HomeMy WebLinkAboutKPL - 2009 Proposed Operating Budget ReductionREPORT
Report To: Chair Vrbanovic and Members of Finance and Corporate Services
Date of Meeting: January 12, 2009
Submitted By: Kitchener Public Library Board
Prepared By: Sonia Lewis, CEO and Sabina Franzen, Senior Manager, Administration
Ward(s) Involved: All
Date of Report: December 17, 2008
Subject: PROPOSED OPERATING BUDGET REDUCTION
RECOMMENDATION:
For information only.
BACKGROUND:
At the Finance & Corporate Services Committee meeting of Monday, December 8, 2008, the
following resolution was passed:
"That the 2009 Operating Budget for the Kitchener Public Library Board (KPL} be referred to the
January 12, 2009 special Finance & Corporate Services Committee meeting X2009 Capital /
Forecast and Operating Budget Deliberations}, pending consideration and report by the KPL on
the potential to reduce their operating budget by a further 1 %, taking into consideration potential
operating efficiencies as a result of Radio Frequency Identification Technology.
REPORT:
The 1 % reduction requested by Finance and Corporate Services Committee equates to
$87,000. In order to address this proposed reduction to the operating budget, consideration
was given to potential revenue generating opportunities, possible reductions to operating
expenses, and potential operating efficiencies resulting from the implementation of Radio
Frequency Identification Technology ~RFID).
A review of revenue generating opportunities resulted in a small increase of $4,000 in fines.
However, this gain was negated by the need to recalculate interest revenue from the original
2009 Operating Budget submission. Based on the declining interest rates experienced in the
last few months, a decrease of $16,000 in interest revenue is now projected. This results in a
net loss of projected revenue totalling $12,000.
The net loss of projected revenue, as well as the 1 % operating budget reduction, results in a
need to address an overall budget reduction of $99,000.
Within the Operating Budget, the two primary expense areas available to address a funding
reduction of $99,000 are resource materials and salary budgets. The original 2009 Operating
Budget already incorporated a $30,000 salary gapping target which the KPL Board proposes
increasing by $5,000. Most of the proposed budget reduction would be absorbed by the
resource materials and related processing/bindery budgets. In addition, some minor reductions
are proposed to a variety of smaller budget items.
Cutting KPL's budget by $99,000 will have some service impacts. Most significantly, a reduced
resource materials budget coupled with the weaker Canadian dollar will result in fewer items
being added to KPL collections and longer turnaround to satisfy holds that library customers
place on items.
The implementation of RFID provides opportunities to avoid future costs, rather than reducing
current expenditures. In 2008 circulation is projected to exceed 2.5 million items, a 12%
increase over the previous year. Over the past five years KPL has experienced 30% growth in
activity with no changes to circulation staffing levels. RFID will allow us to handle continued
increases in circulation with the current staffing levels, thereby avoiding the cost of additional
circulation staff.
FINANCIAL IMPLICATIONS:
The following itemizes the various adjustments identified to achieve the proposed budget
reduction and address the projected loss in interest revenue:
Revenue adjustments:
• Increase Fines revenue ($ 4,000)
• Decrease Interest revenue 16 000
TOTAL ($12,000)
Expense adjustments:
Decrease Public Programs $ 200
Decrease Resource Materials $45,900
Decrease Processing/Bindery $34,400
Increase Salary Gapping $ 5,000
Decrease General Business Expenses $ 2,000
Decrease Stationery $ 1,000
Decrease Equipment Maintenance $ 2,500
Decrease Facilities Expenses 8 000
TOTAL $99,000
The budget amendments as noted above would reduce KPL's 2009 operating budget request
by $87,000, thereby achieving the target established by Finance and Corporate Services.
Sonia Lewis
CEO
Sabina Franzen
Senior Manager, Administration
Kitchener Public Library Kitchener Public Library