Interlocal Agreements - Interlocal Agreement

According to MCA 7-11-105 an interlocal agreement must have the following elements:

  • Its duration – how long is this agreement in place?  A certain number of years?  Or until either party wishes to dissolve the agreement?

  • The precise organization, composition, and nature of any separate legal entity created by the contract – ie. Who is entering into the contract – the city council, county commissioners, and/or school board?

  • The purpose of the contract – in this case formation of a public library to provide library services to a certain group of people.

  • The manner of financing the library

    • Will the county put in money?  How much?  What about the city?  Or the school board?  Consider all parties involved in this agreement and spell out how much and what each of them will contribute to the library.

    • If possible consider asking for an inflationary rate similar to that calculated for MCA 15-10-420 to be added to the contract.  Be sure and include any information about voted levies to support the library.

  • How the agreement will be terminated and how any property will be disposed of if the agreement is terminated.

    • Generally you will see language that says either party can notify the other party if they wish to end the agreement.  Typical language only gives the library 60-90 days to deal with a terminated agreement.  We recommend asking for 6 months to a year, because two or three months is not enough time to find alternative ways of offering library services.  Property disposal depends upon the parties entering the agreement.  Some of them will allow the library board to keep the property; others wish to give the property back to the funding bodies whose money purchased it. Consider adding language to the dissolution clause that protects the library from one party arbitrarily ending the agreement.  For example:

      • A statement that addresses lack of funding – if funding is no longer available then the city or county may end the agreement

      • Both parties may mutually agree to end the agreement in writing

      • A statement that addresses failure to comply with the terms of the agreement and how one party may ask to end the agreement if the other party has failed to comply with the terms of the agreement.

    • Provision for administering the library and/or the creation of a library board

      • This section usually creates the library board and spells out who will be appointed to the board, their terms, and how vacancies will be handled.  For example the county commissioners might appoint 3 people while the city council will appoint 2 of the members.

      • This section also spells out the powers and duties of this board.  We recommend stating that the board will be given the same powers and duties as those listed in MCA 22-1-309.  This gives your board the authority to make decisions about the library.

  • If applicable the contracting party responsible for making payments and reports for the public employees’ retirement system.  If the director and/or any staff members are receiving public employees’ retirement benefits the interlocal agreement should state who is responsible for that.  The responsible party will generally be either the county or city.  It is usually the governing body that hands out library staff’ paychecks.

  • Any other necessary matters – the catch-all category that addresses matters like:

    • Insurance.  Will the city, county, or school board provide building, liability, and property insurance or does the board need to provide that itself?  Please note the board may have to obtain its own insurance coverage.

    • Accounting and/or payroll.  Who will handle accounting and payroll for the library?

    • Utilities and building maintenance.  Who will maintain the building and pay for that maintenance?  What about utilities for the library?

    • School considerations – what is the responsibility of the school district?  What is the responsibility of the board? What about library access and hours?

    • Amendment of the interlocal agreement – if one party wishes to amend the agreement what do they need to do?

Examples of Interlocal Agreements

NOTE: Montana State Library staff are providing these examples for your assistance however we are not attorneys, cannot provide legal advice, and make no claim or representation that these particular examples are appropriate for use by public libraries.