It’s important to go into each budget season prepared.  Prepare to explain every penny. Prepare the details of why something deserves an increase or to be created. Most importantly prepare all the answers for the questions you hope you don’t get asked.

I’m new to Library Management, as I’ve been a director only about four years, and I’m reminded how new I am during each budget cycle, as I continue to improve in my process and preparation. I’ve learned to treat it like painting, it’s never as easy as you think, and always takes more time than you expect. Preparation is key.

In my community, the next year’s budget is due about 6 months before it will begin, and we go through 5-6 rounds of review with the community administration, financial team, capital committee, town governance, and then a final vote by the annual town meeting (about 300 citizens). They all have different angles and approaches, with questions and needs for explanation, but ultimately the same endgame exists for each: What’s the bottom line?

With a new political climate in our country, and an economy that still hasn’t fully recovered from the crash in 2008, it’s safe to say that many of you building budgets will hear the phrase “based on a level fund scenario” (or something to that effect) when you are beginning your budget seasons. If you are new to budgeting, it’s important to realize what the folks saying this to you realize already that a “balanced budget” is really a cut.

Non-salary item costs will rise each year whether it’s convenient or not. It’s important to pay attention to these things like materials, supplies, maintenance contracts (both building, and smaller machinery like copiers, printers, security gates) and go into the creation of the budget knowing what could be done to make sure you have everything you need. If you overspent your budget for building maintenance or library materials, but returned half of the budget for utilities costs, that’s an opportunity for next year.

Those groups we spoke about earlier will certainly notice these things, so it’s important you do too. Perhaps you can utilize unused funds in the current year by asking for less in the forthcoming year, transferring that fund request to a spot where it could really help you, keeping the bottom line unchanged. Asking these questions will show you care about the overall community budget, not just your budget at the library, and that will earn you some points you need later when the rubber hits the road, or if the possibility of fulfilling “wants” exists.

You’ll need to think of other creative ways to shuffle around amounts between line items from one year to the next, as you will usually have less to work with than you prefer.
It’s needs versus wants, and sometimes that’s a difficult pill to swallow. You may think you “need” that extra position, because of all the things you could be doing but aren’t, but it just might not be a need in the eyes of the brass. Needs should only be what you require to perform as strongly next year as you did this year. That’s it. Your team of librarians will continue to push the bar creatively when building your collection and program offerings, but you need to keep it all in perspective. Every yes has a cost associated with it, and it will be you alone explaining this to those who hold the purse strings at budget time.

The post It’s Never Too Early to Start the Budget first appeared on Public Libraries Online.

New approaches, like priority-based and outcome-based budgeting, could help align a library budget with its services and dollars received. These methods can provide enhanced accountability and transparency to the budgeting process. They both have the potential to better communicate the goals and intended outcomes of new and existing programs. Outcomes, outputs, inputs, strategies, and performance are aligned and regularly evaluated. Governmental units, like libraries, can align more strongly with their city’s or county’s priorities.

A priority-driven budget is in some ways the opposite of a traditional line-item budget approach. The budget process begins with a review of the organization’s priorities rather than the dollars spent on activities the previous year. Each program or activity is evaluated based on predetermined performance indicators. The focus moves from dollars spent to effectiveness of programs and services in relation to the value of those services.

Creating priorities prior to funding considerations helps to focus on the mission and role of the organization. The process can also help to weight the value of one program over another. In cases where a program may be ranked at a lower value for results achieved, stakeholders and program participants have the opportunity to take on more responsibility for the success or support of the service. San Jose, Calif., is an example of how a city has applied this process.

Outcome-based budgeting is a specific form of priority-based budgeting. It is an approach that government entities have successfully implemented and is now moving to the non-profit sector.  It is interesting to see how some government agencies have used this method to incorporate their strategic plan initiatives directly into their budget process. An example is Newton, Massachusetts, a city that has used an outcome-based approach throughout their city, including their library budget.

The four principles of outcome-based budgeting include:

1. Establishing outcomes
2. Developing approaches to achieve outcomes
3. Developing a budget with approaches to achieve outcomes
4. Evaluating performance and making adjustments

These four principles allow the organization to align its budget tightly with its strategic plan.

Traditional library metrics and performance indicators need a tune-up. This is an opportunity for library leaders to adjust indicators to demonstrate long-term strategic priorities. By aligning them with the budgeting process, libraries will be in a better position to communicate value to financial stakeholders.

Resources

Stanz, C., Backes, S., Fokerts, N. “Budgeting for Results: Outcomes Based Budgeting.” Presentation of Nonprofit Financial Roundtable Series, Waite Park, MN, August 26, 2014. Powerpoint slides from the presentation.

Kavanagh, S.C., Johnson, J., Fabian, C. Anatomy of a Priority-Driven Budget Process, Government Finance Officers Association, 2011.

Outcomes Based Budget Overview,  City of Newton, Mass., 2014.

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