Economic Conditions and Library Budgeting

Economic Conditions and Library Budgeting

Criminological Theory into Murder

Recession and Library Budgeting: Implications and Recommendations

The year 2007 had hit the world quite hard. Stock markets crashed globally and real estate prices toppled down. Even the biggest of the companies found themselves struggling for survival. Unemployment rate shot up at a rapid rate and so did inflation. To top it up, U.S. Dollar got onto the road of everlasting devaluation. This was the beginning of what we know as the current economic recession. Ever since 2007, funding expenditures have been hard on pockets for everyone, be it individual households, private sector companies or the government itself. Even the most necessary and crucial sectors like health and education had to face sharp budget cuts. Like everything else, libraries also became victims of fund shortfall, and thus, were forced to reconsider their budget plan. Libraries, whether individual or institutional, had compromise on essential budget elements.

Creating a Budget in Recession

Creating budgets for libraries is not as easy as it sounds. Things get even worse when these budgets have to be created during recession. Like any other conventional budget, library budgets comprise of incomes and expenditures. Incomes are generally dependent on fees and fines, endowment funds, donations and revenues from routine activities such as printing and photocopying, with endowments being the major contributor. On the other hand, the expenditures are further categorized into operating expenditures and collection expenditure. While operating expenditures are normal administrative expenses, however, collection expenditure includes expenses related to a library's collection such as books, periodicals and other subscription charges.

Considering the fact that the major source of funding for libraries come from donations and endowment funds, it is understandable why budgeting becomes difficult during times of economic decline. Funding from both these sources drops and consequently, the dependence remains on operating revenues which, in most cases, are not enough to finance the expenditures. As a result, libraries have to resort to budget cut downs. This is the most difficult part of budgeting and needs careful planning. A tiny lapse of planning might end up affecting the service quality in a negative way. This may further lead to a decline in subscription revenues, thus making situation even worse.

When creating budgets, libraries should keep in view, their objectives and target. The basic determinants that need consideration include the purpose of library's existence, its clientele, its distinctive services and the resources available to render those services (Farmer 1993). This will help them deciding where to cut. The next step is to take into account, the internal and external factors that influence the library's economic environment. For example, members can be asked to fill out a survey that aims to find out which services are most widely used by the members and what resources are least used. This will give planners an idea about where to focus for reductions. As far as external sources are concerned, factors like competitor libraries and technological and political changes, where political changes refer to government's budgetary allocation to libraries. Say for instance, some resources might be available on electronic sources free of cost, therefore libraries need not invest on subscribing such resources. When making reductions in budget it is very important to create balance between the services offered by the library and the sufficiency or excessiveness of resources used in provision of those services. For example, the staff employed for organization of incoming collection may be in excess to the amount of resources coming in. This means that the said library should consider saving the extra money going to staff salaries.

While a cut down in budgets is inevitable, however, libraries should also try to increase their revenues. This can be achieved by promoting more subscriptions and grants through increasing dependency on technology (Budd 2005). A library might be able to attract grants if it goes digital. The director or management can make a presentation to convince the relevant authorities about how their grant will increase the library's productivity. This will in turn also attract more members as the accessibility to libraries resources will become easier. Subscription to electronic resources may also help in reducing expenditures such as postage. This will make circumstances even easier if the respective library has an institutional affiliation, as the internet costs are generally incurred by the institution.

Merits and Limitations

When the economic situation is not ideal, the library management is left with little choice. However, as allocation of scarce resource involves opportunity cost, the ideal budget cut would be one that incurs minimum opportunity cost. However, since a budget is an estimate of future fiscal environment, it needs to be more pragmatic then ideal

Firstly, the proposed budget should be clear enough so that all the relevant stakeholders can understand what is being represented. Secondly, accuracy of budget is very important. Discrepancies in reported figures and too much variation between budgeted and actual figures may lead to severe financial mismanagement. As budgetary records are used for comparing trends in different periods, consistency in the budget format must be ensured. Lastly, the proposed budget should be comprehensive and detailed enough to cover all necessary fiscal areas. Again, failure to do so may result in misleading the decision makers.