Transcript CREATING A PUBLIC LIBRARY BUDGET: WHAT’S IN IT AND …

MAKING
LIBRARY
BUDGETS
Instructor:
Anne M. Turner
[email protected]
An Infopeople Workshop
Winter 2009
This Workshop Is Brought to You By
the Infopeople Project
Infopeople is a federally-funded grant project
supported by the California State Library. It
provides a wide variety of training to California
libraries. Infopeople workshops are offered
around the state and are open registration on a
first-come, first-served basis.
For a complete list of workshops, and for other
information about the project, go to the Infopeople
website at infopeople.org.
Introductions
•
•
•
•
Name
Library
Position
How many budgets have you created?
Today We Will Talk About
•
•
•
•
•
Creating a library budget
Privatizing and contracting out
Cutting the budget
Revenue Sources
Making the Dry Creek Library Budget for
FY 2009-10
Dry Creek--a Garden Spot in
California
Notes on the City:
• 76,000 people on edge of Central Valley
• Gated communities built outside demand
service
• Economy impacted by shift in agricultural
processing overseas
• Budget exceeds revenues
Notes on the Library
• Department of City of Dry Creek
• Advisory Board
• Three facilities: Main Library, Barely
Adequate Branch, and Abysmal Branch
• 38,591 registered adult borrowers, 10,732
registered kids
• 503,600 checkouts last year
• 51 FTE staff (14 librarians, 37 others)
Creating A Public Library Budget:
What’s In It And How Did It Get
There?
Three Elements
• Personnel
• Supplies & services
• Capital outlay
Personnel
• 68% of the Dry Creek Library budget is for
personnel.
• 25% of the Personnel amount is benefits,
which are 35% of salaries
• Look at how personnel costs are spread
across the Library divisions
Dry Creek Library Personnel
Expenses by Library Division
Supplies & Services
• Objects that are flexible
– Library materials or training
• Objects that are not
– Electricity or rents
Exercise #1
• Look at the Dry Creek Library Budget
Summary on Page 8. Working together,
identify which items are flexible and which
are not.
• Total up each column
Why Is This Important?
• Inflexible item cost is going up 5%
• Must hold budget to 2.5% increase
• Where’s the difference going to come
from?
The Flexible items or Capital Outlay?
Capital Outlay
• Capital Outlay is comprised of all the
equipment and other items costing more
than $5,000 each, plus a summary line for
all those things in the under $5,000
category.
• Shelving, shelving, shelving, and computer
equipment
But Capital Outlay also includes. . .
• Big repair or building maintenance items,
like $40,000 for the new roof at the Main
Library or $25,000 to re-do the HVAC
system.
The Budget-making Process
1.
2.
3.
4.
5.
6.
Get requests
Establish the cost of the inflexible items
Create Draft #1
Ask Questions and Cut
Create Draft #2
Take it to the Board, to City or County
management, and to the Council or
Board of Supervisors
Draft #1: Everything’s In
But everything’s questionable too
The “What-Why-What IfCouldn’t We?” Model
• What is the problem the item or service will
solve or program will support?
• Why do we need this particular item, and not
some other?
• What If we don’t buy this item or service
• Couldn’t we save money by buying or doing
something else?
Exercise #2
Analyzing & Asking Questions
• Look at the Object from the 2006-07 Dry
Creek Library Budget assigned to your
table. Pretend this is a request for
2009-10
• Using the “What-Why-What If-Couldn’t
We?” model, develop a list of specific
questions about the items requested.
Adding A New Program
• New programs easier to add
• More $ for day-to-day needs is harder
• Package as a new service?
Elements Of A New Program
Proposal
• What is the need?
• Who will be served?
• Why is the library the best group?
• How much will it cost?
• How much will it save?
Draft #2: The ‘Final’ Draft
• Put everything together to achieve a final
number you think you can live with.
• Take it to the Library Board
• Objective is to get active support
• Present the new program
• Talk about the imperatives of the new roof or
whatever
• Add what Board members can’t live without
The Guys In Suits
• The City Manager and the Finance
Director will both look over the ‘final’
budget
• They too will wonder why, ask questions,
and suggest/demand changes
And Finally
• Present to City Council or the Board of
Supervisors
• Their questions
• The role of the library board at the
presentation
Other Budgeting Methods
• Program budgets
• Performance budgets
– See also PPBS
• Multi-year budgeting
• Zero-based budgeting
Exercise #3
A Program Budget for the
Young Adult Services
Grant Proposal
Privatizing & Outsourcing
A.K.A.
“The private sector can
do it cheaper”
Privatizing
• Def: moving a whole department or
function of government into the private
sector.
• Ex: Waste Water Treatment
State Prisons
Libraries
Outsourcing
A.K.A. Contracting Out
Def: Hiring other people to do a piece of
work that is not key to the organization’s
primary mission.
– Shipping and delivery
– Telecommunications
– Janitorial Services
Privatization
• A matter of political philosophy
• Elected officials make privatization
proposals to solve difficult political or
budget problems.
How Does A Private Firm
Like LSSI Save Money?
Two ways:
• Takes the employees out of the public
sector benefit system
• Centralizes back-of-the-house services
Pros Of Privatizing Libraries
• Cheaper
• Consolidating can make economic sense
• Gets rid of a department the elected
officials don’t understand
• No need to negotiate a regional alliance
Cons of Privatizing Libraries
• Cost savings are ephemeral at best. What
about next year?
• Unfair to library workers
• Who will advocate for library services?
• Puts a beneficial public service into private
hands
• Reduces public accountability
Contracting Out
• “We’re not in the cleaning business. We’re
in the city government business. It is a
waste of our resources to be spending as
much time as we do supervising janitors.”
A City Manager
Analyzing A Proposal To
Outsource
• Four elements:
– What needs doing
– Direct costs
– Indirect costs
– Social costs
What Needs Doing?
• Develop a detailed specification list
• Be careful what you wish for
• Develop objective measures for the
quality of the service
What Are Direct Costs?
• Identify using janitorial services
What Are The Indirect Costs?
• Biggest is damage to employee morale
and productivity of the existing in-house
workers
Social Costs
• Called the “negative externalities”
• Failure to calculate these makes the price
of the product artificially low
– Air pollution example
Social Costs Summarized
• Loss of equity
• Loss of public participation
• Loss of accountability
• And a final question: will the outsourced
contract be particularly vulnerable to
budget cuts because public employees are
not doing the work?
Library Core Functions:
Could They Be Outsourced?
• Cataloging and Processing
• Reference Service, Virtual and
Otherwise
• Story Hours
• What else?
Exercise #4
Outsource the Work of Five Dry Creek
Library Employees
The Bottom Line
• Outsourcing can be a useful tool
BUT
• We have to define and protect our core
competencies
• We have to be sure to compute all the
costs
Cutting The Budget
• The bad news:
The Dry Creek city manager has
imposed level funding on all
departments for the new fiscal year
What Does This Mean?
• Personnel slated to increase 4% =
$147,119
• Fixed cost items will increase 2.5% =
$23,125
• You have to find cuts worth $170,246 in
the FY 2008-09 budget
Evaluating Potential Cuts:
Four Criteria
•
•
•
•
Will the cut be visible to the public?
Is it a short or long term cut?
Does the cut require staff layoffs?
Which library constituency will be most
affected?
Visibility
• Public must understand it costs $$ to run
the library
• Invisible cuts help people think that the
library can continue to deliver services
with less and less money
• Hard to get invisible cuts restored
• What are some visible cuts?
Short or Long Term Cuts
• Is the city-imposed cut temporary or longterm?
• Can we live without this item forever?
Long Term Cuts are
Hard to Achieve
• Closing a branch, reducing open hours,
etc.
• They involve painful staff layoffs, but that
isn’t what makes them hard to achieve
• It’s the politics
Will It Involve Staff Layoffs?
• Almost always, the layoffs are at the
bottom of the library staffing array
• BUT: easier to get back support staff to
restore open hours than a reference
librarian
• Watch out for bumping rights
Which Constituency Is Most
Affected?
• Who benefits? Nobody.
• Who is hurt the most and what kind of
power do they have?
• Again, a political issue
53
Three Things To Avoid
At All Costs
• Cutting off your nose to spite your face
• Allowing groups to pit one branch or
service against another
• Handing the issue to a candidate for office
54
Exercise #5
Cutting The Dry Creek Library
Budget
Don’t Take It Personally
Revenue Sources
Where do Dry Creek and the
Library get their money?
The Four Basic Taxes
– Property tax
– Parcel taxes
– Sales taxes
– Excise taxes
Property Taxes
A.K.A. Real Estate Taxes
• Ad valorem; based on the assessed value
of the property
• The chief source of revenue for local
governments in the U.S.
• Tax limitation measures like Prop 13
require workarounds
Three Other Points:
• Tax rates: what people pay depends upon the
assessed value of their property, and the rate
set by the governing body
• Property taxes are flexible
• Not all property is taxed
Churches, schools, libraries, government
buildings, and university and community college
campuses are exempt
Parcel Taxes
• NOT Ad Valorem
• A fixed amount placed on every property
to (usually) do something specific.
• A favorite of the schools--$21 on every
property for class size reduction
Sales Taxes
• Have to have something worth taxing
• Respond to the economic cycle:
collections are good when times are good,
but go down when times are bad.
• The “Point of Sale”
concept
Excise Taxes
• Taxes on specific commodities produced
within a nation.
• A way to tax wealthier people, and also to
“control” use of harmful substances—
tobacco, alcohol, etc.
Impact Fees
• A fee imposed on the developer of a new
housing project
• Compensates for the city resources in
place that the new residents will use
• Not enormous, but better than NO fees
Borrowing Money
• “G.O.” Bonds, or General Obligation
Bonds
• Revenue Bonds
• Special Assessment District Bonds
• Tax Increment Financing
• “C.O.P.s” or Certificates of Participation
• Impact Fees
An Important Fact About
Borrowing Money
It has to be paid back!
Other Revenue Sources
•
•
•
•
Fees and Fines
Gifts and Bequests
Grants
Fundraising
Where Does The City or County
Put The Money It Collects?
• It puts it into funds
– Enterprise Funds
– General Fund
– Library Fund
– Internal Service Fund
Funding The Dry Creek
Library Projects
• Different money for different projects
• Planning and talking about what’s coming
Economic Growth
• A city’s whose growth is limited to the
2.5% annual CPI increase is NOT growing
and is in economic trouble
• It has to find ways to increase economic
growth beyond the 2.5% rate, because
the cost of doing business grows faster
than the CPI
Exercise #6
Making the Dry Creek
Library Budget for FY 2009-10
Are we done yet?
Nope. Not until you have filled out and
turned in your evaluation forms