Methods and Techniques of Library Budget Proven 7

Budgeting:
Budget is defined as “an estimated often itemized or expected income and expense or operating results for a given period in the future”. Thus, a library budget is an estimate of the expected income and expenditure of the library for the coming year. As a budget is an estimate, it can be altered if and when the circumstances change. It needs to be flexible enough to meet the changing needs. In a budget, the diversion of funds should not be done for some unnecessary events or causes and it is actually not permitted.

a) Need and Purpose of Library Budget: Since a library is a non-profit organization, the financial responsibility on its part is much more important. The need and purpose of the library budget can be looked at from the following points

i) Through budgeting a library is able to limit its expenditure to its income;
ii) A budget helps to spend the finance in a systematic way;
iii) Budgeting is the primary means by which formulated plans can be carried out;
iv) It serves as an effective management tool.

v) It gives overall direction to the library services;
vi) It coordinates all administrative functions by guaranteeing exchange of information on policies, programs and finance;
vii) It is a most important control device to measure the programmes of a library and their effectiveness;
viii) It reflects the goals and objectives of the library.

b) Budgeting Method: The following methods are generally used in budgeting-
i) Line Item Budgeting:

A line-item budget is a form of budget presentation that clusters proposed expenses by department or cost centre. This method of aggregation more easily shows which departments and cost centres are absorbing the bulk of the entity’s funds. The presentation typically shows the actual expenditure or budget from the prior period for comparison purposes, so that one can quickly see if there are significant changes budgeted from the prior period.

This format represents an easy way to roll forward the budget into a new period. However, the simplicity of the roll forward may encourage users to not delve more deeply into the numbers, so that existing budgets tend to be perpetuated into the future.
ii) Lump Sum:
The phrase “lump-sum budget” refers to a very general, non-specific approach to budgeting which leaves a great deal of discretion to the owner of the grant. As opposed to a more specific line item budget where the salaries and fringe benefits are broken out by an individual, a lump sum budget might group them together into one round figure: $35,000. Though the lump sum budget might have categories of spending, those might be very generally defined. For instance, there might be $50,000 in a Research Project category.

This broad category could include salary, travel and equipment depending on the specific project that is eventually funded. Typically lump sum budgets are supported by foundations where the financial reporting may not be as rigorous and the use of funds may be much more flexible than would be required on a federal grant.

iii) Formula Budget:
Based on financial norms and standards (to be discussed in the next section) this method tries to relate some inputs as users served, academic programmes supported and the ratio of book stock to total funds of the parent body. The formulae are used for financial estimation as well as budget justification. This appears to be a broad and quick method and hence saves a lot of time. But it does not account for finer variations in respect of each library and its customers and services.

iv) Performance Budget:
This budgeting method is similar to programme budgeting but the emphasis shifts from programmes to performance. The expenditure is based on the performance of activities and the stress is laid upon operational efficiency. This method requires the careful accumulation of quantitative data on all the activities over a period of time. Management techniques such as cost-benefit analysis are used to measure the performance and establish norms.

For example, data on the number of books acquired, classified and catalogued, actual man-hours for doing the entire processing work, etc. are collected to determine manpower and materials to perform the tasks.

v) Programme Budgeting:
This method propounded originally in Hoover Commission Report (1949) has three steps. They are (i) statement of agency (i.e., library) objectives (ii) full consideration of alternative ways and (iii) logical selection of the best based on effectiveness and efficiency. Extended from the line-item method, this method tries to answer the questions ‘what purpose the money is being spent?’ and ‘how resources have to be deployed for each programme?’ and more suitable for a contracting economy.

Accordingly, a financial plan is presented as programmes and sub-programmes built upon work units or workloads. Work units are assumed to be measurable and the work unit costs are building blocks of the programme budget.

vi) Per Capita Method: In this case, a minimum amount per head of the population is fixed and financial estimates are prepared accordingly.
In the case of university and college libraries, the UGC Library Committee way back in 1957 suggested a provision of Rs. 16 per student and Rs. 200 per teacher. Kothari Commission in 1966 suggested for allocation of Rs. 25 per student and Rs. 300 per teacher.

vii) Proportion Method: In this method, a certain proportion of the general budget of a parent organization/state is recommended for providing library services.

Dr. S. R. Ranganathan suggested that 6% of the education budget of a local /state / federal government, as the case may be, should be earmarked for public library purposes. UGC Parry Committee (UK) suggested that 6% of the total budget of a university may be provided to the university library. Education Commission recommended that 6.5-10 per cent of the total university budget should be spent on the university library.

viii) Method of Details: In this method, all the items of expenditure of a library under various heads and subheads in detail are calculated. The expenditure should be estimated under non-recurring expenditure and recurring expenditure. It is generally done by projecting current expenditure to the next year adding the increase of the cost.

The UGC Library Committee (1957) staff formula can be used to determine the number of staff and their pay scale. The cost of books and other reading materials can be based on the number of students and teachers. 5% of the total cost of books is allocated to stacking, storing, and serving of books.

ix) Planning Programming Budgeting System (PPBS): PPBS is a technique that combines the best of programme budgeting and performance
budgeting. In this method, the emphasis is given on the planning of the total system, the different parts of the system and their expected level of performance. All these are considered for assigning the cost of the whole system.

x) Zero Based Budget: It was developed by Peter Pyhrr to achieve greater effective planning and fiscal control. The term “zero-based” is derived from the first step in the process- the development of a hierarchy of functions based on the assumption that the unit or agency is starting operation for the first time (i.e point zero).

Thus, the focus of budgeting is on the purpose(s) of the unit and on the function which it should perform so that it meets the reason for its existence. Basically, it is not concerned with what happened previously but rather with what is required to be done in future.

c) Expenditure: While estimated expenditure is planned three factors are kept in mind-

i) Comparison with past expenditure;
ii) Budgeting in accordance with the work programme and
iii) Using arbitrary stands and norms.

In the case of a new library, the initial costs, as well as the operating budget, require some special consideration. But in the case of an existing library, only the operating budget items need to be considered. As the library does not usually have all its functions at the start, the total staff is not required at the initial state; consequently, the recurring expenditure on salary will be about three times that obtained at the beginning.

The cost of the library building and its maintenance usually form part of the budget of the organization as a whole and, therefore, this has been excluded from the library budget. If, however, the library has its separate existence, a sizable initial cost and a proportionate cost of maintaining will have to be provided in the budget. Any good architect will be able to give these estimates.

The expenditure in a special library is higher than that in a general library as it involves more amenities and the use of many costly types of machinery and gadgets.

d) Accounting and Reporting: Accurate records regarding the amount paid out, encumbered and unspent are maintained by the accounts section. To ensure proper utilization of grants, an Account Register should be maintained to watch the expenditure. A Ledger should be maintained with a double-entry system.

Receipts and expenditure items should be entered regularly in the said ledger. In addition to this ledger, a Cash Book in which daily transactions are to be entered and a Budget Allotment Register, department wise and objective wise, should be maintained so as to know easily and with accuracy as to how much amount has been spent and how much remains in balance. Monthly reports should be prepared regarding this.

The reporting should be done to the users, library staff and higher authorities. This may appear as an annual report of newspaper articles or radio talks or in some other form.

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