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IANAL but the church has stated that they will not return the books. I'm pretty sure that makes it theft, Petty Theft*, but still theft with a penalty of up to 1 year in jail and $500 fine. Still it's probably simpler for library to just bill them after a year and then turn the bill over to collections when they refuse to pay it. They should replace the books so that people who are interested in them can borrow them.
Of course, there's every chance that those new books will also be stolen. If that happens, I say they should replace them again. And keep replacing them, and I'll tell you why. The library obviously knows who borrowed the books. Once an individual has stolen enough books to cross the $500 threshold for Grand Theft in the state of Kentucky. The penalty for that can be several years in prison plus restitution. The article states that the missing books are valued at $410.85, so they're not far short of it if a single person took the missing books.
But if three or more of them are doing it, then it's criminal gang activity. If one of them sold the books and donated the money to the church, the pastor could be charged with a class c felony.