Financial Management in Academic Libraries: a practical overview

Financial Management in Academic Libraries: a practical overview

Jill Taylor-Roe Newcastle University LibraryUKSG 16-18 April, 2007

Why this seminar has come about…

Perceived lack of commercial training events on financial management in Libraries

Belief that enhanced understanding of how libraries and publishers go about their businesses should promote better dialogue

Desire to test the market before launching a more commercial venture

Objectives for today’s session

To describe some typical financial management structures that are found in academic libraries

To consider how the financial planning timescales and structures of academic libraries relate to the way in which academic publishers plan and operate their business

Why is financial management important?

“Take care of the pence and the pounds will take care of themselves” Lord Chesterfield – Letters to his son

“Money is only important for what it will procure”

John Maynard Keynes: A tract on Monetary Reform

Why is financial management important?

enables us to stay in business! helps us to be competitive helps us to provide the best and most cost

effective services for our users enables us to demonstrate to our paymasters

that we are appropriate and effective managers of the funds they entrust us with

helps us to make sound business cases for future service enhancement

How does an academic library get its budget?

The Planning process: Typically Nov - Jan, tho can start in Spring Plans submitted to senior University management

groups of varying composition Sometimes an opportunity for library input to

deliberations – often not Sometimes a provisional budget notified late Spring Firm Budget generally notified May- Aug Typically no appeals process

What sort of information do libraries include in these plans?

Inflation predictions for key commodities – esp. books, journals

Implications of VAT estimated costs of supporting new teaching/research

interests Comparative data from other institutions – e.g. LISU or

SCONUL data KPIs to demonstrate how we have performed over the

past year

Some Typical KPIs

Gross Library Expenditure per academic staff FTE Gross Library Expenditure per student FTE Gross Library Expenditure per academic staff and student

FTE Gross Information Expenditure per academic staff FTE Gross Information Expenditure per student FTE Gross Information Expenditure per academic staff and

student FTE Cost per seat hours per annum Cost per use of electronic journals Expenditure on E-Resources as a % of total expenditure

What other types of information do libraries include in these plans?

Data from Student feedback/ satisfaction surveys Business cases to support requests for new

investments – esp re Capital Bids Usage stats Evidence of VFM re existing resource outlay Risk Assessment Data

What do Universities want from this planning process?

Evidence that previous year’s funds have been optimally utilised

Hard evidence to support future funding bids Well argued, business like proposals for capital

investment Evidence of alignment with University Strategic

objectives - both for past and future spending

Issues and comments (1)

Planning documents are often time consuming and complex to complete

Future gazing – up to 5 yrs ahead – difficult unless you are psychic!

“Efficiency gains” may be required at short notice

We are competing with other sections of the University – including other major services such as Information Systems/Computing

Issues and comments (2)

July/Aug notification means no time to consult re journal cancellations if you get a budget cut

Usual options are either to hit the bookfund or library makes snap decision on journal cuts

Radical changes in publisher pricing policy can cause major problems

Libraries are also vulnerable to rapid changes in University funding policy

Just when you thought you knew the planning process…

How would the library budget work if we just allocated it all on the basis of FTE share?

Recent Query from PVC Planning and Finance!

Answer – not very well!

Dividing the Spoils: what Libraries do when they have the budget

Staffing – largely fixed costs – needs to be determined first

Subscriptions/Maintenance contracts – not just about serials!

Variable elements – bookfund, misc operating costs

Income Generation – setting targets

Budgets for Books and Journals

Often allocated by formula Tends to be allocated at Dept or School level Big deals – can be problematic – can’t divide up

costs as readily Many libraries now top slice these elements

but… Leaves less free/flexible money to respond to

new developments Funds may be controlled by Depts/schools

rather than library – adds another layer into negotiating process

Typical elements included in resource allocation formulae

Staff and Student FTEs Comparative cost of materials Inflation factors Some form of demand weighting

No of items on reading lists No of modules offered Usage data

Contingency element – for new developments, increased demand

Monitoring Expenditure

Invariably monthly, tho more frequent reports done towards yr end

University may require quarterly reviews Produced by library management system and/or

spreadsheets Reports go to fund holders – e.g. Liaison

Librarians and/or Academic Staff Exceptional costs have to be accounted for Bookfunds vulnerable if Serials account

overspends

Summary Points

Libraries are having to be increasingly business like about bidding for and managing funds

Budget setting process is invariably based on competitive bids

There is a high level of accountability There is very little time between receiving a

budget and having to allocate major resource spends – e.g. serials

Publishers can help by setting prices as early as possible and providing us with info which demonstrates VFM – e.g. accurate usage data

Points for discussion

Is there anything we can collectively do to alleviate the log jam of activity in July-August? Library Budgets notified Renewal instructions required by agents Publishers’ prices being notified.

How can publishers usefully feed in data to Libraries’ budget planning processes?