Financial Planning for Libraries

Murray S. Martin

• Publisher: Taylor & Francis
• Year: 2019
• Print ISBN: 9780367371326
• eBook ISBN: 9781000757675
• Edition: 1
• Topic: Filología
• Subtopic: Biblioteconomía y ciencia de la información

This book, first published in 1983, stresses the need for libraries to weed out expenditures which do not contribute to their basic role - the collection and organization of information - when planning where and when to spend money. It illustrates how priorities and goals must change in accordance with changes in libraries' roles in the information world.

PART I:
GENERAL FINANCIAL
PRINCIPLES

Issues in the Financial Management of Research Libraries

Duane E. Webster

I. INTRODUCTION AND BACKGROUND

If academic libraries are to survive as active partners in instruction and research, they must be sensitive to changing conditions both within their internal structure and in the external environment. In the 1980s, a central issue is maintaining quality while dealing with pressing financial problems.

Because research libraries are one part of a larger, interdependent system, we can most effectively study their economic and financial management issues in context of the parent institutions, and the demographic, social, political, and cultural changes that affect higher education and the nation as a whole. The growing severity of financial pressures is motivating research library administrators to take a closer look at relationships within this system, for both practical applications and theoretical knowledge.

The recent high rate of inflation, the need for more equitable library salaries, and the dramatic increase in costs of library materials—combined with relatively stable budget allocations—have moved academic libraries from the period of growth and expansion that characterized the 1960s to a period of stabilization, with the prospect of irreversible deterioration of library capabilities.

Duane E. Webster is Director of the Office of Management Studies, Association of Research Libraries, Washington, D.C. He has been responsible for developing and operating a national program of management research and assistance to research libraries seeking to improve services, resources and performance. He has written a number of articles on library administration, including a number related to the Management Review and Analysis Program (MRAP). This paper is based upon a presentation entitled “Risk Capital for Library Development” made at the Fourteenth Annual Alumni-in-Residence Program of the University of Michigan, School of Library Science.

Available statistics on research library costs and programs suggest a growing erosion of capability to meet demands because of the effects of inflation, the information explosion, and declining rates of budget growth. For example, the 75 academic libraries that were members of the Association of Research Libraries (ARL) in both 1969–1970 and 1979–1980 reported that during the past decade:

– Expenditures for library materials increased by 91%, while the gross number of volumes added each year to collections, decreased by 22.5%. During this period the cost of books rose 273% and the cost of periodicals rose 398%.

– The median number of non professional staff grew by 11.5%, with no increase in the number of professional staff. The median expenditures for salaries and wages increased 106%.

– The median number of volumes held increased by 44%, and the annual rate of growth slowed from 7% to 2.9%.

– Operating expenditures doubled during the decade.¹

As research universities develop long-range financial forecasts covering five years or a decade, library line item costs—if recent trends continue—will grow at a rate faster than increases projected for university income. These cost increases come from a number of sources, including the following: (1) extraordinary increases in the unit cost of published materials, magnified for such libraries because of their need to purchase particularly expensive foreign materials; (2) the well-documented information explosion placing demands upon the library to acquire larger numbers of more expensive materials; (3) a growing demand from faculty and students for more assistance from the professional staff in identifying sources, in sorting out what is relevant, and in locating and acquiring material from many sources; and (4) an emerging communications technology, which provides access to information in a variety of media.

II. CURRENT ECONOMIC CONCERNS

The university budget process is supposedly the means to plan and implement necessary financial changes. But it is no surprise that this budget process, so crucial for so many reasons, is often cumbersome and poorly understood. For example, budgets are difficult to manipulate readily to study the effect of a specific change on the other parts of the budget, and incentives to save money often are lacking. To alleviate some of these problems, universities have introduced various types of systems in recent years—such as zero base budgeting, the Planning-Program Budgeting System (PPBS), and computerized models such as Stanford University’s Trade-Offs System (TRADES)—each with its benefits and weaknesses. Everyday decisions must be made using such systems. But, do these systems help people become aware of financial issues? Do they provide incentives for saving money and innovating? Do they truly allocate resources fairly and equitably, permit assessment of the effects of various changes on the university, help insure effective management of resources, and tie resource allocations to goals and objectives? Or, do they merely provide new formats for bureaucratic and political infighting?

When libraries face their part of paring the budget, two paradoxes can arise. Sometimes libraries become victims of their own success: because of enhanced user education and services programs, expectations created within the university may go unmet as financial pressures rise. And in other cases, the very technology and cooperative ventures that could help alleviate tight money problems are not possible because of initially high investment capital requirements. Libraries that do plunge into bibliographic utilities, networks, consortia, and automation often must do so without adequate knowledge of their own needs, cost-benefit relationships of the new development(s), alternative options, and where the development(s) may lead.

The problem of capital renewal deserves attention from three aspects. First is the repair and replacement of library facilities. Institutions have deferred major maintenance, have not renovated buildings, have not replaced or updated equipment, and have not always made needed facilities changes to accommodate the physically disabled. University administrations have sacrificed funding for these ongoing maintenance activities for short term economic gains.

A second part of the problem involves the libraries’ collections of published materials. Research library collections have not expanded to contain the same coverage of published literature as in the past. The statistics noted earlier show that universities are not able to meet commitments to information access that are commonly assumed to be part of our mission.

But this inability to do the job we have agreed to do in the area of collections is further compounded by a third aspect—the advancing communication/computer technology. The new technology promises information products and services that research libraries simply cannot afford. The integration of on-line processing, data banks, and decentralized terminals raises serious questions of viability of research libraries if the risk capital is not there to allow expansion.

Clearly the impact of telecommunications and related technolgy will change the relationships of information providers and users. In fact the nature of work at all levels of society in the future will be shaped by computers. A key aspect is the combination of technologies that have been available for a long time. Videodiscs, satellite communication, facsimile transmission, electronic mail and optical character recognition are technologies that libraries are uniquely situated to use and promote. Network information systems already employ some of these tools. And at least one major university, the University of Chicago, has reconfigured the campus electrical system making every outlet a telecommunication link.

The cost of this new technology seems staggering. And viewed in a lump sum amount, it is. But responses to the capital requirements must be imaginative and innovative. One point worth recalling is that universities have moved from a near-zero investment in computers in 1960 to an investment of many million today. Furthermore, the profession has found capital in the past to finance library development from federal support combined with private businesses and foundations such as the Council on Library Resources. There are notable instances of universities investing their own capital in libraries when the purposes were persuasive. Private enterprise has led the way in making available machine-based information services such as Lockheed’s Dialog, New York Times Information Bank, and BRS’s and SDC’s information services. There are many examples of commercially developed automated circulation systems. However, the inescapable conclusion is that federal dollars have provided the major capital in the development of information technology and library innovation. This conclusion collides with the reality of today’s political arena—all federal aid to libraries could be wiped out in fiscal year 1983. With this in mind, strategies must look at both external and internal approaches to securing the risk capital for future library development.

III. RESPONSES TO FINANCIAL PRESSURES

To a large extent, the past financial management practices of academic libraries have been characterized by limited fiscal control, unevaluated development of collections, reliance on single source financing, multiple missions, hopeful but not purposeful funding, segmented functions with people working in isolation, and what might be called reactive management. We have been able to succeed without a lot of effort devoted to financial management. In fact, the library is often the best managed unit on campus in spite of our own concerns about underfunding, inadequate staffing levels, and poorly supported collections. In the future, however, renewed efforts must be made to develop and promote more successful financial management. The following are some notions of where efforts and improved thinking are needed:

A. External Strategies

1. The organization of the scholarly information function within the university. We need a broad view of the production, distribution and use of information within the university. We can no longer afford to see the library, the computer center, the instructional materials center, the university press, and the bookstore as separate functions to be administered in isolation. Universities will be making important capital decisions that require understanding of the technology and information needs of the future. An example is the development of numeric data bases. Here vast stores of data may be available to support research, yet costs of collecting and disseminating this information are beyond library means and, in most cases, no one takes the responsibility for organizing and providing access. And the costs of expertise and equipment required to manage this material can be enormous. The total information resources of a university need to be organized and managed on a scale comparable to the other major intellectual, physical and fiscal resources. Furthermore, librarians have perspective and understanding that can contribute to quality decisions in this area.

2. Support from private foundations and industry. Increasingly, research libraries are turning to external sources for financial help. In the past, foundations and industry often assisted with new buildings or special collections. Increasingly however, library directors devote a major percentage of their time to helping university development officers and private donors understand the investment opportunities libraries present. These opportunities include: funding of critical and visible positions such as specialized bibliographers or key executives; maintenance, renewal, or creation of important portions of basic collections; provision of new automated services and capabilities; and renovation of facilities. The library director as a promoter is often replacing the traditional role of bookman.

An important hope for the future continues to be the Council on Library Resources. This agency has been the single more important facility for library risk capital and has supported some of the more innovative and successful development efforts such as Project Intrex, the College Library /Bibliographic Instruction Experiment and the Barrows Preservation Laboratory. The future holds additional promise for innovative efforts by the Council in bibliographic control, recruitment and development of professional staff, library services and management, and relations with the academic community.

Many higher education administrators view large corporate foundations as important sources for future risk capital. However, although these agencies are receiving more attention because of reduced federal funding, obtaining support from them remains difficult. The OMS, for example, is trying to secure support for a public service study from a major corporate foundation. But the lack of past experience and interest in libraries is proving to be a major obstacle to winning this support. Regional and local foundations whic...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Contents
• From the Editor
• Part I: General Financial Principles
• Part II: Issues in Specific Budget Categories