Elizabeth Lovsin

LIS 770-01
Budget and Financial Exercise

The Oak Park Public Library shares its annual budget with the
public through the library website. On the Budget page of the
website, anyone can read the basic facts and summary about the 2013
annual budget, or click on links to view the complete budget or a PDF
version of the budget summary.
Budgeting Technique
The Oak Park Public Library uses the line-item budgeting
technique. This is made obvious by the document link on the website
which says line-item 2013 budget. Moran, Stueart, and Morner
(2013) describe line-item budgeting as a process whereby categories
of the budget are increased or decreased by a percentage (p. 414).
Expenses are organized into broad categories and subcategories.
Within these subdivisions are detailed line items, or objects of
expenditure, associated with specific dollar amounts (p. 414). As
Moran et al. explain, this approach focuses on the purpose and amount
of money spent instead of the effects and outcomes of programs and
activities (p. 415).
The 2013 budget for the Oak Park Public Library has a brief
section titled Revenue and an extensive section outlining
Expenses. The Expenses section of the budget is divided into the

following seven categories: Personnel, Support Services, Library

Materials, Capital Expenditures, Facilities Management, Public Services,
and Information Technology. Most of these categories are further
subdivided; for example, the Public Services section is divided into
Programming and Virtual Services. Within each category or
subcategory are specific items and associated dollar amounts; for
example, included in the Programming subcategory is Childrens
Programming, which was allocated $10,000.
The organization of the budget into categories, subcategories,
and specific line items matches the description given by Moran et al.
Additionally, the focus is on the purpose of spending, such as
Childrens Programming, instead of the impact of that spending on
outcomes like literacy rates or socialization.
Moran et al. explain that a line-item budget is created when an
increase or decrease of a certain percentage is applied to the budget
from the previous year. Since most expenses remain relatively static,
it is easier and more efficient to simply project the previous years
budget into the future, with changes broadly applied to specific
categories or to the entire budget (p. 415).
The 2013 Budget Summary for the Oak Park Public Library
explains that the 2013 budget is a 4.9 percent increase over 2012. A
3.49 percent increase in Oak Park property taxes is linked to the
increase in the overall budget. Using the line-item budgeting

technique, the Oak Park Public Library took this increase in revenue
and increased the expenses of the prior years budget by 4.9 percent.

Revenue
The primary source of revenue for the Oak Park Public Library is
property taxes. While the line-item budget breaks the revenue from
property taxes into three categories Property Taxes, for operating;
Property Taxes, TIF distributions; and Corp. Property Replacement Tax
the budget narrative combines these three amounts, stating that
property taxes provide $6,852,171 of revenue.
The next greatest source of revenue is Fines, Service Charges
and Fees, which totals $195,000. The Illinois Per Capita Grant provides
the next largest amount, $53,000 of state-funded revenue. It is closely
followed by donations of $50,000 provided by the Friends of the Oak
Park Public Library. Fees from the Parking lot follow with $38,000, then
Photocopier & Printer Fees at $35,000. The income from Community
Fund Endowments provides $25,000 of revenue in 2013.
Smaller sources of revenue include Rentals- Library Space
($12,000), Lost Books Reimbursed/Reciprocal Borrowing ($5,000), and
Interest ($12,000). Finally, $23,500 is grouped in the catchall of
Miscellaneous Income.
Three revenue sources are listed as providing $0.00 of revenue.
These are Gifts, Grants, and Pass Through Revenue. Perhaps these

three sources are listed because, while anticipated, they are impossible
to predict. It is also possible that these three revenue types are more
likely to contribute to future capital projects that would not be included
in the 2013 budget.

Expenses
There are seven main categories of expenses. The first and
largest category is Personnel, which includes $5,196,950 of expenses.
The bulk of the Personnel budget, $5,110,950, is devoted to Payroll,
which includes wages, salaries, and benefits. The other $86,000 of the
Personnel budget is grouped into Professional Development, which
includes training, recruitment, conferences, dues, and tuition and
travel reimbursements.
The second largest expense category is Library Materials, which
is not broken down into subcategories. This category, totaling
$876,000 of expenditures, consists of just five line items: Print
materials ($405,500), Audio and visual materials ($241,000), Digital
collections ($119,500), Online tools ($100,000), and Devices ($10,000).
The third largest area of expense is Capital Expenditures, totaling
$644,500. This category is not broken down into subcategories, but
instead includes just five line items: Equipment ($165,000), Furnishings
($30,000), Technology ($39,000), Building Improvements ($400,500),
and Special Projects ($10,000). The capital budget is typically

separate from the operating budget, which are then combined to form
the master budget (Budgeting, 2004, p. 226). While this is the
master budget for the Oak Park Public Library and therefore should
include both, separate revenue sources for capital projects are not
identified, and the Capital Expenditures section is included in the
middle of the operating budget.
Moran et al. state that it is important to understand the
distinctions between operating revenue and costs and capital project
revenue and costs (p. 412). Those distinctions are not made clear in
the line-item budget; however, the budget narrative states that Capital
Projects are one-time costs financed by savings. The Expenses total
of the line-item budget is $644,079 higher than the Revenue total, so
clearly the bulk of the $644,500 of Capital Expenditures is coming from
outside the listed sources of revenue. Including the costs of these
capital projects in the budget without including the revenue sources
funding them creates confusion.
The next greatest area of expense is Facilities Management,
totaling $508,100. Subdivisions include Facility Supplies and Facility
Services. All the items in this category relate to the maintenance of
the library building and grounds.
The fifth largest area of expense is Support Services, at
$400,200. This category is broken into four subcategories. Marketing
includes expenses directed to advertising, give-aways, and other

marketing services. The Collections subcategory includes ILL Payments

and Cataloging/Bib Search Fees. The Administration subcategory
includes items such as Legal, Audit, and Collection Fees, Postage &
Delivery, and Supplies, and takes up the bulk of the Support Services
budget. There is also a catchall subcategory of Other Support
Services.
The next category is Information Technology, which includes
$216,500 of expenses. This is another category that is not subdivided.
It includes only four items: Service contracts and fees, Supplies and
accessories, Hardware, and Software.
Finally, the smallest category, Public Services includes $102,500
of expenses. This category is subdivided into Programming and Virtual
Services. Programming includes items for specific audiences or types,
such as Childrens Programming and Idea Box. Virtual Services
includes website and app maintenance and supplies.

Fixed and Variable Costs

The Oak Park Public Library does not clearly delineate fixed and
variable costs in its budget. One can make assumptions based on the
definitions that fixed costs are predicted to remain unchanged within
the fiscal year, while variable costs have a greater likelihood to change
(Stewart, 2013). These variable costs produce variance, a difference
between predicted and actual results (Budgeting, p. 222).

Those expenses most likely to include fixed costs are many of

the Payroll costs within Personnel, Information Technology contracts,
and some of the Facilities Management costs. Any cost resulting from
a contract should never change unexpectedly, and many of the Payroll
and Facilities costs are highly unlikely to change. Arguably, the Capital
Expenditures are also fixed costs because they have been carefully
planned and the revenue for them has been allotted over ten years, so
therefore they will not change within this fiscal year.
All other costs could be considered variable. Support Service
and Professional Development expenditures may change based on the
needs of the organization. While both Library Materials and Public
Services are given clear budgets, those expenses could be changed
during the fiscal year. While some Facilities Management costs are
likely fixed, an organization can never anticipate an emergency to the
library building or grounds that could require repairs.

Budget Narrative
The 2013 Budget Summary provides some very useful
explanations to clarify the line-item budget. It opens with a paragraph
explaining that the Oak Park Public Library Board of Trustees approved
the budget in November of 2012. The introduction also explains the
purpose of the document, which is to summarize changes in the library
since the opening of the main building in 2003 through 2013.

Following the introduction is a brief paragraph under the

heading, Whats the Financial Bottom Line for You, the Taxpayer?
This paragraph explains that the total 2013 budget is $7.9 million, and
mentions the major sources of revenue. It also states that the budget
increased 4.9 percent from the 2012 budget, which is largely due to a
3.49 percent increase in property tax revenue. The property tax
increase cost the average household an additional $10.02 in taxes, and
created an additional $219,474 for the library. The purpose of this
paragraph is to clarify the connection between property taxes and the
library, and to highlight the significant impact that a fairly small
increase in property taxes can have.
The rest of the document falls under the major heading, 10
Years at the Main Library: More than 5 Million Served. The first section
is Capital Projects, which cost $644,500 of one-time costs financed
by savings. The narrative explains that increased library use creates
the need for updates and repairs to library facilities. It states that the
community made a major investment in library facilities a decade
ago, which is likely the Community Fund Endowments revenue of
$25,000 on the line-item budget. While the additional savings
necessary to create the $644,500 is not included in the budget, the
specific projects and improvements being funded by this money are
briefly explained in the narrative. As mentioned earlier, this area of

the budget and the gap between revenue and expenses is likely to
create confusion.
The next major section, Operating Expenses, explains some of
the major functional costs of the library in six subsections. The
Personnel subsection describes the importance of the people delivering
library services and outlines planned staff additions. The Materials
subsection states that surveys prove the importance of a balanced
collection to the community, and outlines plans to expand the
collection to meet users needs. The Facilities Management subsection
identifies environmentally friendly building features and sources of
increased building costs. In Information Technology, the importance of
updated technology to improved library use is explained. Events &
Virtual Services explains the impact of programs and services,
including improved access, learning, entertainment, fuel for the
imagination, and literacy. Finally, the Supplies, Market, Insurance
subsection identifies communication and outreach methods used to
promote services.
The total expenses amount for the operating budget listed on the
budget narrative is $7,300,250. This is less than the total expenses
amount on the line-item budget, which includes the Capital
Expenditures and comes in at $7,944,750. The operating budget
number is very close to the total revenue listed on the line-item budget
and the narrative, which is $7,300,671.

The final section briefly discusses Revenue. It states that fees

and fines are kept low to encourage library use, and mentions that
about 94% of library revenue comes from property taxes.
The purpose of the budget narrative is to justify library expenses
to taxpayers by demonstrating the benefits they create. This type of
justification helps to ensure continued support for the library.

References
Budgeting. (2004). Harvard business essentials: Manager's toolkit :
the 13 skills managers need to succeed. (pp. 217-241). Boston,
Mass: Harvard Business School.
Oak Park Public Library. (2013). Budget. Retrieved from
http://oppl.org/about/library-information/mission-vision/budget.
Moran, B. B., Stueart, R. D., & Morner, C. J. (2013). Library and
information center management (8th ed.). Santa Barbara, CA:
Libraries Unlimited.
Stewart, C. (2013). Financial Management [PowerPoint slides].