FinMan and Bud: An Online Course Report

“FinMan and Bud.” So read my folder name for a month-long online course I recently completed via ALA Editions called “Financial Management and Budgeting for Librarians.” Every week, when about to embark on my studies, the folder name would bring to mind a happy mental image: either a beer-drinking mermaid or one frolicking with Air Bud (beloved movie star and sports hero of the 1990s), depending on the day.

Eventually I would shake out of this reverie, however, and join the course – which was a nice introduction to financial management terminology and the types of budget scenarios (and challenges) that libraries face. It was comprised of weekly lectures, readings, and assignments. While I wouldn’t feel comfortable sharing the lectures, or even the readings in their entirety (the syllabus appears to be behind a paywall), I thought I would share a summary of one article we read that provides a practical introduction to typical library budget types. Linn, Mott. "Budget Systems Used In Allocating Resources to Libraries." Bottom Line: Managing Library Finances 20.1 (2007): 20-29. Academic Search Premier. Web. 1 July 2015.

[Citation only via ASP. Publisher website: http://www.emeraldinsight.com/doi/full/10.1108/08880450710747425 ]

This article provides an introduction to the types of budget systems typically employed in libraries. It details the following:

Incremental line-item budgeting In this system, all increases/decreases are disbursed equally for all units on a percentile basis. The previous year’s budget is used as a base for the next fiscal year. This type of budget is easy to manage, but strategic changes cannot be made without causing distress.

Formula budgeting In this budgeting system, funding is determined by mathematical formula. In an academic setting, for example, the formula might take into account degrees conferred, credit hours taught, students enrolled, square footage of buildings, etc. This system is predictable year to year, but is often too rigid to foster new programs or practices.

Zero-based budgeting In this system, the budget is recreated from scratch every year. Each unit within the organization determines their own budget lines and ranks them by priority. This system takes a lot of time and puts the focus on whether activities justify funding, so is often used during retrenchment.

Program budgeting In this system, all spending is attached to one program or another. All the costs and outputs must be quantifiable to tie to that funding program. When multiple programs exist, maintaining that independence can be difficult. This system focuses on why money is spent, along with how. It does not necessarily take assessment of outputs into account.

Performance-based budgeting This system focuses on outcomes over outputs, and as such can be responsive to calls for accountability. Again, however, assessment can be difficult – especially when trying to pinpoint large outcomes (e.g. “learning”) to specific activities.

Responsibility center budgeting In this system, every unit in an organization manages its own expenses and revenues. This can create redundancies across the organization.

Block-incremental budgeting In this system, spending is decentralized out to the units, but income is controlled centrally.

Initiative-based budgeting (sometimes called reallocation budgeting) This is a short-term, organized way of creating a pool of money for funding new initiatives. Every unit must give back a percentage of its base budget to the pool.  

It is not uncommon for these budget systems to be mixed. An organization might, for example, use a zero-based budget for a different unit each year along with an incremental budget for the rest. I enjoyed this course and appreciated the opportunity to learn about all of the functions a budget might perform: from controlling spending to coordinating activities to setting organizational priorities.