Our local library district has a new library director, and we just went through our first budget cycle. The director followed the process used in earlier years -- she built a detailed line-item budget and presented it to the board in a special budget review meeting. We walked through the budget line by line, asking questions, and based on those questions and some updates the budget was revised. The trustees were provided the final budget during the regular monthly meeting and were expected to review the changes and to approve the budget. This year, there were some major changes but only on a few line items, and the trustees approved the budget in that meeting, although with objections about the process.
The library director should have been given some guidance as to what the board was looking for in a budget, and how it should have been presented to us. The guidance was not provided for philosophical reasons -- the board president believes the director needs to put together the budget that the library needs without being given any guidelines or goals, beyond knowing the changes in taxes that will be available. This certainly seems to be the tail wagging the dog if a board believes that fiscal responsibility is of utmost concern, as the pot will most always be spent.
Surprising was that no summary diagrams were provided. Granted, this was historic practice, but as the new director used her first budget as an opportunity to rename line items and remove some traditional items, this would have been quite useful. I ended up building my own graphics and presenting to the board, and I believe the way I presented set the stage well for the budget modifications and subsequent approval.
Here's what I will recommend to the director for future budgets:
I am primarily interested in summary budget comparisons to previous budgets and actuals. From this summary, which should be presented graphically as well as in spreadsheet, I should be able to see how large budget items compare and how the totals compare. As trustees we need to be able to say how much the budget changed each year, as well as the items that went into it that changed.
Secondly, I need to know that our budget funds our long-term plans as we expect. In this year's preliminary budget, we were surprised to uncover that our "savings" had dropped to zero while our budget had increased by roughly 3x inflation. This was discussed and changed to more appropriate numbers.
Third, I need to know that we are not increasing long-term liabilities with the budget. In our case, we were surprised with unforeseen unfunded pension issues. Normal funding of the pension is in the budget, as well as catch-up payments, but not enough to cover the new issues. The trustees will absolutely need to define how rapidly we meet these obligations over the next couple of years. Any other long-term liabilities need to be tracked and validated in the budget cycle.
Fourth, I believe a yearly budget is a good place to define investments and divestments in services we offer. Instead of just giving line items that may hide these new or ending programs, we should specify these at this time. If we do it during the budget, we can gauge the savings of divested services and ensure that shut-down costs are covered. And we can understand new programs and new ongoing costs that can be expected. This need to report these items will also set the expectation by the board that the library will be moving forward and not just providing status quo services. The board needs to know this kind of information as the public often asks how we are reducing costs or investing in the library.
These should be minor additions to the budget preparation cycle, hopefully reflecting work that is already being done but not shared.
The detailed line items are also of interest, but most of what I've seen in previous board meetings in going over these are that there are as many questions about small line items as large line items -- often more time is spent on small items! Think postage vs. payroll... I think this reflects the board member's need to provide recommendations while sticking with safer, low-cost budget items. The first step is admitting you have a problem, and I'll admit I've done this in the past. I'll make the effort to reduce the time I spend nit-picking when I see those other items!
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