Financial Management in Academic Libraries: a practical overview

1. Financial Management in Academic Libraries: a practical overview Jill Taylor-Roe Newcastle University Library UKSG 16-18 April, 2007

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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!

14. Answer – not very well!

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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?