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?