DATE:             September 16, 2003

TO:                  Winnefox Library System Board

FROM:            John V. Nichols

RE:                   2004 Proposed Winnefox Library System Budget

 

 

The text of this memo is similar to what you saw at our last meeting since no changes have been made in any of the budgets since then.  The primary changes are in the section on WCTS since that was not complete at that time.  I’m very pleased to report that the net result of all the following budget changes is that:

 

 

The combination of enhanced revenues in some key places, much tighter budgeting in a number of accounts, and judicious cutting have allowed us to balance the 2004 budget without significant service cuts. 

 

WINNEFOX 2004 BUDGET

 

REVENUES

 

State Aids - as you know, our state aids for 2004 and 2005 are expected to show no increase.  I think that is likely to stand since both the Governor’s and Legislative version of the budget agreed on this item.

 

Interest Revenues – continue to decline.  We’re projecting $11,000 less in Winnefox interest revenues for 2004 due to declining interest rates and reduced fund balances.

 

Contractual Revenue, Electronic Services – OPL contracts for 50% of the time of Electronic Services staff.  During 2002, that represented half of two full time positions.  As part of the 2003 budget, we eliminated one of those two positions.  For 2004 I have restructured the remaining staff configuration.  Joy Schwarz, ILL Librarian spends half of her time on web development/electronic service development projects and has for several years.  I have added half of her time to the ESS staff configuration.  OPL will still contract for 50% of the combined time of this staff which results in a revenue increase to Winnefox of $17,692.

 

EXPENDITURES

 

Salaries & Fringe Benefits – we have included an estimated 2% salary increase for all salaried staff; a 10% estimated increase in health benefits costs; and the projected increase in state retirement costs.

 

WALS Coordinator – several years ago I had decided that part of Karen Boehning’s cost would be charged to Winnefox since there were many libraries not in the WALS consortium that would still require her services/support in the technology area.  25% of those costs were part of the Winnefox budget.  Since, as of early 2004, there will only be 4 libraries that are not part of WALS, I have decided to reduce that subsidy to 12.5%.  That represents a savings to the Winnefox budget of $10,609.

 

Community Relations/Marketing – the funds for this position are now included as a contract in the Contractual Services budget at $45,000 which is approximately the same cost as the former position (salary and benefits).  After discussions with three possible service providers, we are contracting with Blue Door Consulting to develop a strategic marketing plan for OPL and Winnefox and then advise us on the best staff/contractual configuration to carry out those responsibilities.

 

We have carefully reviewed and tightened up a number of budget items for some significant savings.  One result of this budget tightening is that we may have to rely on contingency funds more (from our undesignated reserve) if revenue or expenditure estimates prove wrong.

 

Telephone – reduced by $1,250 based upon past expenditure patterns.

 

Travel – all staff and trustee travel accounts were reviewed and past experience suggested we could cut them by $7,700 and not have any adverse impact.

 

Advertising – is used primarily for ads for hiring.  Since this happens infrequently, it is a good candidate for use of undesignated carryover funds if we have to place ads.  Cut $1,000.

 

Software – cut by $2,000 based upon closer scrutiny of past expenditures.

 

Postage Equipment Expense - cut by $2,000 based upon closer scrutiny of past expenditures.

 

Van Replacement – we increased this line item by $4,000 in anticipation of the fact that we will probably need larger vehicles when we replace the present vans at a higher cost.  Half of this increase comes in as revenue since one van is paid for by WALS member libraries.

 

Electronic Information Site Licenses – this is perhaps the most direct service cut in this budget.  We will reduce spending on site licenses by $10,000 and go from $50,000 to $40,000 for 2004.

 

ILL Net Lender – is up due to an increase in net lender volume from the Resource Library.  The rate for ILL transactions remained the same.

 

Workshop Registration Reimbursement – this line item was eliminated since no expenses had been charged to it in two years.  We determined it was a redundant line item and that these expenses were being charged elsewhere.  Saves $1,400.

 

Kay Swan Grants – these small education matching grants were increase by $250.

 

Staff Training – this line item was where we were charging the costs of computer related training from an allocated reserve established two years ago for all member library staffs.  Since this was intended as a one time project (which lasted two years), we were able to substantially lower this line item by $6,500 and still leave $1,500 for actual staff training.

 

WALS Membership Fee – I lowered this fee by reducing the amount we were budgeting for PC replacement.  We will draw down our direct capital reserve account for PC replacement for the next couple of years and rebuild an income stream when state aids revenues increase again.  This saved a net $3,723.

 

Enrichment Grants – this is actually a vestige of cuts made in the 2003 budget.  Instead of eliminating the grants entirely in the 2003 budget, we decided to phase them out and budget half of the normal amount to be paid out of carryover funds (which is why our undesignated reserve balance is down over $30,000 this year). 

 

WINNEFOX AUTOMATED LIBRARY SERVICES – this budget proposal was reviewed and unanimously approved by the WALS Executive Committee on July 8, 2003.

 

Here are the most significant changes within the 2004 proposed WALS budget.

 

Formula – this is by far the biggest change in the 2004 budget.  With the addition of Fond du Lac to the group of member libraries, the formula allocations for the existing members decrease enough to cover a number of cost increases so that no existing members see any significant increase as a result of the upgrade or addition of Fond du Lac.

 

Personnel & Operations – this line item covers that portion of the WALS staff funded by the members and associates as well as contracted positions at OPL for database maintenance (cataloging) and system support.  In general, this item reflects the same 2% estimated salary adjustment and 10% estimated health benefit cost increase as in the Winnefox budget.

 

WALS Coordinator – as mentioned in the Winnefox narrative, the share of this position paid for by WALS libraries increased from 75% to 87.5%.  I anticipate that this position will gradually become 100% WALS funded.  This resulted in a WALS budget increase of $10,609.

 

Catalog Position (.5 FTE) – we have added a half-time catalog librarian to the OPL cataloging operation in order to better manage the addition of Fond du Lac work load.  All WALS libraries share the cost of this position.  Results in a budget increase of $25,690.

 

Maintenance – this item increases significantly by $49,836 primarily due to three reasons: 1) an increase in user licenses from 140 to 280; 2) the addition of Fond du Lac PL to the shared system; and 3) an increase in the cost of the Syndetics software license since this is now being purchased on a system-wide basis (it was being purchased by Oshkosh Public Library).

 

Telecommunications – the increase of $9,810 is due to WISCNET charges (our Internet service provider) being paid fully by Winnefox with no anticipated e-rate offset.  The result of this action is that no funds would be used by WALS that would require filtering under the CIPA decision.

 

Capital Reserve – we have begun budgeting again for a gradual build up of shared capital reserve funds.  We provided everyone a “holiday” from this expense in 2003.  We need to rebuild our shared reserve since we will be spending it down by over $257,000 during 2003/4 for the SIRSI upgrade.  We have included an increase to $20,000 in 2004 and will need to gradually rebuild that amount to about $50,000 a year in order to have enough funds available to upgrade/replace shared equipment in the future.  There is also $5,000 budgeted for van replacement.

 

WINNEFOX COOPERATIVE TECHNICAL SERVICES - this budget proposal was reviewed and unanimously approved by the WCTS Executive Committee on July 8, 2003.

 

 Revenues

 

County Contracts – in general terms, WCTS is receiving about the same amount of funding as it received this year with slight variations in the amounts from each county.

 

Expenditures

 

Personnel – there are no significant changes in the personnel area.

 

Contractual Services – decreased most in the area of WCTS share of WALS costs due to the participation of Fond du Lac PL in the formula.

 

Capital Expenditures – none projected at this time.

Staff Training & Travel – have been reduced substantially since Mark Arend is no longer assigned to that budget.

 

Rotating Collections – while these are largely rotating collection circuits supported by member library dues, there has been some subsidy by Winnefox.  It was always anticipated that the subsidy would gradually decline over several years, and that is what is happening with Large Print.

 

There are no other significant changes in this budget.