HOW DO WE COUNT AND ACCOUNT?

In a recent meeting with library managers it came as a surprise to learn that many, perhaps even the majority, still use line item budgeting. The argument in favour of this method is that it simply follows the accounting system of the university, local authority or company the library serves, and this is a powerful argument indeed. The broad categories of the line item budget are established by the organisation, with subdivisions perhaps introduced at the section (library) level as required. Using the institutional categories makes it relatively easy to track expenditure and to account for outgoings, and this pleases managers who already have more than enough on their plates.

It is generally accepted that a line item budget is not terribly difficult to comprehend or operate at the bookkeeping level, but how defensible is it in terms of what is conveyed and what results from this approach? How accountable, in other words, does the line item budget allow the library manager to be? It must be remembered that line item budgeting is not about outputs but rather about inputs, about the amount of money being utilised. Somewhere I have read that a line item budget characterises the manager as someone who spends money, and in all likelihood more money, every year. But what are the results, what are the outputs? Line item budgeting does not address these questions, yet they are being raised with increasing vigour by those very institutions who still advocate line item budgeting.

It is time for the library managers to take a far more positive and proactive approach to their budgeting, adopting techniques that allow them to focus on the outputs achieved when funds are used wisely. For this programme budgeting is far more useful, because it is goal oriented and focuses on outputs achieved. In a programme budget the various expenditures needed to provide a service or activity (programme or output) are grouped together. For each programme or service a cost centre budget is created - in fact a mini-line item budget - so that the full expenditure incurred in meeting the service goal can be measured and accounted for.

It should be clear that this is a far more positive approach to budgeting. If our service goal, for example, is information literacy training (this is the programme), we can measure the results of this activity each year (the number of people trained, the levels achieved by the participants, etc.) and then indicate the various costs involved in achieving these results - number of staff hours, amount of technology used, number of books purchased, amount of software licensed, etc. We can then say that it cost this much to achieve this result, or that the inputs resulted in a specific output. Yes, a programme budget may be a series of small line item budgets, but what a difference there is in approach, and how much more positive it looks!

The programme budget may be somewhat difficult to develop, particularly when we work within line item accounting structures. It is never easy to determine in advance all of the inputs needed to achieve the desired outputs, and this may require considerable research and forward planning in the first instance. However, in our view programme budgeting has advantages that more than outweigh potential difficulties. First, it focuses on services and activities rather than costs, making it a powerful political and public relations tool. Second, it forces one to understand the specific needs of the library and should enable a clearer articulation of these needs. Third, it allows one to see precisely the nature of expenditures and to assess whether they are justifiable in terms of outputs.

If one wants a full understanding of the main approaches to budgeting, or specifically programme budgeting and line item budgeting, then a book such as Richard Rounds� Basic Budgeting Practice for Librarians (2nd ed., American Library Association, 1994) is an ideal vade mecum. He uses �function� in place of �programme� but otherwise offers a lucid argument in favour of this approach. Also, of course, there are several journals which deal with aspects of budgeting in LIS, among them some from the MCB stable. Most obvious is The Bottom Line: Managing Library Finances, which in fact has a very useful piece entitled �Budgeting Hints from the Internet� in Volume 13, Number 4 (2000): 201-203. Also worth consulting on this topic are Library Management, Library Review and, occasionally, New Library World, all published by MCB.

G.E. Gorman
Editor, LibraryLINK

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