new jersey state library trustees institute may 9,2009 pam rollo budgeting for knowledge
TRANSCRIPT
NEW JERSEY STATE LIBRARYTRUSTEES INSTITUTE
MAY 9,2009PAM ROLLO
Budgeting For Knowledge
What Is the Budget?
Plans defined in financial termsEvaluation toolThe vital link that exists between
planned activities and financial outcomes
A Document that provides insight into the activities of a specific entity for a projected time period expressed in quantitative terms
Budgets Are…
PoliticalCompetitivePhilosophical
Budgets Enable
Translate goals into controllable parts and tie performance to financial requirements
Allow resources to be allocated ensuring that programs are successfully delivered
Gauge operational performance
Budgets Should…
Be oriented to help an organization accomplish goals and objectives
Be realistic plans of actionProvide a framework for evaluation,
performance and improving budget planningBe participatoryNot be used to deny opportunityBe the Vehicle for modifying the behavior of
employees to achieve company goals
Why Do People Hate to Budget?
Budgets are seen as an impediment to goals
Seen as revealing weaknessPeople are fearful of not doing it properly and hampering the institution
Why Budget?
Gain controlEnhance productivityGain knowledge about the organization
Align with the strategic planReveal the expertise of the organization
Strategy and the Budget
MissionVisionBudget is the monetary expression of the strategic plan
Budgets follow strategy, Strategy doesn’t follow budgets
Budgets and Funding
StateMunicipalityFriends of the LibrarySpecial fundraising for unique efforts
How do Trustees Help?
Understand the Library’s financial needsCollaborate with the Library Director and become
knowledgeable about the Library’s goalsBe aware of the Library’s previous financial
performance Have knowledge about the Library’s opportunities
for local, state and federal fundingBecome knowledgeable of supplemental sources of
revenuesUnderstand the basics of legal and reporting
requirements for funding
Budgets Measure and Reveal
Examine costsInvestigate processesExplore new opportunitiesTest assumptions
Why Don’t People Measure
Suspect that it is a time waster – will reveal what we already know
Fear that their performance will be found inadequate
Fear that they will lose influenceFear that the they will be judged against
unfair standardsConfused by what system to useConfused as to where value lies
Policy Confirmation and Data Gathering
Collaborative understanding of the human resource policy (job sharing, benefits expense, training costs)
Ensuring good job descriptionsClear understanding of what the library currently
does for whom and with whomClear understanding of current staff capabilityFacility planning ( cost per square foot full
loaded)Square Footage devoted to collection, people and
programs
Budget Influences
The Economy
Library Objective
s
Community Needs
Customer
Demands
What to Measure?Break it down to Measurable Units
What services does the Library provide?Where do the Library’s programs take
place?Who participates in executing them?What are the costs affiliated with these
programs?Who attends these programs?
What is the Unit Cost?
Getting Information from the Community
Email surveysPrint surveysSummits and forumsTrial programsWEB 2.0 - Social networking toolsTouching non-membersSoliciting input from community thought
leaders
Prioritize Your Services and Activities?
Do you have sacred cows?
Benchmarking and Measuring
Competitive resourceFosters innovationSupports viabilityReveals core competenciesShould be embedded in the strategic planDefines value
Measurement Models
PLA standards http://www.ala.org/ala/mgrps/divs/pla/
plapublications/pldsstatreport/index.cfm
Comparative library performancehttp://nces.ed.gov/surveys/libraries/
librarysearch/http://harvester.census.gov/imls/publib.asp
Compare to other community services
Balanced ScorecardRobert Kaplan and David Norton
Qualitative and quantitativeConcentrates on customer satisfactionProvides a complement to financial measurement
Management system and measurement system
Employees themselves decide what to manage and count
Key Performance Indicators
Standards document educational, operational and financial benchmarks
Standards come directly from the strategic plan and support the Library’s goals
Standards should be performance based and link to quality experiences
Demonstrate that the organization knows what success looks like
Balanced Scorecardillustration from www.balancedscorecard.org
Targets of the Scorecard
How do customers see us?At what must we excel?Can we continue to improve and create value?
How do we look to our supporters?How do we look to our detractors?
Where does the Score Card fit?Illustration from www.balancescorecard.org
Learning More About the Scorecard
Identifying key performance indicatorsDetermining what success looks likePutting the plan on the calendarLinking the KPI to the budgethttp://www.balancedscorecard.org/
Budget Techniques
Line item or percentage budgetFormula budgetPerformance budgetingManagement by objectiveZero based budget
Budget Types
Formula budgetFunction budgetProgram budgetPPBS (planning, programming, budgeting
system)MBO (management by objective)Zero based
Formula Budgets
MechanicalApplies to all services equallyEach service is measured against the same
criteriaFacilitates comparisons among units and year
to year comparisonsReduces paperwork Eliminates details
Function Budgets
Targets the task to be accomplishedBundles related costs into the complete cost
of performing the process
PPBS
Overlooks the current base and concentrates on future activities
Combines budgeting and planningExpects a scenario of alternatives with an
accompanying cost of analysis Measures scenarios against performanceClarifies authority and responsibility
Traditional Fixed Budgeting
Increase or reduce by some set percentage Don’t ask, don’t tell Do the same with less or more with less Reactive and expensive if business conditions are guessed at
incorrectly Political and not financial Characterized by competition Difficulty in linking benefits of costs to quality of investment Drops costs in equal amounts over the 12 month period
(seasonality vs. equal distribution) Scrutinizes the monthly variance
Zero Based Budgeting
Defines, lists and ranks activitiesDetermines the point at which programs can
not be supportedCreates all inclusive “decision packets” which
contain 1) measurable performance objectives 2) appropriate actions to achieve performance objectives 3) resource allocations and 4) methods for carrying out the activities
Management by Objective
Sets tangible, verifiable and measurable goalsLists and links the activities necessary to meeting
those goals – high tacticsAnalyzes the activities in a step by step progressionCosts the activitiesLinks the activities to the calendarEncourages participatory managementProvides motivational benefits
Benefits to MBO
Motivates the teamStrengthens relationshipsProvides a framework for coachingEliminates weak appraisalsProvides knowledge of what is expectedIncreases satisfaction
Activity Based Budgeting
Shifts from detailed plans to trend analysis and rolling forecasts
Takes into consideration the real financial position
Based on performancePerformance is documented by KPIs Monitored by flashes against rolling forecasts
Ramifications of Activity Based
Goals are met in “real time”Act while resources are availableConsistent execution planEffective use of investment – clear linking of
tactics to successLink service to expectations of users
Remember when Preparing
Know your audienceAvoid surprisesQuantify, quantify, quantifyConcise and polishStories Count – Use modern toolsAmple supporting documentation Rehearse those answers
Success is Measured
How happy are the clientsDoes something new and remarkable happenWorks better than the competitionWorks as well or better than other librariesMeets and sticks to the planFlexibly meets new challenges
Other Places of Inspiration
http://www.oclc.org/us/en/par/default.htmOnline Computer Library Centerhttp://www.urbanlibraries.org/Urban Libraries Council