Board Manual - Budgeting and Funding

CHAPTER EIGHT
BUDGETING AND FUNDING

What do library board members need to know about the library budget?
A library budget includes the total cost of existing services and the finances required for moving the library forward to meet its goals and objectives. Quality library service begins with an adequate budget. The library board has the responsibility to develop the budget, to present it for final approval to the governing body, and to monitor the actual expenditures during the budget year. For this reason, each board member should:

Know the library's financial base and background.
Know the governmental unit(s) allocating the local appropriation.
Know the local government's entire amounts of tax monies and the library's fair share of those tax monies.
Know what restrictions apply to specific funds or budgets.
Understand the financial needs of library operation and plan for growth and expansion in the future.
Understand the basics of legal regulations and reporting required for library funding. Investigate other possible sources of funding support (state and federal aid or grants, a bond issue, endowments, trusts, memorials, dedicated tax revenue, gifts, foundation grants, donations, fines or fees).

Steps of the Library Budget Process

The budget reflects the library's goals and objectives. Therefore, before a budget can be formulated, the plan for library services must be developed and the goals and objectives established.

The budget preparation is a cooperative process involving library boards, the library director and staff, and funding agencies. Trustees should be aware that the calendar for the budget process will probably be set by the primary funding agency and should be followed closely. If there are multiple government agencies funding a library, the budget calendar may be different for each. There are several important steps in the budget process: preparation, presentation, and implementation.

Preparation
The librarian, staff and library board should share in a give-and-take process of budget discussion and review. Preparation involves some vital steps:

Review the strategic plan, goals and objectives, and project anticipated expenditures in relation to resources.
Develop a budget calendar with dates for completion.
Evaluate the prior year's actual costs for each budget line or program.
The librarian presents a budget draft to the full board for changes and adoption. (A sample budget is included at the end of this chapter.)

Presentation
Board members must be prepared to participate in presenting the budget: to explain, to justify, and to negotiate. When the proper time comes, the director should accompany the board to present the budget to the local government officials. Board members should know how funds are used and exactly what is needed in order to explain the budget request clearly. To help "sell" the budget, remember these points:

Let funders know what community needs and desires the library has addressed.
Tell the story of the library’s budget by sharing stories of the difference the library has made in people’s lives.
Throughout the year, point out the successes, the services and the community's response to the library. Invite city officials to receptions and library activities regularly.
Offer quality library reference service and assistance to local government officials and departments. Show how indispensable your library is to each of them individually.
Send copies of letters of appreciation, notice of awards and/or staff accomplishments, and newspaper articles to local government officials.
Use the Friends of the Library and other community library supporters to help promote the library budget and to speak on the library's behalf.
Tell the community what they can expect and what the current funding level will accomplish. Prepare brochures, newsletters, newspaper items, television spots, community meetings, etc., to help with promotion.

Presentation is an essential part of the budget process. Every board member must be both ready and willing to meet with local government officials to support, clarify or defend the proposed budget, because local officials must consider each service which is to be provided to the community for the next year. Board members should recognize that their elected officials face many competing and persuasive appeals for the limited funds available.

Implementation
Board members must fulfill their fiscal (i.e., financial) responsibilities by being aware of the budget implementation and by adhering to the budget plan and policies. They may be asked to contribute specific expertise in fiscal management, but their major role is in planning, budgeting and securing funds. The library director and/or bookkeeper are responsible for keeping the trustees informed of budget expenditures. Board members set priorities and review budget implementation, but are not usually involved with the day-to-day financial operations of the library.

Sources of Public Library Revenue

Library boards and librarians must be creative in meeting their library's financial needs. They must become familiar with all the various sources of support in order to participate fully in the planning for their library's service programs and budget. While local government often provides the majority of library funding, state and federal government, and private sources may also provide a portion of the funds.

Local Government Support
Local levels and sources of funding vary with the local government unit that established or maintains the library. Local sources of revenue for libraries may include:

General revenue funds.
Tax levies specifically for library services or buildings.
Interest on investments.
Contracts for service with other governmental units.
Fines and fees.
Bonds issued for materials or construction.
Rental of properties owned by the library.
Keno funds.

State Aid to Public Libraries
A supplement to local financial support is provided by state aid to public libraries. State aid is appropriated by the Nebraska Legislature and administered by the Nebraska Library Commission. State aid provides a means for the library to upgrade its collections, and to provide services not otherwise possible through local funding alone.

State aid is only a small portion of the library's income and should never be used as a substitute for local tax support. In order to receive state aid, the library must be accredited by the Nebraska Library Commission, must submit an annual statistical report, and must meet the maintenance-of-effort requirement. See more information about the requirements at: http://nlc.nebraska.gov/funding/stateaid

Federal Funds
Federal funds come primarily from the Library Services and Technology Act (LSTA), a section of the Museum and Library Services Act of 2003.

The Institute of Museum and Library Services provides funds to the Nebraska Library Commission (NLC) using a population-based formula. The NLC may use the appropriation to support statewide initiatives and services; they also may distribute the funds through grants or cooperative agreements to libraries in the state.

In addition, a number of Nebraska public libraries have received grants or loans from other federal sources – Community Development Block Grants (CDBG), and U.S. Department of Agriculture (USDA) loans or grants.

Private Sources of Library Funding
Private funds are another supplement to local funding. These funds, like state and federal monies, provide a means for the library to upgrade its collection or facility or to provide services or programs not otherwise possible through local funding alone. Private funds may come in the form of grants or ongoing commitments from groups such as:

A Friends of the Library group.
A library foundation.
Individual donors.
Community foundations.
Nebraska Humanities Council.
Nebraska Arts Council.
Dollar General
Dinklage Foundation
Corporations and foundations.

Fund-raising Tips

Fundraising can provide money for the library, but it can also be time-consuming for the library staff.
Fundraising for big-ticket items may be more successful than raising money for books or for salaries. People like to see the result of their donations.
Grant seeking is both an art and a skill. Staff and board members should be alert to workshops and classes designed to provide training in this area.
Information on grants can be obtained from various foundation directories, periodicals, etc., available through the library, your regional library System, or the Nebraska Library Commission.
It is essential to remember that funds raised by Friends groups and library foundations belong to those groups and are not subject to the same rules and regulations as the tax funds governed by the library board.

Sample Budget

(The monthly expenses for the Utilities category are filled out completely to show how the line item budget works.) Percent of budget year completed: 91.63% (That’s equivalent to 11 of the 12 months of the 12-month budget year.)

Categories	Line Item	Amount Budgeted	October 2015	Expended to Date	Amount Remaining	% of Amount Remaining
Personnel
	Salaries

Utilities
	Electricity	700.00	51.10	51.10	648.90	93%
	Gas	500.00	15.00	15.00	485.00	97%
	Telephone/Internet	960.00	72.00	72.00	888.00	93%
	Water	400.00	25.00	25.00	375.00	94%
	Trash	450.00	32.00	32.00	418.00	93%

Supplies
	Office supplies
	Processing supplies
	Cleaning supplies

Materials
	Books
	Periodicals
	CDs/DVDs
	Interlibrary loan

Programming
	Adult
	Youth/Teen

Continuing Education
	Fees/Mileage/Lodging

Contracts
	Insurance (Bldg. ect.)
	Tech Support

Equipment
	Computer/Copier

Bldg. Maint.
	Bldg./Yard/Sidewalks
Totals

Previous Chapter Main Page Next Chapter

created 2006; rev. 7/2015 For more information, contact Holli Duggan

Nebraska Library Commission Website