Budgeting

While we tend to think of budgeting simply as the allocation of available money, it is more useful to consider it as a planning process. The library's strategic plan spells out where the library hopes to go over a period of several years. The budget states what the library wants to do this year and addresses the very practical issue of costs.

Because the library board has the legal responsibility for setting the budget and the library director and staff have the most knowledge of the day-to-day operation of the library, it is important that both the board and the staff be involved in the budgeting process.

The budgeting process should involve the following steps:

  1. Definition of Goals and Activities. At this point the staff and board should think about reasonable goals and activities for the upcoming year without regard to cost. If the library has a strategic plan, its plan for the specific year should be consulted. Other problems or opportunities that have arisen should be considered. This "dreaming" phase of the budgeting process should result in a list of potential activities for the next year.
  2. Information Gathering. In this phase of the process, information on the potential costs of maintaining services and reaching new goals is gathered. This is done in a number of different ways. The current year's expenses are examined, the rate of inflation is considered and new equipment or services are priced by checking catalogs or contacting service providers. By the end of this process, the staff and board should have obtained cost estimates for achieving the library's defined activities.
  3. Estimating Potential Income. During this stage, which often overlaps the Information Gathering step, estimates are made of potential income. These include taxes, gifts, fines, fees, grants and any other possible sources of funding for the library.
  4. Comparing Costs and Income. At this stage, the costs of achieving the goals and activities are compared with the library's potential income. If income exceeds costs, all the goals and activities can be kept. More typically, the costs exceed the potential income, so the process goes to the next step.
  5. Adjusting Goals and Activities. This is the hardest part of the budgeting process, because the library board and staff must decide what goals and activities are more or less important than others. Some may have to be deleted altogether from the year's budget or may have to be scaled back. This is best done through a negotiation process with all concerned. Goals and activties that cannot be included fully in the present year can, of course, be reconsidered with the next year's budget process.
  6. Presenting the Budget. Once the budget has been written, it needs to be written out in a form that shows estimates of both income and expenditures. City library boards then need to present this document to the city council. District libraries must have a budget hearing that is open to the public. In both cases, board members should be able to fully explain the income and costs shown in the budget.

A good budget cannot be written the day before it is due. A full budget process is not something that is completed in just one board meeting. It is best to start thinking about the budget early in the spring, so plenty of time can be spent in both the Goals and Activities Definition and Information Gathering phases. The more time that can be spent on the budget, the more useful it is likely to be.

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Resources

Developing the Library Budget 

Budget Presentation Example