreement is a draft agreement to set mutual responsibilities and scope of
association. Although we have provided a sample MOA, it is always a good idea to seek legal counsel when entering into any sort of agreement.

Library Policies. The new board will need to develop bylaws for its own governance. Bylaws are the rules that the board establishes to regulate itself. The new district will also need to have policies in areas including collection development, circulation of library materials, confidentiality of patron records, sponsorship, hours of operation, emergency procedures and programming for adult and youth services, and the Internet use policy required by I.C. § 33-2741. If the district has branches, a meeting room, display space, or other special facilities, it should have policies dealing with branch operations, use of meeting rooms, and use of other resources, as applicable. Libraries that offer makerspaces or maker programming should have a maker safety and liability policy in place. These policies cannot be finalized until a district board is appointed, but drafts can be prepared for their use in advance of the district formation, since voters or petitioners may be especially interested in how the new district will operate. Your ICfL Public Library Consultant is available to help the board and director with bylaw and policy questions.

Risk Management and Insurance. Risk management is another important consideration in planning the administrative structure for the new district. The working group should consider errors or omission insurance for the district board, along with liability insurance, theft, fire, and damage insurance for the building.

One possible resource is the Idaho Counties Risk Management Program. ICRMP is a member-owned self-insurance pool that provides property and liability insurance coverage and risk management resources to political subdivisions in Idaho. In addition to selling insurance, this program also provides training in risk
management as well as member resources, such as model agreements, that may be especially useful to new districts.

Expected changes by type of project. The amount of change will depend on the type of districting project being undertaken. Here are some of the changes that should be anticipated for each of the major types of districting projects:

• Establishment. Territory that contains no library can be formed into a library district. The new library district can set up its own library and provide services itself. The new district will have to determine its board structure. It will have to establish a complete bookkeeping system and will have to establish financial accounts in accordance with the Public Depository Act: chapter 1, title 57, Idaho Code. It will have to determine how it will employ legal counsel, when necessary. It should begin drafting board bylaws and library policies in the areas of collection development and library operations, as well as any other special policies that the new district will need.
• Establishment to purchase library service from another library. Territory that contains no library can be formed into a library district. The new district does not provide services itself, but contracts with an existing library to provide services to its residents. Because the new district is primarily acting as a pass-through to an established library, it will have relatively simple financial accounting procedures. It should have its own attorney examine the contract that it is establishing with the contracting library. Because the district will not be operating its own library, it will not need to write library policies, but it will need to draft board bylaws.
• Establishment including an existing city library. Territory that includes one existing city library can be formed into a district that serves the city and surrounding territory. The new district will have to determine its board structure. It will have to establish financial accounts in accordance with the Public Depository Act: chapter 1, title 57, Idaho Code. It will have to determine how it will employ legal counsel, when necessary. Board bylaws will need to be revised to make them compatible with district library law. The city library policies should be reviewed and modified to accommodate the needs of new district patrons.
• Establishment/Combination including multiple city libraries. Territory that includes two or more city libraries can be formed into a district that includes untaxed territory that connects the cities together. The new district will have to determine its board structure, as the board of a library district consists of five trustees. It will have to establish a complete bookkeeping system and will have to establish financial accounts in accordance with the Public Depository Act: chapter 1, title 57, Idaho Code. It will have to determine how it will employ legal counsel, when necessary. District board bylaws will need to be drafted. The existing policies of the participating libraries should be reviewed and policies for the district written, based on the most useful policy elements for the larger service area.
• Annexation of area with no library service. An existing library can annex untaxed territory which is contiguous to it and which contains no other public library. The new district will have to determine its board structure. Financial systems and access to legal counsel should have already been established by the existing district, and therefore will not be changed. Current district board bylaws and policies can be used for the new district, unless changes are needed to serve a larger service area.
• Annexation of area including one or more city libraries, and the cities do not choose to join the district. An existing district library can annex untaxed territory that is contiguous to it, which contains an existing city library (or libraries), and the cities do not choose to join the district. The new district will have to determine its board structure. Financial systems and access to legal counsel will have already been established by the existing district, and therefore will not have to be changed. Current district board bylaws and policies can be used for the new district, unless changes are needed to serve a larger service area. Contracts for services or reciprocal borrowing agreements with non-participating libraries will need to be considered and negotiated.
• Annexation/Combination. An existing district library can add untaxed territory which is contiguous to it and which includes an existing city library (or libraries), and the cities also choose to combine with the district. The new district will have to determine its board structure. Financial systems and access to legal council will have already been established by the existing district, and therefore will not have to be changed. Current district board bylaws and policies can be used for the new district, unless changes are needed to serve a larger service area, or to accommodate the needs of the cities joining the district.
• Combination. A city library whose boundaries are contiguous with a library district combines with the district. The new district will have to determine its board structure. Financial systems and access to legal counsel will have already been established by the existing district and therefore will not have to be changed. Current district board bylaws and policies can be used for the new district, unless changes are needed to serve a larger service area, or to accommodate the needs of the city joining the district.
• Consolidation. Two or more existing contiguous districts can be consolidated into a single district. The new district will have to determine its board structure. Since both districts will have established financial systems and legal services, part of the consolidation negotiations will be to determine which systems and services the new district will use. The existing board bylaws and policies of the participating districts should be reviewed and policies for the new district written, based on the most useful for the larger service area.