DATE: September 28, 2005

TO: Winnefox Library System Board

FROM: John V. Nichols

RE: 2006 Proposed Winnefox Library System Budget

As most of you know, the legislature and Governor were convinced to provide an increase in public library system aids for the first time after four years of flat funding. For 2006 that represents an increase of 5%. As a result, in general terms there are no staffing changes, we have been able to accommodate cost increases where necessary and incorporate funding into the budget for a number of special projects and changes that are anticipated to continue. That results in our ability to stabilize some service improvements of recent years.

The Winnefox budget is made up of three components and they all follow:

Winnefox Library System Services Budget – which is funded primarily by public library system aids and interest earnings. This budget also includes pass through revenues for county reimbursement contracts.
Winnefox Automated Library Services Consortium Budget (WALS) – which is funded primarily by member library annual fees, interest, federal grants and reserve accounts set aside for capital expenditures.
Winnefox Cooperative Technical Services Budget (WCTS) – which is funded primarily by funds from Green Lake, Marquette and Waushara counties, interest and pass through funds expended by member libraries for purchasing of library materials.

WINNEFOX 2006 BUDGET

REVENUES

Public Library System Aids - our state aids for 2006 are $879,817 which represents a 5% increase over 2005. That was achieved with the unanimous support of the Governor and Joint Finance Committee after several years of flat funding.

Interest Revenues – we’re now projecting that interest revenues will about double during 2006. We are already running about 30% ahead of our 2005 budgeted amount.

OCLC ILL Fees – as we shift to use of OCLC for inter-library loan purposes (approved by the Board at our May meeting), this represents an amount ($150) that each member library used to pay for WISCAT support that is now being used to help fund the OCLC ILL license costs. There is actually no increase in cost to members.

Contractual Revenue, Electronic Services – the increases in these accounts are due to the increased salary and benefits for the employees in those programs.

EXPENDITURES

· Salaries & Fringe Benefits – we have included a 2.75% salary adjustment to the Salary Schedule; a 5% estimated increase in health benefits costs; and all other projected benefit cost increases.

Marketing/Community Relations – the funds for this position remain in the budget although no action will be taken to fill the position until such time as the issue of marketing and development are reviewed with the board and directors as part of Winnefox strategic planning and the new director has time to review organizational and service needs.

Contractual Services:

· Administrative Services – you will note that most of the increase is offset by a decrease in payment to the Director. Now that these payments will be made by Oshkosh Public Library, there will be no direct payments from Winnefox to the Director and the amount is included with the payment to OPL. This change is also covered in the 2006 Contractual Services Agreement.

· Audit – the increase in this category is based upon our estimate of increased costs to accommodate the addition of GASB34 requirements in future audits as well an underestimate for 2005.

Services: Collections

· Large Print, DVD, Books on CD – lowered these by $1,500, 1,000 and 1,000 respectively. Mark and I discussed these cuts and referred to the memo written in March of 2000 when we first launched the DVD and Book on CD collections. They were launched then with WLS Undesignated Reserve funds under a 4-6 year phase-in/phase-out plan as libraries gradually could build up their budgets to accommodate the new formats. Next year should be the last year for funding for DVD’s and Book on CD collections. Additional money will probably need to be budgeted in 2007 for Overdrive downloadable audio books since these will prove more popular.

I have always maintained that System funds should not be used for permanent collection support for libraries. We need to be able to move to newer services and collection formats with at least some of our funds, so I anticipate always recommending that collection development is ultimately a local responsibility and System funds should be bridge funds. The fact that we have made a WCTS grant program available for three years for “new media format collections” as well as this year’s new WCTS library improvement grant program should help ease this transition.

Services: Delivery

· Gasoline – is increasing for obvious reasons. We have already almost expended this year’s budget.

· Maintenance – we are projecting a drop here as we move forward on van replacement this year. Our vans are about six years old and have over 400,000 miles combined. We maintain a vehicle depreciation fund from Winnefox and WALS funds in order to be able to replace vans when necessary.

· Intersystem Delivery – is a contract based statewide delivery service provided by the South Central Library System and this represents our fee for 2006.

Services: Electronic

· Overdrive – represents Winnefox’s share of the WPLC license costs for 2006 for our demonstration of downloadable audio books. Almost all of the titles in the starter collection (about 500) already have holds waiting on them.

· OCLC WorldCat/Firstsearch Group Catalog – this consolidates the costs for a number of libraries and Winnefox to provide system-wide access to the WorldCat/Firstsearch database – the world’s largest catalog of library holdings. This can now be used by the public and staff in all 30 libraries to identify resources for inter-library lending from many of the world’s libraries.

· AskWisconsin Virtual Reference – we have included the Winnefox share of the consortium cost for this 24/7 virtual reference service that began in 2003 out of project funds. All 30 member libraries and their public have access to AskWisconsin reference services from professional librarians at any time through an icon on the library web sites. Librarians from Neenah, Menasha, Oshkosh, Fond du Lac and Winnefox either participate or are considering participation in providing service for 2-4 hours/week.

Services: ILL/Reference

· ILL Net Lending – costs to OPL went up by $3,116 due to increased net lending (as part of the Resource Library Agreement). The unit cost hasn’t changed in four years.

· OCLC ILL – this represents Winnefox’s cost for use of the OCLC ILL system which is replacing our use of WISCAT and is mostly offset by the $4,500 in revenue from member libraries.

Services: Summer Reading Program

· Guest Artists – the increase here is based upon recommendations from staff. This service is popular with member libraries and, due to rising transportation costs, most of the artists are now requesting mileage reimbursements and billing for time spent in transit. As a result, the actual amount left to pay for an artist for each library during the summer reading program has been dropping – resulting in a smaller and smaller pool of talented guest artists. Increasing this amount should again permit us to have wider selections of guest artists for the members. This hasn’t been increased since 2003.

Member Library Continuing Education

· Travel Reimbursement and Workshop Expenses – both have been raised based upon this year’s experience.

Staff / Board Training, Travel, & Dues

· Trustee Travel – is increased by 50% based upon the most recent expenditure pattern for increased incidence of travel (committee) and increases in mileage rates.

Pass Through Funds

· County Contracts - are budgeted at the best estimates we have available at this time. They are subject to final budget and contract approval at the county level.

WINNEFOX AUTOMATED LIBRARY SERVICES – this budget proposal has been reviewed and approved by the WALS Executive Committee in July. This one contains some changes accommodating requests by the members without any significant changes to member fees.

Here are the most significant changes within the 2006 proposed WALS budget.

Personnel & Operations Support – 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. There are no changes in staffing levels.

Shared Operations – the total of these expenditures are increasing 5.4% for 2006. There are no significant changes in any of the shared operations accounts.

Capital – the amounts budgeted for shared capital costs (equipment which benefits everyone and for which costs are shared) include $8,000 for two replacement servers (we manage about 12 servers now) as well as $7,000 for associated server software. These server upgrades and replacements have become a regular part of the budget. There is also $6,500 budgeted for a replacement tape backup unit and $3,400 for two replacement PC’s for WALS staff.

We have also estimated $15,400 in startup fees to SIRSI for Oakfield and Brandon for 2006. This is a tentative placeholder figure in case these two libraries decide to begin bar-coding in 2006 in anticipation of startup sometime in 2007.

There is also $25,400 budgeted for PC replacements for WALS Associate libraries which is only spent when they request we order them for them and is offset with revenue for that purpose.

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 have spent it down substantially during 2003/4 for the SIRSI upgrade. We have included an increase to $62,007 in 2006 and will need to gradually rebuild that amount to about $100,000 a year in order to have enough funds available to upgrade/replace all shared equipment and software in the future.

WINNEFOX COOPERATIVE TECHNICAL SERVICES – the most significant thing happening in this year’s budget is the incorporation of a WCTS Library Improvement Grant program that was approved by the Executive Committee and the Board previously from Un-Allocated Reserve funds. The other changes are mostly adjustments to expenditures based upon actual expenditure patterns that are possible now that WCTS has received a funding increase for the first time in a few years.

Revenues

County Contracts – this year WCTS is receiving about a 10% increase due mostly to a 24% increase from Marquette County which has been playing catch up to the other two counties.

Expenditures

Personnel – there are no significant changes in the personnel area. The increases are due to the increased costs for existing personnel. The increase is not as large as would be expected due to a change in health coverage for an employee.

Contractual Services – increased somewhat in the area of WCTS share of WALS costs about half of which was due to slight increases in direct costs and half due to an increase in the WCTS portion of shared costs. The other increase is for the WCTS share of administrative costs. WCTS and WALS never paid a share of the direct supplemental payment going to the Director. Now that the payment is included as part of the overall administrative services payment, WALS and WCTS are paying more based on the higher base.

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.

There are no other significant changes in this budget.