Budgeting

Budgeting: Budget is defined as “an estimated often itemized or expected income and expense or operating results for a given period in the future”. Thus, a library budget is an estimate of the expected income and expenditure 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.

a) Need and Purpose of Library Budget: Since a library is a non-profit organization, the financial responsibility on its part is much more important. The need and purpose of library budget can be looked at from 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 coordinates 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 effectiveness;

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

b) 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, miscellaneous, etc. However, this brings inflexibility, whereby money from one item cannot be shifted to another one easily.

ii) Lump Sum: In this approach a certain 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 concerned with activities of organization but individual items or expenditures are ignored.

vi) Per Capita Method: In this case a minimum amount per head of the population is fixed and financial estimates are prepared accordingly.

            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 items 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 on 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 combines 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 Peter 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(s) of the unit and on the function which it should perform so that it meets the reason for its existence. Basically, it is not concerned with what happened previously but rather with what is required to be done in future.

c) Expenditure: While estimated expenditure is planned three factors are kept in mind-

i) Comparison with past expenditure;

ii) Budgeting in accordance with the work programme and

iii) Using arbitrary stands and norms.

            Depending upon the size of the library, the types of library expenditure headings vary. The general forms of expenditure which can be applied to all types of libraries are given below.

 

Sl. No.

Item

Percentage of Total Budget

Initial

Recurring

1)       

Salaries

a) Basic Salary

b) DA

c) PF

20%

65%

2)       

Equipment and furniture

30%

5%

3)       

Books

a) Reference collection

b) New books

c) Others

15%

10%

4)       

Periodicals

a) Back volumes

b) Annual subscription

20%

10%

5)       

Binding and repairing of documents

2 ½%

2 ½%

6)       

Microfilming and digitization

7 ½%

2 ½%

7)       

AMC

-as needed-

-as needed-

8)       

Contingency

(stationary item, printing, Photostat, postage, telephone, electricity bills, etc)

2 ½%

2 ½%

9)       

Miscellaneous (overtime allowances, insurance premium)

2 ½%

2 ½%

10)   

Imprest Money (Sundry expenditure or the money which is kept for unforeseen events)

 

 

            In the above table, expenditure with regards to gift and exchange are excluded as they cannot be foreseen with any possible precision.

            In case of a new library, the initial costs as well as the operating budget require some special consideration. But in case of an existing library only the operating budget items need to be considered. As the library does not usually have all its functions at the start, the total staff is not required at the initial state; consequently, the recurring expenditure on salary will be about three times of that obtaining at the beginning.

            The cost of the library building and its maintenance usually form part of the budget of the organization as a whole and, therefore, this has been excluded from the library budget. If, however, the library has its separate existence, a sizable initial cost and a proportionate cost of maintaining will have to be provided in the budget. Any good architect will be able to give these estimates.

            The expenditure in a special library is higher than that in a general library as it involves more amenities and the use of many costly machineries and gadgets.

d) Accounting and Reporting: Accurate records regarding the amount paid out, encumbered and unspent are maintained by the accounts section. To ensure proper utilization of grants, an Account Register should be maintained to watch the expenditure. A Ledger should be maintained with double entry system. Receipts and expenditure items should be entered regularly in the said ledger. In addition to this ledger, a Cash Book in which daily transactions are to be entered and a Budget Allotment Register, department wise and objective wise, should be maintained so as to know easily and with accuracy as to how much amount has been spent and how much remains in balance. Monthly reports should be prepared regarding this. The reporting should be done to the users, library staff and higher authorities. This may appear an annual report of newspaper article or radio talk or in some other form.

           

Let Us Sum Up: 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. Budgetary statement generally depends on the sources of income and expenditure of the library. Library budget may be divided into two parts- Income and expenditure.

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