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LIBR 204: Budget Analysis

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Gradual Budget Recovery at the Paso Robles City Library

Budgeting and planning are two of the most important skills a library manager can possess. Creating a periodic budget proposal for approval by the governing body is one crucial assignment that sets management apart from the rank and file employees. Although this process may seem daunting at first, managers who take a methodical approach will be able to create a workable document. Evans and Alire (2013) provide recommended steps for creating a workable budget (p.427). The budget process starts with an examination of the library’s current offerings, goals, and future needs, which are prioritized. Once the list of programs and services is created, cost estimates for each item on the list are needed. These cost estimates provide the basis for the budget proposal. The biggest challenge to budget creation are the ebbs and flows of the economy which are sometimes difficult to predict and which sometimes make it impossible to offer even the most basic services expected of libraries.

The Paso Robles City Library faced several difficult budgeting years due to the great recession of 2007-2010. Staff were asked to cut portions of their budget by 25%. Due to the city’s Layoff Prevention Plan (City of Paso Robles, July), staffing levels could not be cut, although incentives were provided for staff considering retirement, and full-time staff were given the option of reducing their hours without jeopardizing their benefits and retirement. A hiring freeze was instituted, so if staff retired or resigned, they were not replaced. Even more challenging from a scheduling perspective is that the desk shift hours that were vacant due to part-time staff leaving could not be reassigned to other part-time staff (increasing their hours), and had to be covered by full-time staff, including management. Because the city made a decision to make the economic downturn as invisible to the public as possible, open hours were not reduced. While all these staffing issues were occurring, the Black Gold Cooperative Library System, of which Paso Robles City Library is a part, was revising the protocols for assessing membership fees, and Paso Robles’ share was increasing dramatically. To meet the 25% budget reduction, all staff training was cut, the materials budget was slashed, and only minimal programming was allowed. During these years, there really was no budgeting process. It was assumed that departments would not spend more in one year than they had spent in the previous year; budgets were flat, and cuts continued to be made wherever feasible. The previous year’s actual spending became the current year’s actual allocation (“budget”), presenting further management challenges as prices increased with no corresponding increase in funding to support them. The Friends of the Library and Library Foundation provided funds for materials and essential programs such as the all-ages Summer Reading Program; instead of their traditional role of enhancing the library’s offerings, in some ways these non-profit groups were the library’s offerings.

Flash forward to the present, and the city is in a period of modest recovery. For the first year in a number of years, it appears that the city will be operating in the black and will not be relying on reserve funds to balance the budget. Management are again being asked for preliminary budget requests, but are asked to be conservative in their estimates of needed funding for fiscal year (FY) 2016. For the purpose of this paper, this is the budget proposal that will be discussed; it can be found in full in the Appendix. The city of Paso Robles uses a traditional line item style of budget; funds are allocated to various programs within the format. In this way elements of the line item and program budget formats are used, allowing librarian/coordinator level staff the ability to decide how money allocated in one area is to be spent. There are several programs that are funded including: Staffing, Study Center, Circulation, Adult Services, Reference Services, Administration, Children’s Services, Volunteer Services, and Miscellaneous. Proposed Staffing and Miscellaneous program amounts are determined by the finance department and City Manager; the Library Manager and Director of Library and Recreation Services determine what will be proposed in the other areas of library service.

STAFFING

Because the library is a service industry, staffing is one of the most cost-intensive pieces of the library’s budget. In the proposal for 2016, staffing costs represent 46% of the overall budget. To determine projected staffing costs, management looked at past increases in this area, and calculated an average percent by which salaries/wages and benefits have increased in past years. For three years during the great recession, staff voted to forego their raises and step increases. In their last Memorandum of Understanding (MOU) (City of Paso Robles, July), library staff were granted a 3% increase, representing a small cost of living increase as well as an increase to cover the employee portion of the employee retirement plan (PERS). Step increases were also allowed once again, further increasing the overall staffing budget. Health care is also expected to increase as it has in prior years at about a rate of 5%. Overall, staffing costs increased 9% between FY2014 and FY 2015; in this budget proposal, management assumed a similar increase of 9%. Disher (2010) supports the use of past budget use as an indicator of future budget needs (p.43).

FY 2015 FY2016 % CHANGE
STAFFING
SALARIES & WAGES 547596 607832  11%
BENEFITS 251860 263697 4.7%
TOTAL STAFFING 799456 871529 9%

LIBRARY STUDY CENTER

The Paso Robles Library Study Center (LSC) is an off-site facility located in a County Department of Education-owned building in a low-income area of town, providing after school homework help to elementary and middle school students. Library staff and volunteers oversee the facility and provide homework assistance, filtered Internet computers, and various programs and activities. The Study Center is a popular place for students to gather to do homework, surf the Internet, or play board games. The LSC has always had a fairly small budget, and this year’s projected budget is no exception. The largest portion of the budget is for utilities billed to the city by the County ($4500). The LSC has a small browsing book collection and a listening center with read-along book-and-disc kits; small amounts of money have been requested to freshen this collection in 2016 ($450 total). There is an office supply budget ($500) which covers everything from toner for the printer to the Clorox wipes used to clean the furniture daily. The biggest change in the 2016 projection is the addition of a modest allocation of funds ($400) for programs. This would allow staff to purchase craft supplies and good behavior rewards currently being absorbed by the library’s Children’s Services budget. Overall, if approved, this budget request increases the Study Center budget by 9% (only $585) over the 2015 budget.

FY2015 FY2016 %CHANGE
STUDY CENTER
AV MATERIALS 0 100
BOOKS 500 350
DATA CONNECTION 270 280
OFFICE SUPPLIES 300 500
PROGRAMS 0 400
UTILITIES 600 625
COUNTY UTILITITES 4500 4500
TOTAL STUDY CENTER 6170 6755 9.5%

CIRCULATION

The Circulation portion of the budget covers office supplies for the library, collection agency fees, credit card processing fees, and a portion of the Black Gold Quarterly fees which includes all costs associated with the cooperative’s shared computer system (ILS) and downloadable library (Overdrive, Zinio, Indieflix, Enki). The largest portion of the Circulation budget is used to pay for Black Gold quarterly membership fees. Because the Cooperative adjusted the formula used to determine a member’s share, Paso Robles City Library’s quarterly payment has increased over the past five years from about $16,000 to $22,500 per quarter, and will continue to take another hike in FY2017 as part of a phase-in for fees. In addition to these membership fees that all six members pay to participate, there are some services offered such as self-check software licensing, and purchase of materials such as barcodes and library cards that are optional. Paso Robles’ share of these fees adds an additional $2000 per year to the Circulation budget. All charges for office supplies for the public areas and public service desks including copier and printer supplies also come from the Circulation budget, adding on another $8000 per year. Another group of fees that represents a substantial portion of the budget are fees charged for accepting credit/debit cards ($800 in 2016) and use of a collection agency’s services ($3000). There are also smaller allocations requested for printing services used to print large quantities of library card registration forms and general library brochures ($750) and postage used to return lost library cards to patrons.

FY2015 FY2016 % CHANGE
CIRCULATION
BLACK GOLD QUARTERLY 20900 24500
COLLECTION AGENCY FEES 3000 3000
COPY PRINTING 750 750
CREDIT CARD FEES 787 800
DATA COMMUNICATIONS 126 130
OFFICE SUPPLIES 5500 8000
POSTAGE 65 65
TOTAL CIRCULATION 31128 37245 19.7%

ADULT SERVICES

The Adult Services budget covers all materials for ages 13 and up, and programs for ages 18 and up. This also includes all costs associated with traditional technical services expenses and office supplies used in the Adult Services area of oversight. Once again by far the largest single line item is the Black Gold quarterly membership payment. In FY2015, Adult Services was charged a lower amount for the Black Gold quarterly payment because the California state government sent extra money to the cooperatives that was applied to this quarter. While this is good news for this year’s expenditures, it makes next year’s increase to $22,500 all that much more dramatic. Other increased revenue requests are in the areas of materials ($1000 each to audio-visual and print materials) and program supplies ($300). This represents a 21.3% increase in this program area, mainly for Black Gold fees.

FY 2015 FY2016 % CHANGE
ADULT SERVICES
AV MATERIALS 7000 8000
BLACK GOLD QUARTERLY 16510 22500
BOOKS 12000 13000
COPY PRINTING 420 420
DATA COMUNICATIONS 126 130
OFFICE SUPPLIES 1950 1950
POSTAGE 954 1000
PROGRAMS 200 500
TOTAL ADULT SERVICES 39160 47500 21.3%

REFERENCE SERVICES

The Reference Services budget for the Paso Robles City Library includes all Reference materials, the periodicals collection, any database costs, and public Internet computer costs. Once again, the largest single cost is for the Black Gold quarterly membership payment ($22,500). A $1000 increase for print materials has been requested, raising the total Reference materials budget allocation to $2000. It should be noted that the Friends of the Library have been covering the bulk of the Reference materials costs, and the library will be relying on them to continue to do so in FY2016. The Friends of the Library have paid for all public access databases, and all materials beyond the cost of magazine subscriptions, so $2000 does not actually represent the cost of materials for the Reference area. It is also important to note that the library has a plan to greatly decrease the size of the Reference collection, discarding titles whose information can be more easily found online, and moving other volumes to the regular circulating collection. Because there is no Reference Services Librarian at this time, and no plans/funds to hire one any time soon, there is no need for any Reference programming money. The Reference Services budget increase represents an almost 30% increase over the past few years, but nearly all of this is due to the increase in Black Gold membership fees.

FY2015 FY2016 %CHANGE
REFERENCE SERVICES
BLACK GOLD QUARTERLY 17667 22500
BOOKS 1000 2000
DATA COMMUNICATIONS 126 130
OFFICE SUPPLIES 780 780
TOTAL REFERENCE 19573 25410 29.8%

ADMINISTRATION

The Administration section of the budget represents a small amount of funding used mainly for food for staff meetings, Library Board of Trustees costs, and any professional development materials that are purchased for the library. Staff recruitment costs are often taken from this budget area as well, and, although there is still no new or backfilling of positions, if a staff member leaves, the library is able to replace him, thus incurring Human Resources costs. This budget area pays for a city-owned cell phone for the Library Manager. An extra $1000 was requested in Administration to allow management to bring back the quarterly all-library-staff meetings. Although the monetary amount is rather small, the $1000 still represents a 21.5% increase over FY2015.

FY2015 FY2016 % CHANGE
ADMINISTRATION
CELL PHONE 327 350
DATA COMMUNICATIONS 126 130
OFFICE SUPPLIES 3000 4000
POSTAGE 150 150
TRAVEL 150 150
TOTAL ADMINISTRATION 3753 4780 21.5%

CHILDREN’S SERVICES

The Children’s Services budget funds all materials for ages birth through age 12, and programs for ages birth through age 17. Here again, the largest single cost to this budget area is for the quarterly Black Gold Membership fees. If approved, the Children’s area will receive a significant increase to both the materials budget (an additional $2300) and the programming budget (an additional $800). There will be a substantial decrease in office supply funding ($1200) to offset the requested increase for materials and program funding. A cell phone charge is included to pay for the city-owned cell phone used by the Director of Library and Recreation Services (who was formerly the Children’s Services Librarian). Overall, this budget area will see a 27.6% increase if approved.

FY 2015 FY2016 % CHANGE
CHILDREN’S SERVICES
AV MATERIALS 200 500
BLACK GOLD QUARTERLY 18249 22500
BOOKS 1000 3000
CELL PHONE 303 325
COPY PRINTING 250 250
DATA COMUNICATIONS 126 130
OFFICE SUPPLIES 2000 800
POSTAGE 25 25
PROGRAMS 200 1000
TOTAL CHILDREN’S SERVICES 22353 28530 27.6%

VOLUNTEER SERVICES

The Volunteer Program at the Paso Robles City Library is unique in the state of California, and maybe throughout the United States. The library utilizes the talents of over 125 volunteers in both traditional volunteer roles (shelving, mending, non-profit support groups) and non-traditional roles (working the public service desks, organizing and conducting story times, processing and copy cataloging of materials). The volunteer budget pays for volunteer supplies (such as name badges, bottled water, and candy) and volunteer acknowledgement (such as the library’s annual Fall Fest Barbecue). It also pays for the Library Leaders Program luncheon for volunteers who have been asked to act as advisors to staff regarding volunteer needs and as trainers for incoming volunteers for the areas in which they work. This budget total is remaining the same overall, but funds were shifted from the general office supply area to the programming area.

FY2015 FY2016 % CHANGE
VOLUNTEER SERVICES
COPY PRINTING 100 100
OFFICE SUPPLIES 2600 1000
POSTAGE 40 40
PROGRAMS 0 1600
TOTAL VOLUNTEER SERVICES 2740 2740 0%

MISCELLANEOUS

The City of Paso Robles has its own set of items that are charged to the library’s budget. The library has no control over these allocations; they are set by the Administrative Services Department, City Manager, and City Council. The largest portion of this, and in fact the second largest portion of the entire library budget – almost the same cost as staffing the library – is the Allocated Overhead (FY 2016 projection is $851,700). This includes all charges to the library from other city departments. For example, a portion of the library’s Allocated Overhead is slated for the Information Technology staff who service the library’s computers on a regular basis. The Police Department, Administrative Services, Human Resources, and Public Works Departments also receive a portion of these monies. All of these services are necessary to the functioning of the library. Insurance costs are also part of the Allocated Overhead. Another large Miscellaneous charge is the annual equipment replacement fee which allows the library to replace computers and copiers on a regular basis, keeping equipment current for staff and the public. Utilities charges keep the lights on in the building, pay for heat and air conditioning maintenance, and keep the taps flowing. The legal fees represent the portion of the City Attorney’s contract for which the library is responsible. The allocations in this area of the budget proposal are remaining   the same, except for a modest increase in the Allocated Overhead. The other Miscellaneous allocations may change as new contracts for legal service and insurance are formulated, and utility charges may increase as well.

FY2015 FY2016 % CHANGE
MISCELLANEOUS
ALLOCATED OVERHEAD 846000 851700
EQUIPMENT MAINTENANCE 100 100
EQUIPMENT REPLACEMENT 13700 13700
LEGAL SERVICES 1000 1000
UTILITIES 5000 5000
TOTAL MISCELLANEOUS 865800 871500 .66%

BOTTOM LINE

Overall, the library is asking for a modest increase in funding (9.9% or $171,428), mainly due to staffing cost projections (42% of all increases or $72073) and the large increases in Black Gold fees (10% of the total increases or $16,674). There is also a modest amount being sought for materials and program increases (4% or $6800). Because it has been so many years since the city has created a formalized budget, and because the city has been so slow to recover from the recession, the increases in materials spending were based on rough ideas of what needs would be for FY2016. Ideally there would be a more formalized process which ties in budget requests for materials funding to circulation statistics as described in the “magic formula” of Pearlmutter and Nelson (2012, pp.76-77). Once the city begins realizing greater recovery from the recession, using a formula such as this will make sense.

FY 2015 FY2016 % CHANGE
BOTTOM LINE
STAFFING 733884 871529
STUDY CENTER 6170 6755
CIRCULATION 31128 37245
ADULT SERVICES 39160 47500
REFERENCE SERVICES 19573 25410
ADMINISTRATION 3753 4780
CHILDREN’S SERVICES 22353 28530
VOLUNTEER SERVICES 2740 2740
MISCELLANEOUS 865800 871500
TOTAL BOTTOM LINE 1724561 1895989 9.9%

So, what could Paso Robles do differently in the budget structure that would help out the library? The main thing that makes this budget awkward is the huge percentage of Allocated Overhead. While an argument can be made that by including these charges, the city is actually including all the money it takes to run the library as if it were an independent operation, it really does not make sense to be moving funds from one department to another. In fact, when it comes to reporting budget figures to the State Library, the Paso Robles City Library seems to be doing remarkably well for a library serving 30,000 people (United States Census Bureau, 2014), spending $63.20 per capita. Subtract the Allocated Overhead from the total budget, and the city is now only spending $34.80 per capita, a more realistic amount based on the services actually being provided. If the Allocated Overhead were distributed among the budgets for the various departments it represents, it would paint a much truer picture of the state of the library’s individual budget.

When all is said and done, the City of Paso Robles City budgeting structure works well for the organization. It is laid out in an organized manner that is easy to follow. Because it is a line item budget, staff members who oversee portions of the budget know exactly how much they have available to spend for various library services. The city has recently acquired new financial software that will make report generating much easier, particularly the end of year statistics that are so helpful for completing the State Library’s annual Public Library Survey report and for planning the following year’s budget.

REFERENCES

City of Paso Robles (August 5, 2014) General Plan Financial Forecast – 2011-2015 [Data file]. Retrieved from http://www.prcity.com/government/search.asp?cx= 013496630980780339025%3A9zcud22uuus&cof=FORID%3A11&ie=UTF-8&q= layoff+prevention+plan&sa.x=0&sa.y=0

City of Paso Robles (July 1, 2014) Memorandum of understanding between the City of El Paso de Robles and the Paso Robles City Employees’ Association, local 620, Service Employees International Union [Data file]. Retrieved from http://www.prcity.com/ government/search.asp?cx=013496630980780339025%3A9zcud22uuus&cof=FORID%3A11&ie=UTF-8&q=mou&sa

Disher, W. (2010). Crash course in public library administration ABC-CLIO

Evans, G. E., & Alire, C. A. (2013). Management basics for information professionals American Library Association

Pearlmutter, J., & Nelson, P. (2012). Small public library management American Library Association

United States Census Bureau (December 4, 2014). El Paso de Robles (Paso Robles) (city), California. State & County QuickFacts [Data file]. Retrieved from http://quickfacts.census.gov/qfd/states/06/0622300.html

 

 

APPENDIX

PASO ROBLES CITY LIBRARY BUDGET FY2016

FY 2015 FY2016 % CHANGE
STAFFING
SALARIES & WAGES 547596 607832
BENEFITS 251860 263697
TOTAL STAFFING 733884 871529 18.8%
STUDY CENTER
AV MATERIALS 0 100
BOOKS 500 350
DATA CONNECTION 270 280
OFFICE SUPPLIES 300 500
PROGRAMS 0 400
UTILITIES 600 625
COUNTY UTILITITES 4500 4500
TOTAL STUDY CENTER 6170 6755 9.5%
CIRCULATION
BLACK GOLD QUARTERLY 20900 24500
COLLECTION AGENCY FEES 3000 3000
COPY PRINTING 750 750
CREDIT CARD FEES 787 800
DATA COMMUNICATIONS 126 130
OFFICE SUPPLIES 5500 8000
POSTAGE 65 65
TOTAL CIRCULATION 31128 37245 19.7%
ADULT SERVICES
AV MATERIALS 7000 8000
BLACK GOLD QUARTERLY 16510 22500
BOOKS 12000 13000
COPY PRINTING 420 420
DATA COMUNICATIONS 126 130
OFFICE SUPPLIES 1950 1950
POSTAGE 954 1000
PROGRAMS 200 500
TOTAL ADULT SERVICES 39160 47500 21.3%
REFERENCE SERVICES
BLACK GOLD QUARTERLY 17667 22500
BOOKS 1000 2000
DATA COMMUNICATIONS 126 130
OFFICE SUPPLIES 780 780
TOTAL REFERENCE 19573 25410 29.8%
ADMINISTRATION
CELL PHONE 327 350
DATA COMMUNICATIONS 126 130
OFFICE SUPPLIES 3000 4000
POSTAGE 150 150
TRAVEL 150 150
TOTAL ADMINISTRATION 3753 4780 27.4%
CHILDREN’S SERVICES
AV MATERIALS 200 500
BLACK GOLD QUARTERLY 18249 22500
BOOKS 1000 3000
CELL PHONE 303 325
COPY PRINTING 250 250
DATA COMUNICATIONS 126 130
OFFICE SUPPLIES 2000 800
POSTAGE 25 25
PROGRAMS 200 1000
TOTAL CHILDREN’S SERVICES 22353 28530 27.6%
VOLUNTEER SERVICES
COPY PRINTING 100 100
OFFICE SUPPLIES 2600 1000
POSTAGE 40 40
PROGRAMS 0 1600
TOTAL VOLUNTEER SERVICES 2740 2740 0%
MISCELLANEOUS
ALLOCATED OVERHEAD 846000 851700
EQUIPMENT MAINTENANCE 100 100
EQUIPMENT REPLACEMENT 13700 13700
LEGAL SERVICES 1000 1000
UTILITIES 5000 5000
TOTAL MISCELLANEOUS 865800 871500 .66%
BOTTOM LINE
STAFFING 733884 871529
STUDY CENTER 6170 6755
CIRCULATION 31128 37245
ADULT SERVICES 39160 47500
REFERENCE SERVICES 19573 25410
ADMINISTRATION 3753 4780
CHILDREN’S SERVICES 22353 28530
VOLUNTEER SERVICES 2740 2740
MISCELLANEOUS 865800 871500
TOTAL BOTTOM LINE 1724561 1895989 9.9%
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