Many factors affect collection budget and planning, such as the administrative structure of the library, funding sources, fiscal year alignment with the calendar year, and institutional financial management policies.

Budget Types and Fiscal Responsibility

The overall library budget usually consists of an operations budget and a capital budget. An operations budget includes expenses for the running of a library, such as personnel, technology, maintenance fees, and utilities. A capital budget generally covers fixed assets such as property and equipment. It is meant to be used for item improvements, replacements, and additions that are high cost. The minimal cost of something to be considered part of the capital budget is set by the fiscal authority that the institution or organization operates under. For example, they may stipulate that anything under $5,000 can be funded out of operations but over that amount would be funded out of capital.

In budgetary parlance, items that make up your collection are called “materials.” It covers all types of formats and resources in your library collection. Library materials funding can be a part of the operations budget or it can be separate. When it is part of the operations budget, materials and personnel can make up 80-90% of the operating budget as a whole.

In general, funds designated as part of the operations budget cannot be used for expenses in a capital budget and vice versa. The ability to carry forward any unspent funds from one fiscal period to the next will vary by institution.

Budget types

The type of budget used by a library will be influenced by the type of budget used by the parent organization. There are several types of budgeting that one may encounter in libraries. In general, only one type of budgeting will be used by a library. Below are the most common budget types you will encounter.

• Line-item: A listing of items of expenditure each with their own dollar amount that, when added together, represent the total expenditure.
• Lump sum: Allocation of an amount of money with no specific line items.
• Program/Performance: Links budgeting to organizational objects.
• Formula-based: Allocation based on objective quantitative criteria based either on historical allocation or formulaic projections.

Budgeting methods

• Baseline budgeting: Uses the previous year’s allocation to start and is modified by forecast data and expected changes, such as changes to the patron population or demand for resources.
• Zero-based budgeting: Starts at zero dollars and adds dollars correlated to specific programs and activities.

Staff involved in collection budget planning need to understand the library’s methodology used to calculate expenses, projections, and encumbered and free funds. They should also understand the role of special funds or endowments as they affect the collection budget.

Funding Sources

The main source of library funding is usually an appropriation from the parent organization. Of note, funding for library materials is often considered a protected category inviting extra inquiry about how it is allocated and spent.

Other funding sources may include:

• Cost sharing with departments outside the library
• Donations
• Endowment income
• Grants from parent or outside organization
• Fees and charges for services
• Fines
• Fundraising (including Library Friends groups)
• Sponsorships

Accountability of how budgets are allocated and spent is extremely important. Demonstrating effective stewardship of funds received is often a core library mission. Organizations may require metrics to show how the budget is being used and its impact on the mission and/or values of the institution.

Grant Funding for Collections Content

Receiving grant funding is one way that libraries can purchase content that is not covered by a given budget. Although this option only provides one-time funding for titles, grants can be helpful for developing or expanding collections that are more likely to maintain their relevance after a few years (e.g., memoirs, graphic medicine), or to experiment with new content, formats, or platforms.

Prior to applying for a grant, you will want to speak with your manager and your institution’s Office of Sponsored Research (or similar department, if available) to get their support and ensure that you will not run into any organizational conflicts. For example, sometimes an organization can only submit one grant application to a funder, or an institution may not permit librarians to be Principal Investigators (PI) for grant applications. The Office of Sponsored Research is also a good place to start if you are interested in learning about places to look for possible internal funding sources. As for external funding, the following organizations are good places to begin looking for grants that support purchasing collections content:

• Network of the National Libraries of Medicine (NNLM): Funding Opportunities
• Institute of Museum and Library Services (IMLS): Grants
• Grants.gov
• American Library Association: Grants

It is also worth checking to see if your state library association offers grant funding. Other general databases you can search for grant funding include DEMCO (free), Foundation Center ($), Pivot-RP ($), and SPIN ($).

Below are some general tips when applying for grants:

• Pay attention to return on investment.
  • Is the amount of work required to apply worth the amount you will receive?
  • If you get the grant, is the volume of documentation you will need to submit worth the amount you received?
• Make clear how your application aligns with the grant or organization’s intended purpose, in part by incorporating their keywords.
• Provide quantitative and measurable data whenever possible.

Allocating, Expending and Monitoring

How the materials budget is divided up varies from library to library. Typical line item allocations include:

• Subject or discipline
• Location (e.g., branch library)
• Type of patron
• Format or genre (e.g., monographs, reference materials, backfiles)
• Type of publisher (e.g., trade presses)
• Support tools and services (e.g., MARC records for cataloging)

It is important to monitor budget expenditures and balances regularly as mid-year adjustments to spending may be necessary to ensure all funds are spent by the end of the fiscal year.

Preparation and Presentation

At its most basic, a budget represents the funding needed and how it will be spent in one fiscal year. Multiple scenarios at various funding levels (i.e., specific percentage increase, flat funding, or specific percentage decrease) may be requested by organization leadership to present to funding administrators for consideration. Providing different scenarios can help highlight the consequences of flat and reduced budgets, especially if specific resources can be identified that would likely be cut due to lack of funding. Some institutions will require an annual expenditures report that includes sections on expected budgetary increases and new expenditures.

Budget terms can vary depending on the organization. They range from a fiscal year (July 1 to June 30), to the calendar year (January 1 through December 31), and in some cases it may begin with October 1 and end on September 30. Knowing when your budget begins and ends is important for collection development librarians because it impacts when you can purchase items and your planning for next year’s budget. For example, it can help you get quotes for new resources before the new fiscal year budget is locked in so you can add them to your line item expenditures.

Forecasting and Decision Support

When preparing a budget, it is recommended that you familiarize yourself with sources that annually summarize current price trends into indices. These indices provide tables and analysis that measure changes in average U.S. serials prices within a historical context. The annual “Periodicals Price Survey,” published annually in April by Library Journal, forecasts serials inflation rates for the coming year. Additional helpful resources include:

• The Library and Book Trade Almanac (formerly known as The Bowker Annual), published by Information Today, Inc. This title includes the “Prices of U.S. and Foreign Published Materials” which is also available on the ALA website.
• The “Periodicals Price Survey” published annually in April by Library Journal.

You will also know from your licenses how much a subscription will increase every year. This annual percent increase should be factored into forecasting your budget. The annual percent increase of a serial can often be negotiated to be lower than the initial offer, especially if you are willing to consider a multi-year deal. Your institution may, however, set a threshold for the percentage and not allow you to purchase resources that increase more than a specific amount annually.

Systems and Processes

Staff involved in collection budget planning need to understand:

• The library and institutional system used to track the budget (e.g., ILS, institutional financial system, spreadsheets).
• The budget approval process and who ultimately approves the budget.
• What types of reports and data points are needed for library or institutional administration.

Note that collections-specific budget tracking records or spreadsheets are often kept separately by the library or collections department.