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Introduction to Budgeting and Strategic Planning
Learning Objectives of This Chapter Are to:
□ Understand what a budget is
□ Understand the advantages to the organization of having a budget
□ Illustrate how the library’s budget is the outcome of its strategic planning process
□ Explain the purposes of strategic planning
□ List the types of budgets that may be used in libraries
□ Review the way that budgets are developed
□ Determine the accounting and financial tools required to prepare and analyze budgets
□ Discuss the participants and procedures involved in the budget development process
This book is written for at least two audiences. The first group comprises students in library and information science programs who must acquire the information, skills, and abilities required to become functioning professionals in a rapidly changing environment. They will be entering a world where information is the key to success, and will serve as gatekeepers and disseminators of information. To maximize their information skills, they must be proficient in allocating and controlling scarce resources and the budgetary and financial skills required to determine priorities about where to allocate resources.
The second audience consists of practitioners working in the information industry who need a reference to guide them in preparing and/or implementing budgets.
Budgeting and finance are keys to implementing a successful library program. Unfortunately, most librarians don’t have a strong background in budgeting and finance, and when required to prepare or revise a budget and/or financing plan are faced with challenges that seem formidable. This book is designed to give readers the opportunity to learn the basics of budgeting.
For simplicity, the term library will be used in this book to describe all types of information centers. Most libraries are part of larger organizations, such as universities, schools, or governmental agencies. Three libraries, the San Diego State University (SDSU) Library, the Chula Vista Public Library (CVPL), and the Schaumburg Township District Library (STDL) will be used as case studies to illustrate budgetary practices and concepts. All three libraries are of a size and have a magnitude and scope to which most readers of this book can relate.
This chapter defines budgeting and examines its relationship to strategic planning, and introduces the major sections of the book.
What Is a Budget?
A budget is a plan driven by the vision, mission, goals, and objectives of the library. The Oxford American Dictionary defines a budget as “the amount of money needed or available for a specific item” (Mean 2003, 61).
Noreen, Brewer, and Garrison’s Managerial Accounting expands the definition to define a budget as a “quantitative plan for acquiring and using resources over a specified time period” (2008, 6) and points out that budgets are used for two distinct purposes: planning and control. Planning involves developing goals and preparing various budgets to achieve those goals, whereas control involves the steps taken by management to increase the likelihood that all parts of the organization work together to achieve the goals set down at the planning period.
Noreen, Brewer, and Garrison (2008, 298) list the benefits of budgeting:
- 1. Budgets communicate management’s plans throughout the organization.
- 2. Budgets force managers to think about and plan for the future. Absent the need to prepare budgets, many managers would spend all their time dealing with daily emergencies.
- 3. The budgeting process provides a means of allocating resources to those parts of the library where they can be used most effectively.
- 4. The budgeting process can uncover potential bottlenecks before they occur.
- 5. Budgets coordinate the activities of the entire organization by integrating the plans of the various units and parts. Budgeting helps to ensure that everyone in the organization is pulling in the same direction.
- 6. Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance.
- 7. Budgets represent what a library wants to do and to be, and how to achieve these goals. Budgets are the end product of the library’s strategic planning process.
Budgeting and the Library’s Strategic Planning Process
Strategic planning is what must take place before budgets are created. It is a process that involves describing the library’s destination, assessing barriers that stand in its way, and selecting strategies for moving forward. This planning process will allow the library to develop a budget that meets its vision, mission, goals, and objectives. The main goal of strategic planning is to allocate resources in a way that provides organizations with a competitive advantage and this is accomplished through the budget process (Aguinis 2013, 60–65).
The author has taught a variety of MBA and upper-division undergraduate courses at the San Diego State University’s Fowler College of Business, including strategic planning, performance management, general management, and organizational behavior. He has also completed strategic plans as a director and consultant at a number of libraries as well as in industry. Approximately twenty different management texts were used in the various courses and activities, and their definitions of vision, mission, goals, and objectives were not consistent.
Strategic planning has a hierarchy of goals starting at top of general goals down to specific objectives. The hierarchy includes vision, mission, and objectives and specific strategies.
An organization’s vision statement is a goal that is “massively inspiring, overreaching and long term. It evokes a destination that is driven by passion” (Lipton 1996, 83–92). It is a statement of future aspirations. Some authors believe that a mission statement should be written before the vision statement is completed because the organization must know its identity and purpose is before it can provide a description of what it wants to become in the future. Others think the mission statement should come first. A good vision statement should have the following characteristics (Aguinis 2013, 71–72):
- 1. It should be brief so that all library employees can remember it.
- 2. It must be verifiable, a realistic depiction of what the library hopes to become.
- 3. It should be bounded by a time line—good vision statements specify a schedule for the fulfillment of the library’s aspirations. Usually a mission statement should have a time horizon of ten to fifteen years.
- 4. It should be current and updated when the library’s environment experiences major changes.
- 5. It should not be a laundry list of aspirations, but rather focus on those aspects of the library’s performance that are vital to its success.
- 6. It should be written in a clear and straightforward manner, so all the library’s stakeholders understand it.
- 7. It should be inspiring and encourage staff to be optimistic about the library’s direction.
- 8. It should be a “stretch”—a challenging but doable dream.
Following are some library visions:
- • Dartmouth College Library: “Inspiring ideas for personal transformation and global impact” (Dartmouth 2015).
- • San Diego State University Library: “The Library and Information Access aspires to be a flexible and experimental organization that encourages innovation and collaboration to meet the evolving information, curricular, and research needs of SDSU. We will provide responsive and innovative public services and public spaces to the university and the community, foster information literacy, and create an intellectually stimulating environment through cultural events” (SDSU Library 2016).
- • The Chula Vista Public Library: “A nucleus of learning, culture, and recreation, a catalyst for innovation business and growth, and a vital and robust community partner” (Waznis 2015).
A mission statement differs from a vision statement in that it encompasses both the purpose of the library and the basis of its competitive advantage. It provides information on the organization’s purpose and scope., A good mission statements usually addresses
- 1. Why the organization exists
- 2. The primary markets or customer groups to be served
- 3. The unique benefits and advantages of products and/or services offered by the library
- 4. The technology to be used in production or delivery of the products and/or services (Dess et al. 2016, 26)
Following are three library mission statements:
- • Dartmouth College Library: “The Dartmouth College Library fosters intellectual growth and advances the mission of Dartmouth College and affiliated communities by supporting excellence and innovation in education and research, managing, and delivering information, and partnering to develop and disseminate new scholarship” (Dartmouth 2015).
- • San Diego State University Library: “The Library and Information Access supports the information, curricular, and research needs of the university’s diverse community through the widest possible range of resources. We are committed to information literacy, lifelong learning, and creative endeavors in a welcoming environment.”
- • The Chula Vista Public Library: The library does not have a specific mission, but this statement from its planning document exemplifies what its mission may be: “Chula Vistans see their library not as a building full of books, but as a true community hub for whole-life enrichment. A central mission for the Library for more than a century has been educational support for all ages. The community believes strongly in the value and relevance of the Library’s role in lifelong learning, and sees an opportunity for CVPL to evolve to support new directions in education. As educational institutions adapt to more collaborative and experiential modes of learning, the Library will focus on providing the resources, technology, and space where students can come together to continue learning outside of the classroom.”
Strategic objectives are a set of organizational goals that are used to operationalize the mission statement, and that are specific and cover a well-defined time frame. To be meaningful strategic objectives should be SMART:
- 1. Specific. This provides a clear messa...
