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This online course is no longer being updated online. It's only available through the Canvas website for the current course offering. 


After completing this session, you'll be able to:

Begin by viewing the class presentation in Vimeo. Then, read each of the sections of this page for more detail.

Explore each of the following topics on this page:


Library Budgeting

Figure by Gregory 2011Budgeting is an important component of collection development and management. Library financing is changing. With continued tight economic times, librarians will increasingly need to defend their budgets and seek outside funding for their materials. From grant writing to donations, all librarians need skills in dealing with the financial aspects of librarianship.

The library budget is a tool for turning library dreams into reality. The budget determines the services that will be offered by your library and the resources devoted to each library program. A carefully developed budget will ensure that available funds are effectively utilized to realize your library's service objectives.

A budget is a financial expression of the library's plan and objectives. Therefore, before a budget can be formulated, the plan for library services must be developed and the goals and objectives established. If the community is properly involved in the planning process, the library and its plan will be supported throughout the community. However, the library's budget must be realistic.

Library service is only one of the many services provided by the municipal government. If the budget necessary to support the public library plan requires a substantial increase in funding, the board should investigate other funding sources. State grants and federal funds should be considered supplemental to the local budget and never are they a means of reducing local appropriations.

ODLIS defines budget as

"the total amount of funds available to meet a library's expenditures over a fixed period of time (usually one or two years). In most budgets, funds are allocated by category of expenditure, called lines. In chronically underfunded libraries and library systems, budgeting can be a major source of frustration for librarians and library administration."

Explore the distribution of funds on the right above from Gregory (2011). Click to see the full page.


Read Program Administration: Budget Planning and Accounting for background information on budgeting.

Sources of Library Funding

The sources of funding are largely dependent on the library type.

Tax Dollars. The primary funding for public libraries and public school libraries comes from local tax appropriations. State universities also receive support from tax dollars, but their primary source of funding is tuition.

Tuition. Private schools, both K-12 and higher education, receive no direct tax support and are primarily funded by student tuition.

Fund raising. All libraries use fund raising to one extent or another to increase the support that they receive, and many write grants for additional revenues.

Fines. Fines may also be a source of funding, but the policy of charging fines is the subject of debate concerning their effectiveness in encouraging the return of materials and concerning their public relations effects. Before establishing a fine policy, the library should consider not only the possible revenue but also the potential negative public relations effects.

Fees. Under some state laws, public libraries may not charge fees for information-providing services; however, fees and charges for such things as making computer printouts and using a copy machine are legal. Most fees, charges, and sales by libraries are subject to the state sales tax and any county and special sales taxes.

budget girl

Budget Basics

There are a number of terms associated with budgeting that you should be aware of to help you through the budgeting process.

First is the definition of fiscal year, often seen abbreviated in documents as FY. This is the 12-month period that an institution uses for its annual budgeting and financial reporting. Generally, this is not a calendar year, but a July 1st to June 30th time period; however, the federal government uses an October 1st to September 30th calendar, so it is good to not only pay attention to the time period being used, but also the source of the funding. Some institutions allow fiscal year rollover, that is use of money that is not used in one fiscal year to be used in the next year. It is good to know whether you are in a "use it or lose it" environment or not because planned use of rollover funding can come in handy in some situations.


It is important to keep the operating and capital budget activities separate when planning for the financial needs and activities of the library.

The operating budget is made up of the day-to-day cost of running the library (e.g., utilities, personnel, maintenance). These are recurring budget items and can be anticipated from year to year.

ODLIS defines operating budget as

"funds allocated, usually on an annual or biennial basis, to cover the ongoing expenses incurred in running a library or library system, including the payment of salaries and wages and the purchase of materials, equipment, supplies, and services."

The capital costs are those associated with irregular activities such as remodeling, major technology upgrades, building a new building.

The library may receive a specific appropriation of funds, and these are then further allocated for specific purposes. The collections budget is one of the allocation areas from which libraries purchase monographs, serials, AV, etc. A line item budget outlines the exact expenditure planned in specific areas, and the specificity is determined by the type of library and the financial planning and reporting requirements of the institution.

Working budgets generally have a number of columns to indicate the amount allocated in a certain line, the expenditures or amount spent to date in that line, the encumbrances to show funds set aside for future payment, and the balance. The balance should be represented in black to indicate there are funds remaining rather than red to indicate that deficit spending has occurred.


Materials Budget Allocation

Libraries have a range of costs related to collection development and management, many that may not appear to be obvious. The actual cost of the materials, plus postage and handling are the anticipated expenditure; however, there are the personnel costs that are generally the largest expense with salaries, benefits, and continuing education. The materials costs will need to include subscriptions to cover print and online journals and online databases.

If you are going online with electronic resources, a technology infrastructure including development and maintenance of the hosting website is needed to provide the access. These would be in addition to the vendor charges that we discussed earlier in the class.

One that you may not consider would be a line for interlibrary loan and delivery costs. Sometimes when you request a book via interlibrary loan, you may be notified that the library has purchased a copy that is available for circulation. Was it more efficient for the library to purchase and catalog a paperback copy of the requested book or borrow it from another library for her. One of the books recently requested came from Glasgow, Scotland. What would be the delivery costs for that?

Budget Distribution

pigBudgets are distributed in a number of different ways.

A long-standing practice was 60% of the budget to personnel and 40% to materials; however, there is evidence that this is narrowing to a 50/50 split.

The budget is often then allocated based on subject or department with everyone wanting more. This is difficult when there are dramatic cost differences.

For example, science journals are notoriously priced at very high levels. Should that mean that more funding should go to the sciences? This is an important factor to consider when developing the collection development plan.

try itTry It!
For a real-world example, go to Northwestern University's Library Fund Management page. Search for other libraries that provide budget information online.

Materials Budget Management

accountingThe library materials budget should be firmly linked to the institutional and library goals and priorities, and it should clearly indicate how that budget will further those goals and priorities.

The budget should be realistically based on a solid financial foundation and follow sound financial procedures that promote accountability and efficiency. Thoughtful planning that demonstrates an understanding of library workflows and politics should be employed in the development of the budget, and standard accounting practices should be used.

Although official bookkeeping is usually handled within the library's accounting office, it is good to have a few skills to be sure your records align with theirs. That means that you should have some knowledge of general accounting to be able to record fiscal data. You should also have some skills in cost and tax accounting in order to determine business costs and the associated taxes. Auditing skills could also be very beneficial as you match up your records with those from the library's accounting office to verify accuracy.

Budget Process and Cycle

Libraries should start with a strategic plan that reflects the mission, vision, values, and long- and short-term needs and priorities of the organization. From there, a five to ten year business plan should be developed that gives an indication how the library plans to reach the goals outlined in the strategic plan. The three to five year financial plan follows to address the funding needed to be successful. Evidence for need of this long range planning is seen in the deals aggregators are striking with libraries for multi-year contracts for their products, or more accurately, access to their content. Finally, the annual budget is written with specific costs for the year that reflect the statements of the strategic, business, and financial plans.

Those involved in collection development need to make sure they are at the table at each step of the process or the materials budgets could be reduced in favor of remodeling, for example.


Preparing the Budget

Budgets are developed based on existing data and informed guesses as to the future. Start by looking at those plans that we just discussed to make sure you stay on track to reach your goals. It should also make it easier to budget because it should document your community's needs and the planned library activities to meet those needs. Among the items included in the plan should be any new programs requiring library support, such as the addition of a new major within an academic setting.

Next, you will need to determine the total financial resources available for what the library wants to accomplish with the collection. This would include the portion of the operating budget that has been allocated to collection development and maintenance. There may also be special funds available such as grant money or donations. These will need to be closely checked to see if there are any special criteria for how those funds are to be spent, such as support for the science, technology, engineering, and math initiative or STEM projects. Any rollover funds from the previous year should also be accounted for.

After you know the available resources, it is time to figure out how those will be spent. Start by looking at encumbrances for orders not yet received. Look at any known price increases to factor those into your budget. Most libraries also estimate unknown price increases and factor in an allowance for that inflation. If there are items that remain unordered from the previous year, determine whether you can afford them with this budget. Those interested in academic libraries can look at the Association of Research Libraries Library Materials Budget Survey to get an idea about budgets and expenditures. Most state libraries offer training to library directors so they can follow the state requirements when developing their budgets.

Coping with Rising Prices

There are various ways libraries have handled cuts in library budgets and rising prices. The most frequent means is through cancellations. This could include standing orders, serials subscriptions, and bibliographic databases. With these, it is a good idea to try to negotiate with your vendor to determine how to handle these cuts with the least harm to the integrity of the library. Many libraries have begun to enter into cooperative collection development agreements. These agreements can include shared costs for electronic resources or designated areas for specialized collection development in an effort to reduce individual library costs and duplication of holdings. This also leads to increases in interlibrary loan and document delivery services, which can reduce your materials budget but increase the delivery costs. The most difficult cut may be downsizing staff.

Reasons for Change

As much as we would like to copy the same budget from year to year, that isn't possible in today's changing library environment, and the budget must change to meet those innovations. One of the biggest areas of influence, however, is reduced library budgets coupled with the increase in prices. Not only does this include standard inflation, but also rising serials and E-book prices that often exceed inflation.

As libraries make the switch from print to electronic resources, changes will need to be made in the budget to support that new model. Additionally, vendors will change their practices and pricing models that may include fewer items offered at a higher cost. Finally, the library may be asked to support a new area, such as the high school adding Mandarin Chinese to the foreign languages offered, a college adding a nursing program, or a specialized technology business establishing in a community. All of these changes must be accounted for in the budget.

try itRead!
Moore, K., & Duggan, L. (2011). Transparency and publisher pricing models. Serials Librarian, 60(1-4), 98-108.

try itRead!
Chadwell, Faye A. (2008). What's next for collection management and managers. Collection Management, 34(1), 3-18.


Types of Budgets

You'll generally work with two types of budgets: line item budget and program budget.

Line Item Budget

The most common budget is the line item budget, and it may be the format required by your school or local government. It is also an easy way to keep track of expenditures with each category listed as a line on the budget. Examples of the categories would be personnel, materials, and equipment with each line often broken down further to list individual names with salaries and benefits for each under personnel, for example.

ODLIS defines line-item budgeting as

"a method of budgeting used in some libraries and library systems in which anticipated expenditures are divided into discrete functional categories called "lines" (salaries and wages, materials, equipment, etc.) for the purpose of systematically allocating resources and tracking operating expenditures."

Program Budget

Another type of budget that is often developed is a program or performance budget. This type of budget combines various lines that would be appropriate to a specific activity, such as administration, circulation, reference, etc. This allows the central administration and department heads to have a better handle on the resources available in each area.


The Real World

Ideally, the finished budget should be clear, accurate, consistent, and comprehensive. Every board member, employee, and governing body member should be able to understand what is being represented. There should be sufficient budget documentation to support the validity of the budget figures, and those figures should accurately agree with the documentation. The format should be consistent from year to year to allow for easy comparisons. This should provide indicators of what happened in the past and what is projected for the future. Finally, the budget should be as comprehensive as possible to provide a complete picture of the fiscal activities.

try itRead!
Buczynski, James A. (2008). Looking for collection 2.0. Journal of Electronic Resources Librarianship, 20(2), 90-100.



Buczynski, James A. (2008). Looking for collection 2.0. Journal of Electronic Resources Librarianship, 20(2), 90-100.

Chadwell, Faye A. (2008). What's next for collection management and managers. Collection Management, 34(1), 3-18.

Gregory, Vicki L. (2011). Collection Development and Management for 21st Century Collections. Neal-Schuman Publishers, Inc.

Lewis, D. W. (2008). Library budgets, open access, and the future scholarly communication: Transformations in academic publishing. College & Research Libraries News, 69(5), 271-3.

Moore, K., & Duggan, L. (2011). Transparency and publisher pricing models. Serials Librarian, 60(1-4), 98-108.

Sievers-Hill, A. (2009). Building library collections in the 21st Century--It's the economy, people. Against the Grain, 21(1), 72-3.

Weir, Ryan O. (September 201). Trimming the library materials budget: communication and preparation as key elements. Serials Review, 36(3), 147-151.

Wu, Eric FuLong, Shelfer, Katherine M. (2007). Materials budget allocation: a formula for fitness review. Library Collections, Acquisitions, and Technical Services, 31(3/4), 171-183.

Portions of this page were adapted from Collection Development & Management by Irwin and Albee (2012).

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