To: Winnefox Library System Board

From: Mark W. Arend, Interim Assistant Director

RE: Crossover Borrowing Reimbursement in Wisconsin Counties

Date: 11 November 2005

INTRODUCTION

Payments to libraries for use by non-residents can be a controversial issue. Where it is done there are almost as many ways of calculating payments as there are counties.

Before studying this issue, terms need to be defined as used in this discussion:

• Cost per circ: a measurement of the cost of library service. The library’s total expenditures are divided by total number of items checked out. A library that spent $50,000 and checked out 35,000 items would have a cost per circ of $1.43.
• Crossover borrowing: when residents of one municipality which supports and maintains a library check out items from another library. At this time Wisconsin law does not require that libraries be reimbursed for crossover use.
• Intra-System Inter Library Loan (ILL) – when patrons of one library place a hold/reserve on an item(s) from another library and they are delivered to the other the patron’s home library for them to check out.
• Municipality: a city, village, or township.
• Net borrower: a library which borrows more materials from other libraries than it lends.
• Net lender: a library which lends more materials to other libraries than it borrows
• Non reciprocal borrowing: When one library borrows more from another library than it lends.
• Reciprocal borrowing: When the borrowing and lending between libraries is relatively equal.
• Rural residents: persons living in municipalities that do not maintain a library. Under Wisconsin law counties are required to reimburse libraries within the county for use by rural residents. At this time there is no statutory requirement for reimbursement across county boundaries.

Borrowing and lending between libraries can be of two sorts. The first happens when a library user sees an item in the library system’s shared catalog and asks that it be sent to their local library so they can check it out. In 2004 Winnefox member libraries shared 177,804 items in this manner. The second happens when residents of one municipality which supports and maintains a library goes to and checks out items from another library (crossover borrowing). A county plan can address either issue, or both, or neither.

CURRENT STATE OF NON-RECIPROCAL COMPENSATION IN WISCONSIN

Earlier this summer I surveyed the other 16 library systems in Wisconsin to see how counties in their systems address crossover borrowing issues.

• There are ten counties that reported having agreements regarding crossover borrowing and one is considering implementing one in the next year or two.
• Nine additional counties have either consolidated county libraries or a city/county library organization; because all the libraries are part of a single organization payment for crossover borrowing is not an issue since all libraries are essentially branches of the single library system.
• Twenty out of the 72 counties have crossover borrowing agreements, are considering implementing them, or are organized in a way that makes them unnecessary.
• Nine of the 10 most populous counties are included in these 20 (Outagamie does not).
• These 20 counties represent about 60% of the state’s population.

The following paragraphs outline what other counties in Wisconsin have done.

Dane Co.: Crossover borrowing payments are taken out of the funds paid by the county for reimbursement of rural use. Each library’s cost per circ is used, not an average. They have never had a situation where a library has a negative balance (they owed more to other libraries for use by their residents than they earned for rural use) and the Director of the Dane Co. Library Service doesn’t know what they would do if this was the case. The village of Fitchburg is establishing a library and the consultant is recommending their budget include funds to pay other libraries, at least for the first few years.

Eau Claire Co.: Libraries are reimbursed for crossover borrowing using the actual cost per circ. The county calculates the amount each municipality owes and levies a special tax on the municipalities. The agreement allows a community with a library to exempt from the plan and the special county library tax. If a community chooses to exempt from the plan the library system pays for their residents’ use of other libraries. The agreement comes up for renewal at the end of 2007 and the system director believes it will probably prove to be controversial again.

Kenosha Co.: Libraries are reimbursed for both crossover borrowing and rural use at their actual cost per circ rate. The system director said “It's easier when you just have two libraries”.

Milwaukee Co: Libraries are reimbursed for crossover borrowing. There is no reimbursement for rural use or county funding for library service because there are no unincorporated areas in Milwaukee County. The single municipality which does not maintain a library—west Milwaukee—pays each county library for use by their residents. The payment is based on actual use and cost per circ.

For crossover use, the system first calculates which libraries are net lenders and which are net borrowers. Milwaukee PL and one or two others are net borrowers. The total amount of net lending and each library’s percentage share of the total are calculated. Libraries are reimbursed a percentage of the money available based on their percentage of the total net lending. This year $945,000 was available for reimbursement. Funding comes from Milwaukee PL ($500,000) and the Milwaukee Co. Federated Library System ($445,000).

Ozaukee & Sheboygan Counties (Eastern Shores Library System): In 2005 the System budgeted $12,500 to reimburse libraries for both crossover borrowing and items requested through their shared catalog and sent between libraries.

First they calculate both each library’s use by residents of other municipalities and how many items each library loaned directly to each of the other libraries. They use these figures to determine if a library is a net lender or a net borrower. Finally, they add up the net lending amounts and divide the $12,500 by that total and then multiply that unit cost by the net lending amount for each net lending library.

Racine Co.: Payment comes out of the county reimbursement for rural use. They use an average of the cost per circ of the county libraries to calculate the cost. Reimbursement is paid out of the money owed to the library by the county; no municipal or system funds are used.

Rock Co.: Rock is the only county in the Arrowhead Library System. The Hedberg Library in Janesville is consistently the only net lender and so is the only one receiving payments from the other libraries in the county.

Payment is based on half the state average cost per circ (the state average cost per circ was $3.20 in 2004). Each library is credited for the items it loans to other libraries and is debited for items that its municipal residents borrow at another library. The system picks up 70 cents for each item loaned and the library is responsible for the remainder. Because the formula was phased in over a ten-year period, however, the libraries are not yet responsible for the full amount beyond the 70 cents paid by the system. 2004 is the sixth year of the payment so the payment is 60% of the total amount due. The phase-in will be completed in 2008.

Walworth Co.: There is no plan in place at this time but the system intends to recommend that a crossover reimbursement plan be developed and phased in.

Waukesha Co.: The system figures which libraries are net crossover lenders or borrowers and the amount of crossover use is added to or subtracted from the library’s rural use total. They calculate each library’s funding three different ways: the statutory 70% minimum required by Wisconsin Statute, with an across the board hold harmless amount intended to help insulates libraries from the funding roller coaster, and a flat rate per adjusted circulation. Libraries receive the highest of the three amounts.

Winnebago Co.: The county plan specifies the following formula for determining payment for crossover use when one or more libraries determine usage is significantly non-reciprocal:

a. Each library shall determine the percentage of actual circulation attributable to the other library's residents.

b. The percentage will be multiplied by the operational budget

c. The lower of the two dollar figures will be subtracted from the other for a  net non-reciprocal transaction cost;

Since 1998, however, a different formula based on the actual cost per circulation has been used in order to more easily contrast costs. This has been done through a Memorandum of Understanding between the libraries. The amount owed has, in recent years, been gradually discounted; in 2005 the amount owed was discounted by 60%. (See the attached Memorandum of Understanding - Omro and Winneconne Non-Reciprocal Payments to Oshkosh for 2005).

There is also significant non-reciprocal cross-over borrowing between the Neenah and Menasha libraries. For a variety of reasons, they have chosen to address their non-reciprocal usage with a rolling five year Memorandum of Understanding between the two libraries which declares the usage “reciprocal.” (See the attached Memorandum of Understanding – Neenah and Menasha Public Libraries).

FUTURE TREND(S) IN NON-RECIPROCAL COMPENSATION

The issue of non-reciprocal usage and payment for same has been a growing problem and issue in the Wisconsin library community for over 20 years. Because complaints about crossover borrowing and the issue of payments have often been a destabilizing force within public library systems and have threatened to undermine long-standing cooperative library service arrangements almost every major public library legislative and planning committee during the past 20 years has tried to develop some form of statewide solution.

It was originally thought by many that public library systems (which are funded with state shared aids through a formula) and the services they provide to public libraries were defacto compensation for libraries to open their doors to all system residents. That idea quickly faded as two things happened:

1. It became apparent that each system contains net lenders and net borrowers. Yet, system services are provided to all libraries – lenders and borrowers. It is therefore hard to justify system services as compensation for net lending when, essentially, all system member libraries get those services; and
2. The volume of inter-library activity within systems grew with the advent of shared computer systems. As it became easier for people, no matter where they lived in a system, to locate materials in the shared catalog and request they be delivered, they used the service in even greater numbers. Now the amounts of money involved in crossover borrowing and intra-system ILL frequently exceeded the entire public library system budget!

As is evident in the state of non-reciprocal compensation described above, most of the more populous counties in the state have been devising various plans to deal with the issue. Public library systems will continue to struggle to maintain stable library service environments in the face of cross compensation problems.

A new, third factor will now make solving these problems even more difficult – tight local budgets due to the state’s newly imposed limit on property tax levies.

The Division for Libraries, Technology & Community Learning (DLTCL) is making a new attempt at providing a solution for the problem of non-reciprocal compensation. As a result of a recent public library legislation committee, two new bills have been introduced into the legislature – the “Language” and “Reform” bills. The latter contains a new provision of Chap. 43 which would permit public library systems to adopt a planning provision that would require libraries to make non-reciprocal payments to each other. This would be part of a system plan and would include whatever methodology for payment members of the system had agreed to. Failure to make payments would/could result in system service penalties up to and including expulsion from a public library system. There is presently no requirement in state statutes to compel a library in one community to pay for services received from another.

Given the current state of affairs and another attempt by DLTCL to address this issue, it is pretty clear that the state will continue to try to devise a solution(s) that would require payments for non-reciprocal usage between municipalities with libraries.

Counties having agreements regarding crossover borrowing
County	Population
Dane	450,947
Eau Claire	98,199
Kenosha	156,082
Milwaukee	939,465
Ozaukee	24,321
Racine	191,853
Rock	155,547
Sheboygan	114,693
Waukesha	373,372
Winnebago	160,342
Total	2,664,821
Consolidated County Libraries or City/County libraries
County	Population
Adams	17,814
Brown	236,526
Door	29,114
Florence	5,214
Portage	67,908
Rusk	12,819
Marathon	126,504
Marinette	44,204
Shawano	41,836
Total	581,939
Considering implementing an agreement regarding crossover borrowing
County	Population
Walworth	85,833
Total Wisconsin Population	5,532,955
Percentage of counties with crossover borrowing reimbursements		48%
Percentage of counties with county libraries		11%