SECTION 1.64. Cash Reserves: Regional Library Systems

(a) A nonprofit corporation or business shall maintain cash reserves, not to include the performance deposit in §1.63 of this title (relating to Proposal Requirements), totaling both:

(1) an amount not less than 15% of all the ongoing operating costs (administrative, personnel and fringe benefits) in the proposed annual contract, to be used to satisfy obligations and maintain operations in the event of an interruption in cash flow; and

(2) an amount not less than 5.0% of the proposed total annual contract, less the ongoing operating costs, to be used to satisfy debts or other costs which cannot be paid with grant funds; these funds must be from sources other than a system operations grant.

(b) Regional library systems shall have five years to accumulate this cash reserve. For the purpose of this rule, the years will be considered to begin on the date the annual program of service for the subsequent fiscal year is due at the Texas State Library. For regional library systems in existence at the time the rule is adopted, the five-year period will begin with the submission of the next annual program of service after the adoption of the rule. For all others, the five year period will begin with the submission of the first program of service by the regional library system.

(c) The regional library system shall accumulate the cash reserve according to the following schedule:

(1) With the submission of the annual program of service for year one, the regional library system must submit a plan for accumulating the cash reserve to accompany the annual program of service.

(2) With the submission of the annual program of service for year two, the regional library system must demonstrate it has already accumulated at least 20% of the total cash reserve required by this rule.

(3) With the submission of the annual program of service for year three, the regional library system must demonstrate it has already accumulated at least 40% of the total cash reserve required by this rule.

(4) With the submission of the annual program of service for year four, the regional library system must demonstrate it has already accumulated at least 60% of the total cash reserve required by this rule.

(5) With the submission of the annual program of service for year five, the regional library system must demonstrate it has already accumulated at least 80% of the total cash reserve required by this rule.

(6) With the submission of the annual program of service for every year thereafter, the regional library system must demonstrate the cash reserve account required by this rule is fully funded.

Source Note: The provisions of this §1.64 adopted to be effective July 17, 1997, 22 TexReg 6429.