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MAKING LIBRARY BUDGETS
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  1. MAKING LIBRARY BUDGETS Instructor: Anne M. Turner turnera@cruzio.com An Infopeople Workshop Winter 2009

  2. 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.

  3. Introductions • Name • Library • Position • How many budgets have you created?

  4. 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

  5. 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

  6. 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)

  7. Creating A Public Library Budget: What’s In It And How Did It Get There?

  8. Three Elements • Personnel • Supplies & services • Capital outlay

  9. 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

  10. Dry Creek Library Personnel Expenses by Library Division

  11. Supplies & Services • Objects that are flexible • Library materials or training • Objects that are not • Electricity or rents

  12. 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

  13. 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?

  14. 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

  15. 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.

  16. The Budget-making Process • 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

  17. Draft #1: Everything’s In But everything’s questionable too

  18. The “What-Why-What If-Couldn’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? • WhatIf we don’t buy this item or service • Couldn’t we save money by buying or doing something else?

  19. Exercise #2Analyzing & 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.

  20. Adding A New Program • New programs easier to add • More $ for day-to-day needs is harder • Package as a new service?

  21. 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?

  22. 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

  23. 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

  24. And Finally • Present to City Council or the Board of Supervisors • Their questions • The role of the library board at the presentation

  25. Other Budgeting Methods • Program budgets • Performance budgets • See also PPBS • Multi-year budgeting • Zero-based budgeting

  26. Exercise #3 A Program Budget for the Young Adult Services Grant Proposal

  27. Privatizing & Outsourcing A.K.A. “The private sector can do it cheaper”

  28. Privatizing • Def: moving a whole department or function of government into the private sector. • Ex: Waste Water Treatment State Prisons Libraries

  29. OutsourcingA.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

  30. Privatization • A matter of political philosophy • Elected officials make privatization proposals to solve difficult political or budget problems.

  31. 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

  32. 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

  33. 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

  34. 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

  35. Analyzing A Proposal To Outsource • Four elements: • What needs doing • Direct costs • Indirect costs • Social costs

  36. What Needs Doing? • Develop a detailed specification list • Be careful what you wish for • Develop objective measures for the quality of the service

  37. What Are Direct Costs? • Identify using janitorial services

  38. What Are The Indirect Costs? • Biggest is damage to employee morale and productivity of the existing in-house workers

  39. Social Costs • Called the “negative externalities” • Failure to calculate these makes the price of the product artificially low • Air pollution example

  40. 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?

  41. Library Core Functions: Could They Be Outsourced? • Cataloging and Processing • Reference Service, Virtual and Otherwise • Story Hours • What else?

  42. Exercise #4 Outsource the Work of Five Dry Creek Library Employees

  43. 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

  44. Cutting The Budget • The bad news: The Dry Creek city manager has imposed level funding on all departments for the new fiscal year

  45. 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

  46. 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?

  47. 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?

  48. Short or Long Term Cuts • Is the city-imposed cut temporary or long-term? • Can we live without this item forever?