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Financial Management in Libraries

Financial Management

Finance

Sources of Fund for the library

            Funds from Parent Organization

            Grants from UGC

            Grants from Raya Rammohan Roy Library Foundation (RRRLF)

            Library Legislation

            Central Government Grants

            State Government Grant

            Frees and caution Money

            Fine and Penalties

            Research Activities

            Endowment and Private Donation

            Sale of Publication

            Income from Service

            Other Sources

Budget

Need and Purpose of Library Budget

Budgeting Method

         Line Item

         Lump Sum

        Formula Budget

        Performance Budget

        Programme Budgeting

        Per Capita Method

        Proportion Method

        Method of Details

        Planning Programming Budgeting System (PPBS)

        Zero Based Budget

Cost Effective and Cost Benefit Analysis

         Purpose of Cost Accounting

         Cost-effectiveness analysis (CFA)

         Cost Benefit analysis

Library Authority and committee

         Library Authority

         Library Committee

         Members of the library

                                                                                                                                                                       

             Financial Management in Libraries           

Sources of Finance, Resource Mobilisations Budgeting Methods; Cast Effective and Cast Benefit Analysis, Annual Reports, and Statistics; Library Authority and Committee. 

 Financial Management                                                                       

 The sections or parts of the library depend on how big the library is and what its resources and collections are. Sometime they are also based on the type of library i.e. whether it is a school library or a public  library or a college or university library. 

 The administrative section of a library is the nerve centre to the entire administrative system of the library. It aims to assist the establishment activities of the library. It is staffed with skilled and partially - skilled personnell for handling the task of management and finance. Which involves the tasks such as building cleanliness, building maintenance, lift maintenance, central air conditioning maintenance, vehicle maintenance, staff safety. staff leave and staff matters, payment processing, revenue collection, etc. This section also ascertains that all circulars, rules and regulations are upheld and keeps and maintains the records pertaining to various budgetary provisions of the library like salary, expenditure and other matters pertaining to physical stock and infrastructure of the library. More long-term issuers include the planning  of the construction of new libraries or extensions to the existing ones. 

 Finance                                                                                                

The word "Finance" means to obtain or provide money for some programme or activity  and budget is a list of all planned expenses and revenues. The word "finance" is used to express any statement of monetary accounts or comparison of income with expenditure. Broadly speaking, finance is concerned with obtaining funds and making the optimal use of these funds. It is the life blood of any institution or firm and is essential for its effective functioning.  

Finance plays a very importan and significant role in the organization and management of the libraries. Libraries are not profit making institutions: they are spending institutions. Once a library  has been established them funds would be required on a recurring basis to maintain it in proper order and shape. It heavily depends on the continuous supply of funds for organizing their activities, programmes and service. In addition libraries are growing organizations, larger a library grows, the more money it might require for its maintenance it. So, for continuous supply of funds there should be some assured sources of income for each and every library. 

 Sources of Fund for the library                                                          

 Different types of libraries receive funds from different sources, though some of them are common to all types of libraries. 

 i. Funds from Parent Organization : 

The university libraries get financial support from their respective universities out of their own funds; college libraries get financial support from the college budget. Some is the case for school; which is fully financed by the school management. Libraries attached to other teaching institutions are also fully financed by the management of the concerned institution. 

 ii. Grants from UGC : 

UGC is the second major source of income to the college and university library. The UGC grants are mainly plan grant which are  mainly of three types :  

 - Recurring grants 

 - Non recurring grants 

  - Adhoc grants 

 The recurring grants are given for the purpose of books and periodicals, maintenance  of regular services and for anticipated contingency. The non recurring grants are given for specific equipment. The adhoc grant is given for specific purposes on the recommendation of the various visiting UGC groups. 

 iii. Grants from Raya Rammohan Roy Library Foundation (RRRLF) : 

RRRLF is an autonomous  organisation under Dept of culture, govt of India and it provides book assistance (matching and non matching grants) and  Financial assistance to different kinds of libraries. 

 iv. Library Legislation : 

Library tax/rates form the basis of financial support for public libraries in the states having library legislation. Library rate its levied by a local authority but the tax in levied by state or central government. 

 v. Central Government Grants : 

The central universities are directly funded by the central government (Ministry of Human Resource Development) through UGC. 

 vi. State Government Grant : 

The maintenance of state universities depends on the grants of the state government. The government grants are not directly given to the academic libraries. Government provides grants for parent organization and than the parent organization allots the necessary  share to the library. The grants  given by state government to the libraries of various universities are mainly non-plan grant. In case of a school library in some cases the state government, municipal bodies, local bodies on other organizations give funds occasionally. The government schools get full assistance from the state government. 

 vii. Frees and caution Money :  

Almost each academic library changes fee from the students who become their members for the use of the library whether it is a university library or school library. But, the amount of library fee is usually so menager that it connot be considered a denpendable source of finance. Many libraries receive caution money from the reader. It is refundable and in refunded when a reader surrenders his/her library membership. But its interest may become a source of income for the library. 

 viii. Fine and Penalties : 

The libraries can impose f ine and penalties for the late return of books or against losses or misuse of books. But it is not enough to be considered as a source of f inance became its main aim is to compel the users to return the borrowed books in time and not to damage it. 

 ix. Research Activities : 

When research projects are approved by the UGC, the government departments like DST, CSIR, planning commission etc. or other agencies like ICSSR, ICHR, ICPR etc. a part of the research grant is kept for books and journals which, after the completion of the project, are to be deposited in the university or college library. 

 x. Endowment and Private Donation : 

Libraries  sometimes receive gift both in cash and kind from various sources. Generally, people with charitable bent of mind and those who love learning and believe in impacting  learning to their fellow-beings donate a good number of books from their own collection. But these endowments and private donations are not permanent sources of finance and the libraries cannot depend on them.

xi. Sale of Publication : 

The library helps a university in publications and some libraries may have their own publications The sale proceeds of these publications go to the library. Some big libraries publish and sell catalogues bibliographies etc. and there by raise their fundis. 

 The income from all these publication should not be considered as a source of revenue since these publications  should be made available to the user on no profit no loss base's so the the readers may be made interested in using the library resources.

xii. Income from Service : 

Libraries generally provide reprographic, translation services and do charge subsidized rates for such works. There also form a source of income for the libraries. 

 xiii. Other Sources : 

Libraries can also generate their funds by sale of waste papers, money received from rent of the seminar hall of the library, etc. All these also form a small source of income for the library. 

 Library tax rates form the basid of the financial support for public libraries in the state having library legislation. In college lebraries, library free and grants from the state and central government are the main source. In a special library, money would come from the parent body. In case of the central university libraries. UGC is the source, gifts and endowment are not very common. 

 Sources of finance for libraries, libraries require finance on a continual basis for organising their activities, programmes and services. Depending on  the type of library, the sources of finance  are different. The following table gives, in general, the sources of funds for different libraries : 

Public Library                                         Academic Library                                       Special Librar

* Library cess.                      * University/College /School budget.       * Funds from their respective                                                                                                                          parental organisation.

* Library subscription.         * UGC Grants.                                           * Funds allocated to projects.

* Governmental grant.         * Governmental grant.                               * Donor/Funding agencies like                                                                                                                       IDRC, UNESCO ect. at.                                                                                                                                 international level.

* Endowment private and   * Student fees,including library fees.        * Endownments.                     public

* Miscellaneous sources.   * Fines                                                       * Sale of publication

                                           * Sale of publication.                                * Fee charged for                                                                                                                                         information/translation/reprographic                                                                                                             services.

                                          * Fee charged for                                     *Membership subscription.                                                             information/translation/reprographic                                                                                                             services.

                                         * Endowments, gifts, donations etc.         * Miscellaneous sources..

                                         * Miscellaneous sources.

  Budget                                                                                                 

 Budget is defined as "an estimated often itemized or expected income and expenses or operating results for a given period in the future." Thus, a library budget is an estimate of the expected income and expenditure of  of the library  for the coming year. As a budget is an estimate, it can be altered if and when the circumstances change. It needs to be flexible enough to meet the changing needs. In a budget; the diversion of funds should not be done for some unnecessary events or causes and it is actually not, permitted. 

 Need and Purpose of Library Budget  

Since a library is a non-profit organization the financial responsibility on it's part is much more important. The need and purpose of library budget can be looked at from the the following points. 

 i. Through budgeting a library is able to limit its expenditure to its income. 

 ii. A budget helps to spend the finance in a systematic way. 

iii. Budgeting is the primary means by which formulated plans can be carried out. 

 iv. It serves as an effective management tool. 

 v. It gives overall direction to the library services. 

 vi. It coordinate all administrative functions by guaranteeing exchange of information on policies, program and finance; 

 vii. It is a most important control device to measure the programmes of a library  and their effectivene. 

 viii. It reflects the goals and objectives of the library. 

   Budgeting Method  

The following methods are generally used in budgeting.  

i. Line Item : 

Here the expenditure is divided into broad categories such as salary and wages books and periodicals, equipment binding, stationary, miscellanous, etc. However, this brings inflexibility, where by money from one item cannot be shifted to another one easily. 

 ii. Lump Sum : 

In this approach a centain amount of money is allocated to the library, the libraries decide as to how that amount is going to be allocated to different categories. 

 iii. Formula Budget : 

Here predetermined standards are applied for the allocation of money. The formula is mechanical: and easy to prepare. 

 iv. Performance Budget : 

It is based on the expenditure for the performance of activities of a library. It gives justification for and description of services to be achieved by the proposed programme. 

 v. Programme Budgeting : 

It is case a minimum amount per head of the population is fixed and financial estimates are prepared accordingly. 

 vi. Per Capita Method :   

In case of university and college libraries, the UGC library committee way back in 1957 suggested for a provision of Rs 16 per student and Rs 200 per teacher. kothari commission in 1966 suggested for allocation of Rs 25 per student and Rs 300 per teacher.

  vii. Proportion Method :   

In this method a certain proportion of the general budget of a parent organization/state is recommended for providing library services. 

 Dr. S. R. Ranganathan suggested that 6% of the education budget of a local/ state/ federal government, as the case may be, should be earmarked for public library purposes. UGC parry Committee (UK) suggested that 6% of the total budget of a  university may be provided to university. library. Education Commission recommended that 6.5 -10 percent of the total university budget should be spent for the university library. 

  viii. Method of Details :   

In this method all the item of expenditure of a library under various heads and subheads in detail are calculated. The expenditure should be estimated  under non recurring expenditure and recurring expenditure. It is generally done by projecting current expenditure to the next year adding the increase of cost. 

 The UGC library committee (1957) staff formula can be used to determine the number of  staff and their pay scale. The cost of books and other reading  materials can be based an the number of students and teachers 5% of the total cost of books is allocated to stacking, storing and serving of books. 

  ix. Planning Programming Budgeting System (PPBS) :   

PPBS is a technique which combine's the best of programme budgeting and performance budgeting. In this method the emphasis is given on the planning of the total system, the different parts of the system and their expected level of performance. All these are considered for assigning the cost of the whole system. 

 x. Zero Based Budget : 

It was developed by petter phyor to achieve greater effective planning and fiscal control. The term "zero based" is derived from the first step in the process - the development of a hierarchy of functions based on the assumption that the unit or agency is starting operation  for the first time (i.e. Point zero). Thus, the focus of budgeting is on the purpose of the unit and on the function which it should perform so that it meet the season for its existence. Basically, it is not concerned with what happened previously but rather with what is required to be done in future. 

 Budget statement or record is a definite financial record which speaks of the back history, present position and future development of the library. It is also a statement for comparing the position and the trend of development between the past, present and future. Budget statement generally depends on the source of income and expenditure of the library. Library budget may be divided into two parts - income and expenditure.

  Cost Effective and Cost Benefit Analysis                                           

 Purpose of Cost Accounting : 

The purposes of cost accounting are given below : 

 i. to estimate expenditure for each function, service, section/department. 

 ii. to estimate expenditure for formulation of budget. 

 iii. to fix prices to be charged for various services/products. 

 iv. to control library operations through the study of cast of input and value. 

 Cost-effectiveness analysis (CFA) : 

CEA is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more coures of action. Cost-effectiveness analysis is distinct from cast-benefit analysis, which assigns a monetary value to the measure of effect. Cost effectiveness analysis is often used in the field of health services, where it may be inappropriate to monetize health effect. Typically the CEA is expressed in terms of a ratio where the denominator is a gain in health from a measure and the numerator is the cost associated with the health agin. The most commonly used outcome measure is quality -adjusted life years (QALY). Cost utility analysis is similar to cas-effectiveness analysis. 

 Analytical technique involving a momentary assessment of total costs and revenue of a project, paying particular attention to social costs benefits which do not normally feature conventional costing exercises. 

 Cost Benefit analysis 

Cost-benefit analysis (CBA), sometimes called benefit-cast analysis (BCA), is an economic decision making approach, used particularly in government and business. CBA is used in the assessment of whether a proposed project,  programmes or policy is worth doing or to choose between several alternating ones. It involved comparing the total expected costs of each option against the total expected  benefits, to see whether the benefits outweigh the costs, and by how much. 

 In CBA, benefits and costs are expressed in money terms, and are adjusted for the time value of money, so that all flows of benefits and flows of project costs over time (which tend to occur at different points in time) are expressed on a common basis in terms of their present value. 

 Analysis of particular expenditure to establish whether the same expenditure could be used more effective or whether the same benefits are attainable with less expenditure. 

 Vickery has suggested three ways of assessing performance of a system given below 

 i. The economic efficiency of a system, i.e. the degree to which it minimises costs in achieving an objective. 

 ii. The effectiveness of the system. i.e. the degree to which it achieves its stated objectives; and 

 iii. The value of the system, being the degree to which the system contributes to user needs. 

  Library Authority and committee                                                       

 Library Authority  

Authority control is the proctice of creating and maintaining index terms for bibliographic  materials in a catalog  in library and information science. Authority control fulfills two important functions. First, it enables catalogers to disambiguate items with similar on identical headings. For example, two authors who happen to have published under the same name can be distinguished from each other by adding middle initials, birth and/or death dates, or a descriptive epithet to the heading of one author, second authority control is used by catalogers to collocate materials that logically belong together, although they present themselves differently. For example, authority  records are used to establish uniform titles, which can collocate all versions of a given work together even when they are issued different titles. Although theoretically, any piece of information on a given book is amenable to authority control, catalogers typically focus on authors and title. Subject heading  fullfill a function similar to authority records, although they are usually considered separately. Authority as a power which has some authority as a power which has some important rights and power to controlling all important rights and power to controlling all the activities of an institution. The activities of an institution. Library authority is a must powerful. It can be library authority is a most powerful. It can be a person or group of persons in the library. 

 i. Functions of Library Authority.  

ii. Direction in controlling. 

 iii. Decision making. 

 iv. Make a coordination between personnels. 

 v. Distribution of rights and responsibilities. 

 vi. Motivate to library staff. 

 Library Committee   

Library committee consist some selected members who are responsible for the progress members who are responsible for the progress of institution and making a well plan and of institution and making a well plan and policy for the development of library. Need of Library Committee 

 i. To make a policy for the library development 

 ii. To lack of controll 

 iii. To lack of efficiency in the decision making. 

 iv. To development of library. 

 v. To achieve the library aims. 

 vi. To need of financial aspects. 

 vii.To create coordination between income and expenditure power and functions of library committee. 

 viii. Selection of library personnel. ix. Decide the policy and aims of library. 

 x. Creation of rules for well organize in direction for annual reports. 

 xi. Security of library properties in otheruseful works for the development of library. 

 Members of the library 

Committee In case of a university, the library committee is formed with the heads of the departments of the university, the vice-chancellor, the librarian, etc. The vice chancellors is the chairman of the library committee and the librarian is the secretary (convener). In case of college library, the principal its the chairman and the librarian is the secretary. In case of school library the principal is the chairman and the librarian is the secretary (convener).  Responsibilities of the librarian toward library committee :  

i. Suggestions for policy making. 

ii. Apply all the policy and plan created by library.  

iii. Suggest for selection of library personnel. 

 iv. Suggest for creating annual budget of library according to requirement. 

 v. Help in creating annual report. 

 vi. Help in controlling staff activities.

                                                                     Notes                                                                

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