Library Financial Management - Assignment Example

Task 2: demonstrate what kind of budget it is, and to what extent it reflects or emphasises different roles or services of the library. Budgeting is essential for a library's financial management as good as it is for any other organisation. Dossett (2004) elaborates that budgets constitute an important aspect of any organisation's financial management. Like any other organisation, a library also has to undertake financial management process so as to minimise its costs and maximise the value it provides to the customers in the form of information. Seer (2000, p187) delineates that "a budget is a management tool that puts you in control of the financial health of your library". Budgeting is basically about planning for future and evaluating the plan with respect to the outcomes achieved. For a library, budgeting helps to identify its various resources, financial strength and evaluate capacity for upcoming expenses. Budgeting can also be used in library as standards and measures for future performance. Budgets are basically of three types viz. line item budgeting, program budgeting and zero based budgeting. The budget type that is used by Anamerican college library is line item budget as it outlines various expenditures and resources of the library along with the various services that the library offers to its users. Dossett (2004) suggests that the line item budgeting is a type that is applied to almost every library setting. This type of budget classifies each sort of activity in a separate appearance. The program budget emphasises the services or programs that are provided by the library to its customers. Hence this budget allows a library to evaluate performance with respect to various programs that it offers. Seer (2000, p188) says that "the primary characteristic of a program budget is that all expenditures needed to provide that product or functions are grouped together". Zero based budgeting, on the other hand, maintains its focus on the future aspects and accomplishment of the goals of the organisation. "Zero-based budgeting ignores previous practice and insists that every budget fully proves its worth, not in respect of what happened in the past but solely in terms of current organisational objectives" (Heery, 1999, p60). The line item budget that this library uses appraises its performance by outlining all the expenditures and resources, while comparing it to that of the previous year. Seer (2000, p188) says that "a line item budget reflects input (what you are spending) not output (what your organization is getting for the money), resources not results". As Anamerican library uses line item budget to plan its various expenditures and evaluate the available funding and resources, the budget also sheds light on several aspects of information services and roles it performs. As indicated in the budget, the library provides various services such as referencing, circulation, and cataloguing to its users. The budget also shows various expenditures borne by the library towards employees' salaries and benefits along with its information resources such as books, periodicals/serials, electronic reference materials, microforms etc. and other assets, which include computers for different uses. The referencing service of the library appears to be at the stronger side, with the library staff providing referencing and information services to the customers both on the usage of printed as well as online resources. These reference librarians also provide training and education to the users with regard to effective usage of all the materials available in the library. This is very important in when electronic resources constitute an eminent part of information as well as the library sources. According to Gessesse (1997, p92), "the fact that many library users will not have direct access to equipment or the knowledge levels to use effectively the online environment, requires that librarians continue to be sophisticated translators of patrons' needs". Interaction with users also allows reference librarians to be well aware of changes in client needs. This budget indicates that the library utilises assistance from academic staff of the college for the purpose of developing its collection of resources and selecting the right material for the users. Gessesse (1997, p91) states that "as materials budgets fail to keep pace with inflation in publishing, and as the economies of scale in managing large research libraries' collections diminish, the "collection" must be considered to be whatever provides access to and delivers as much of what is needed as possible". Referring to the academic staff enables the library to choose the right material that is needed by the users and thus making the efficient use of available funds. The library is also involved in inter-library loans so as to obtain resources from other libraries and provide them with the available materials in the Anamerican library. Gessesse (1997, p91) points out that "inter-library loan operations can continue to provide efficient, low-cost delivery of materials to library users". Hence, this budget communicates to its readers various roles and services offered by the library. Task 2: discuss the ways in which this budget can be used as a management tool, especially as a planning instrument; for policy making; and for communication. Anamerican college library is an academic library that provides access to both printed and electronic resources to its users. Being a type of budget that exhibits various expenditures and resources of the library along with the significant services that it provides, this budget can go a long way in assisting managers during the planning process. Besides, during the budget preparation and presentation to the readers, it facilitates communication and assists the management in policy making for future. For instance, the line-item budget prepared for Anamerican library can serve as a tool for its management towards better planning, communicating and policy-making by evaluating the expenses that account for most of the library funds. There has been no cut in budget as compared to the previous year, showing that the budgeted funds are enough to meet the coming year's expenses. In an academic library setting, this budget helps in planning the utilisation of funds in a manner that is the most reasonable. A manager who uses budget for planning becomes able to comprehend the important functionalities of the library and the decisions that debilitated its performance in the past. This enables the manager to make effective plans so as to avoid mistakes in the future. Seer (2000, p187) states, "a budget facilitates planning and resource allocation. It helps you to enumerate, itemize, dissect and examine all of the products and services that you offer to your patrons". While budget helps in evaluating the application of funds for improving library resources and adding the needed materials, it can also be used by managers to appraise various services that are provide to the library users. Similarly as shown in the Anamerican library's budget, most of the library funds are spent to meet the employees' salaries expenses that have further increased in the current period. Almost all the staff will be given an incremental pay in the year 2006, which shows that library is putting more emphasis on compensating its employees well. Also, the spending on library materials, library equipments and other operating expense has been budgeted to rise. In materials category, increase in funds has been largely allocated to periodicals/serials (i.e., $55,000) and then to Microforms (i.e., $50,000), whereas less budget rise has been allocated to books and electronic resources. It is for the managers to communicate with the library staff, especially the reference librarians who remain in contact with the users, to assess the client need for different categories of materials. Dossett (2004) propounds that library budgeting instigates a sense of participation among the senior and junior personnel during the planning process. The senior staff communicates specific goals and objectives to the junior staff and ensures that the planned activities are designed well to match the objectives set for the organisation. Line item budgets are specifically effective in facilitating the management in planning, in particular, towards cost control. Also, it this type of budget enables the management to evaluate the library performance from one period to another. This evaluation of library performance through budgeting also helps setting standards for future and devising effective policies for improved performance and efficient allocation of funds. Kennedy (2003) puts forward that budgeting allows a manager to review and assess how the library resources were spent during the year and how these could be spent in different ways so as to accomplish library goals more efficiently. Without proper budgeting practices, library funds would be allocated without prior planning vis--vis the objectives that may lead the library to severe financial problems. Like every other organisation, an academic library is also concerned with the accomplishment of its objectives i.e., the provision of better information services to its users. As the library meets its expenses through funding, this goal is achieved through allocation of funds at right places i.e., purchasing of most needed materials, improving the technological infrastructure and emphasis on the enhancement of services. Thus, by highlighting where the library spends most of its funds, the budget can a manager to devise policies as to the future needs and strategies of the library. Marco (1996, p19) elaborates that, "the financial plan, or budget estimate, proposes steps to be taken in meeting resource requirements through appropriate expenditures. In an ideal situation, there will be an overall plan plus specific plans for various aspects of the library's work". When a manager compares where the funds were allocated or spent in a current period to the previous one, he also gains an insight into the specific aspects that captured highest management attention in terms of expenditure albeit were of trivial significance. He can then also evaluate the aspects that needed urgent spending so as to improve the library performance. For instance, in this budget, a manager can review the items that are more needed by the users, may be electronic resources, than those with highest budget allocation such as books and periodicals. Budgeting can also turn out to be effective in communicating the management's control over the costs, which leads to the improvement of accountability in the organisation. This sense of accountability on cost control makes the managers more concerned with effectiveness and efficiency in library performance. This expectation is communicated to the employees with appropriate strategies to work on so as to improve the provision of information services to the students and other users. Heery (1999, p60) asserts that, "accountability can be made a reality by means of financial arrangements such as cost centres and devolved budgeting. These can make the library or information service financially accountable to users in a very direct way". Budgeting involves participation of all the employees in the planning process. All the employees, including high and low level staff are called for the purpose of evaluating future expenses and identification of new service aspects where expenses are likely to be incurred. In this way, communication can be enriched within the library organisation. For instance in the given library's budget, the manager can consult various library support employees and reference librarians to evaluate the possible materials and services that the library should provide to its users. This will not only improve the communication but also provide the management with necessary tool for policy making in future. References Dossett, J.C. (2004), "Budgets and Financial Management In Special Libraries", [online] accessed 29 October 2006 http://www.libsci.sc.edu/BOB/class/clis724/SpecialLibrariesHandbook/Budgets%20and%20Financial%20Management.htm Gessesse, K. (1997) "Re-examining the role of the public services librarian in the new Information Age", Library Review, 46(2), pp. 90-98 Heery, M. (1999), "Winning resources", The Bottom Line: Managing Library Finances, 12(2), pp. 57-67 Kennedy, T (2003), "Budgeting For The New One-Person Librarian", ALIA, Rivers of knowledge, 9th Specials, Health and Law Libraries Conference, [online] accessed 29 October 2006 http://conferences.alia.org.au/shllc2001/papers/kennedy.html Marco, G.A. (1996), "The Terminology Of Planning: Part 1", Library Management, 17(2), pp. 17-23 Seer, G. (2000), "Special Library Financial Management: The Essentials Of Library Budgeting", The Bottom Line: Managing Library Finances, 13(4), pp. 186-192 Read More