2006 Budget. Presented to the Board of Trustees

Transcription

1 2006 Budget Presented to the Board of Trustees Approved December 14, 2005

2 PIERCE COUNTY LIBRARY SYSTEM BOARD OF TRUSTEES Budd Wagner, Chair J.J. McCament, Vice-Chair Paul Chasco Eugene Matsusaka Allen P. Rose BUDGET PREPARED BY Clifford Jo Director of Finance & IT Neel Parikh Library Director Chuck Bowman Finance Analyst Cindy Bonaro Community Outreach Services Coordinator Mary Getchell Marketing and Communications Manager Holly Gorski Human Resources Manager Becky Hester Collection Services Coordinator Lynne Hoffman Development Director Larry McCarty Facilities Manager Judy Nelson Coordinator of Youth Services WITH ASSISTANCE FROM David Kennicott Acting Deputy Director of Public Services Carol Bell Managing Librarian William Christiansen Managing Librarian Rose Jetter Managing Librarian Jennifer Patterson Managing Librarian Kathleen Wolf Managing Librarian Lynne Zeiher Managing Librarian Storm Reyes Executive Assistant to the Director 2006 Budget Page ii Pierce County Library System

3 GUIDE TO THE 2006 BUDGET Herein contained is the Pierce County Library's 2006 budget, which includes revenues and expenditures for the Library's operating and capital budgets. To obtain copies of this document, please contact: Storm Reyes Pierce County Library System th Street East Tacoma, WA (253) (253) (fax) The document is also available online at the Library's website: Budget Page iii Pierce County Library System

4 TABLE OF CONTENTS GUIDE TO THE 2006 BUDGET...iii TABLE OF CONTENTS...iv LIST OF TABLES... vi LIST OF FIGURES... vi LIBRARY DIRECTOR'S MESSAGE... 8 MISSION, VISION, VALUES Mission...12 Vision...12 Values...12 SERVICE DIRECTIONS...14 BALANCED SCORECARD Initiatives for Customer Perspective Serving Our Customer...16 Internal Processes Perspective How We Run the Business...17 Employee Learning and Growth Perspective Develop Employees...18 Financial Perspective Manage Resources...19 LIBRARY SERVICES Service Area...22 Services...22 Key Metrics (2004)...23 BUDGET SUMMARY...27 Budget Method & Sequence...27 Combined Funds Budget Operating Budget Summary...30 REVENUES Revenue Assumptions...32 Taxes...33 Charges for Services...34 Library Fines...35 Miscellaneous...35 EXPENDITURES Expenditure Assumptions...40 Personnel...42 Maintenance & Operations...44 Materials...47 Other Expenditures...48 GENERAL FUND BALANCE General Fund Balance Summary...51 DEBT SERVICE, CASH, INVESTMENTS Debt Service Budget Page iv Pierce County Library System

5 Cash...54 Investments...54 CAPITAL IMPROVEMENT FUND Summary...56 Financing Sources...56 Carryover Projects Capital Improvement Plan...57 Fund Balance...58 CASH FLOW ANALYSIS/BUDGETING Cash Flow Analysis...62 GLOSSARY REFERENCES Budget Page v Pierce County Library System

6 LIST OF TABLES Table 1 - Combined Funds Budget (Expenditures)...28 Table Operating Budget Summary...30 Table General Fund Revenue Summary...32 Table 4A General Fund Revenue (Final Budget)...36 Table 4B General Fund Revenue (Actuals)...37 Table Expenditure Summary...40 Table Expenditures By BARS Category...41 Table Personnel Detail...43 Table PCLS Staffing...43 Table Maintenance & Operations Detail...46 Table Materials Detail...48 Table General Fund Balance Summary...51 Table 12 - Capital Improvement Fund Detail...59 Table 13 - Cash Flow Analysis/Budget Worksheet...64 LIST OF FIGURES Figure 1 Balanced Scorecard...19 Figure 2 Map of Branch Locations in Pierce County...24 Figure 3 Organizational Chart...25 Figure 4 Budget Process & General Timeline...29 Figure 5 Source of Revenues...38 Figure 6 Materials Budget History...47 Figure 7 Materials Expenditures Per Capita History (Actuals through 2004)...47 Figure Materials Expenditures Per Capita Comparison*...47 Figure 9 CIF Transfer History (Actuals Through 2004)...49 Figure 10 General Fund Ending Fund Balance...52 Figure 11 Ending Fund Balance as % of Year-End Actual Revenues...52 Figure 12 CIP Budget History (Excludes Carry Forwards)...57 Figure 13 Capital Fund Ending Fund Balance...58 Figure 14 Combined Funds Ending Fund Balances Budget Page vi Pierce County Library System

7 LIBRARY DIRECTOR'S MESSAGE

8 LIBRARY DIRECTOR'S MESSAGE 2006 marks the fifth year of implementing the service directions of the Strategic Plan and the first year based on the Balanced Scorecard. Judicious fiscal management over the last five years and effective cost containment by departments combined with unusually high new construction dollars and a continued low cost of living increase has led to a balanced budget and maintained the same level of services in this fiscal year. The limit of 1% increase in regular property tax requires continued attention to planning for the future. Revenue continues to increase, barely allowing the Library to keep up with expenditures. After three years of reducing the budget by a total of $1 million and two years of revenue barely keeping up with inflation, it has become necessary to address ongoing operational issues, ensuring adequate infrastructure to provide the current level of basic service. BUDGET PRIORITIES: During 2005, the Leadership Team created a balanced scorecard to prioritize library initiatives and develop performance measurement. The Balanced Scorecard focuses management on four perspectives of the Library: Customer Perspective Serving our customer Internal Processes Perspective How we run the business Employee Learning & Growth Perspective Develop employees Financial Perspective Manage resources See Chapter 4 for an outline of the 2006 initiatives for the scorecard. Measures and targets will be reported on at the end of the year. Since 1996, the population of the service area has grown by 47%. During this time frame the library has strived to provide contemporary, responsive and relevant services. This is particularly evident in the growth of technology. However, since 2001 the library has struggled to maintain adequate Information Technology. In addition, services have not expanded to meet the needs and volume of the growing population. This budget takes steps toward addressing inadequacies in the technology infrastructure, but does not fully address the changing demographics. This budget does address a few high-pressure areas for increased workloads and service demands. Department Heads evaluated the budget based on past year s expenses and projected trends. After five years of reductions in staff, cost containment measures and reallocations, very few reductions were possible in this fiscal year. Minor reductions were made in equipment purchases, contracted maintenance and substitute hours for branch services and some other departments. There were minor increases in various areas based on cost of living and expenses needed to support a current service. After four years of energy cost containment, this was the first year of increases in energy costs. Electricity and natural gas increased and fuel was substantially increased. Due to the age of buildings and some project deferral, there were increases in estimates for general repair and maintenance, and maintenance projects. Rent increased this the year due to DuPont Lease expenses growing to cover the full square footage of the facility Budget Page 8 Pierce County Library System

9 KEY INITIATIVES: Marketing: This budget continues the commitment to marketing that began in the 2005 budget. A Marketing Plan for the 2006 focuses on goals to develop the necessary tools to: Effectively and efficiently communicate with our key audiences Effectively market and communicate library system benefits and services to result in the library being viewed as a valued asset to the community and worthy of sustained public support. Enhance key audiences awareness about the library system s significance and value to the community throughout the county Increase visits to branches and website with implemented communications and marketing tactics The plan outlines strategies that include improve our internal capacity, market research to improve customer focus, develop and implement focus programming and marketing to reach the key audiences of families and tweens, and perform necessary and ongoing marketing and communications. The budget proposal includes a library card campaign and enhanced promotion of the summer reading program. An advertising budget was developed with co-sponsored by Pierce Transit and local newspapers. Information Technology: Continued traffic on the Internet and our network requires an upgrade of the Internet line into PAC and network line upgrades at Lakewood and South Hill. Fees for these lines and cost of maintenance of network equipment will increase this year. Youth Services: The pressure of population growth is particularly evident in services for children. There has been no increase in Youth Services librarians for at least ten years, yet the demand for services for children both in the library and in partnership with the schools has increased significantly. Based on this need, nominal increases in Youth Services staffing for both Graham and Bonney Lake were funded. The budget also funds the Spanish-speaking assistant in the Explorer, currently funded through a grant. CAPITAL IMPROVEMENT BUDGET: The capital improvement budget for 2006 preserves and maintains library facilities, continues implementation of Express Checkout and supports effective delivery of IT and senior services. Express Checkout: During 2006, Express Checkout implementation will be completed in Summit, Lakewood, Sumner, and Graham. Merchandising will be implemented in small branches. The project budget was increased by $17,000 to install additional PCs. As part of the Express Checkout project, the layout of the entrance to each branch is significantly changing to create a more welcoming and customer-friendly environment. Facility Improvements: The Express Checkout project requires that the library facilities should be closed for three weeks and reconfiguration of a major percentage of the public floor. As a result of the project, the library has chosen to replace aging carpets where replacement after reconfiguration would be difficult or unsightly and in addition, avoid disruption of public service another time. At the same time, it is cost effective to repaint the interior of buildings over ten years old. For a similar reason, the Eatonville branch will be re-carpeted and repainted. More computer workstations will be added and 2006 Budget Page 9 Pierce County Library System

10 the branch will be closed for two to three weeks. At the same time, the 15-year-old carpet will be replaced and the branch interior painted. The Key Center branch has not had new carpet or paint for 25 years and this will be addressed this year. Other facilities projects include re-roofing and replacement of the HVAC system at the South Hill branch, remodel of the Processing and Administrative Center to accommodate changes in department functions, and replacement of a bookmobile generator. Community Outreach Services: Purchase of a small van called a Sprinter will improve the efficiency of the Community Outreach staff, eliminate potential L&I dangers from lifting carts, and allow for greater flexibility of staff to serve nursing homes. University Place Relocation: The project budget for a new University Place branch was revised to reflect the current timelines and the project changes. network performance, the capacity of the Internet line into PAC and the lines at South Hill and Lakewood will be increased. During 2006, the effectiveness of the BiTech financial system will be evaluated, reviewing whether to replace the system with a less expensive system. Funding for a new system has been incorporated in this budget in case the decision is to move off BiTech. Thank you for support of the staff at Pierce County Library and of the services that we provide for the residents of unincorporated Pierce County and the cities and towns annexed to the library system. Respectfully submitted, Neel Parikh, Library Director IT: As a part of recent network upgrades and to meet the demand for improved 2006 Budget Page 10 Pierce County Library System

11 MISSION, VISION, VALUES

12 MISSION, VISION, VALUES MISSION To bring the world of information and imagination to all people of our community VISION We are the community s choice for the discovery and exchange of information and ideas We value VALUES Customer service excellence Freedom of expression and free flow of ideas The diversity of people we serve, their opinions, capabilities, needs and interests The power and worth of words and images Equitable access to all library resources and services Responsible stewardship of public funds Creative solutions by solving problems in innovative ways Our diverse, skilled, and knowledgeable employees working in a safe and stimulating environment As part of the work done to develop the Library s new Balanced Scorecard, the mission, vision, and values were revised Budget Page 12 Pierce County Library System

13 SERVICE DIRECTIONS

14 SERVICE DIRECTIONS The Strategic Plan established the following service directions: Basic Literacy: Working in partnership with community agencies, the library will provide literacy and ESL materials and services to promote success in school and in life, and remove barriers to success. Commons: The library will foster community involvement and will contribute to a sense of community identity by providing programs and activities in an inviting environment where people can meet, gather and share information and ideas. Current Topics and Titles: The library will provide current materials in various formats, and programs that meet the community s desire for current information and entertainment. General Information: In order to meet individuals unique information needs, the library will provide reliable and timely information through library materials and electronic resources and delivered by skilled staff. Life-Long Learning: To foster life-long learning, the library will offer programs and library materials to expand skills and support individual growth and development. Stones Stones are observing, As they have always done, As they always will. Caring not for the chains of age. If only they could tell me, Their secrets, their desires, their memories, I would be the richest in the world, For stones are the historians of time as no others are. Stones see everything, As man never could. They see the bustling of man s short life, And they laugh at the frailty of human age. A stone is eternity. Nicholas Robinson Kopachuck MS, 7th Grade 2005 Our Own Words 7th & 8th Grade Poetry Winner Outreach: For populations isolated by geography, income, language or physical condition, the library will provide access through specialized outreach services is the final year of the Strategic Plan. The Strategic Plan will be created and replace it, many components coming from the recently implemented Balanced Scorecard Budget Page 14 Pierce County Library System

15 BALANCED SCORECARD

16 BALANCED SCORECARD INITIATIVES FOR 2006 CUSTOMER PERSPECTIVE SERVING OUR CUSTOMER The customer perspective focuses on how the customer perceives our services and what services the customer expects. OBJECTIVES Develop customer focus throughout the library Consider customer needs, wants and perceptions on all that we do. Initiative 1: Provide training opportunities, providing tools and techniques to be implemented with management staff to develop a customer focus Initiative 2: Incorporate customer input in major projects: - PowerPAC improvement design improvement - Information services improvement - Strategic planning Initiative 3: Develop a customer survey to measure customer satisfaction annually Deliver contemporary programs and services Meeting the requests and expectations of all our customers. Aligning current and forward-looking services to the demands of a changing marketplace. Initiative 1: Change method of checking out materials; completion of Express Checkout project Initiative 2: Review and improve our delivery of Information services Initiative 3: Expand access to books through downloadable electronic books Initiative 4: Expand public access to online services with WiFi Improve public awareness and knowledge Including a strong pro-active communication initiative to understand customer needs and align our services with customer needs and foster the Library s presence and value among the communities. Initiative 1: Implement 2006 Marketing Plan and achieve targets Budget Page 16 Pierce County Library System

17 INTERNAL PROCESSES PERSPECTIVE HOW WE RUN THE BUSINESS OBJECTIVES Improve customer access to materials and services Make it easier for customers to know what we offer at each access point and for them to get what they want Initiative 1: Redesign and improve the website. Initiative 2: Redesign and improve PowerPac. Initiative 3: Fully implement collection merchandising. Initiative 4: Implement branch staff training for improved customer assistance, reference and use of technology. Improve the delivery, use and application of technology Support all facets of current and future programs and services strategies with contemporary, usable, reliable, and innovative information systems Initiative 1: Complete hiring of staff and reduce backlog of IT critical projects. Improve and modernized business processes Implement sound, results-oriented, contemporary business processes & systems Initiative 1 Initiative 2 Improve or replace BiTech financial system functioning. Improve acquisitions processing with Polaris. Initiative 3: Create a survey to rate internal business processes. Develop a baseline for this survey and use this survey in later years to identify areas needing improvement Budget Page 17 Pierce County Library System

18 EMPLOYEE LEARNING AND GROWTH PERSPECTIVE DEVELOP EMPLOYEES OBJECTIVES Create a learning culture Create a learning culture supporting knowledgeable employees with up-to-date skills is key to delivering high-quality services designed to meet customer needs Initiative 1: Implement prepare training Initiative 2: Define training and education level needed for various positions Initiative 3: Define opportunities for developing a learning culture at Pierce County Library System Attract and retain a talented and diverse workforce Experienced and skilled employees are key to delivering high-quality customer services Initiative 1: Develop a survey for hiring authorities on quality of hires Initiative 2: Develop and implement an initiative to improve hiring results and the hiring process Initiative 3: Develop a succession plan for top management and staff in critical positions Life The Light What life is there in dark and dismal night? The light s the life that rises every day. Not rain nor sleet that showers down the ground, But sunshine pouring out its bright array. A golden sun breaks forth the fruitful spring, Awakening the cold and cloudy skies. As buds arise and flaunt their colors bright, And creatures open misty, shrouded eyes. The darkness runs and hides beneath the earth For shelter in the graves of dust and grime. Death s glory gone and grip released of life. What room is there for dark in sun s set time? When piercing light grows strong and higher still, No shade shall stand, the shadows sink past hills. Benjamin Love Covenant HS, 12th Grade 2005 Our Own Words 11th & 12th Grade Poetry Winner 2006 Budget Page 18 Pierce County Library System

19 FINANCIAL PERSPECTIVE MANAGE RESOURCES OBJECTIVES Diversify funding Increase revenues through a thoughtful, comprehensive, fiscally-responsible approach Initiative 1: Increase amount of donations and grant giving through a creation of a climate of giving at the library Initiative 2: Increase salvage and sales Reduce the trending gap between revenues and expenditures Create a sustainable funding strategy with the public and implementing process improvement and modernization techniques: continue efficiency and cost control Initiative 1: Implement a sustainable funding strategy with the public Initiative 2: Begin work to create a prioritization process for public improvement Figure 1 Balanced Scorecard THE BALANCED SCORECARD DIAGRAM IS ON THE NEXT PAGE 2006 Budget Page 19 Pierce County Library System

20 PIERCE COUNTY LIBRARY SYSTEM We value Customer service excellence We value Freedom of expression and free flow of ideas Mission To bring the world of information and imagination to all people of our community VISION We are the community s choice for the discovery and exchange of information and ideas We value The diversity of people we serve, their opinions, capabilities, needs, and interests We value The power and worth of words and images We value Responsible stewardship of public funds Manage Resources Diversify funding Contain expenses Serve the Customer Develop customer focus through the library Deliver contemporary programs and services Improve public awareness and knowledge Strategies Remove access barriers Serve target populations Meet changing marketplace needs Develop and enable a work-force to achieve our vision Develop Employees Create a learning culture supporting knowledgeable employees with up-to-date skills Attract and retain a talented and diverse workforce Run the Business Improve customer access to materials and services Improve the delivery, use & application of technology Improve and modernize business processes We value Equitable access to all library resources and services We value Creative solutions by solving problems in innovative ways We value Our diverse, skilled, and knowledgeable employees working in a safe and stimulating environment 08/10/05

21 LIBRARY SERVICES

22 LIBRARY SERVICES SERVICE AREA T he Pierce County Library System (PCLS) provides library services in the unincorporated areas of Pierce County in Washington State, and 14 annexed cities and towns: Bonney Lake (annexed)* Buckley (annexed)* DuPont (annexed)* Eatonville (annexed)* Edgewood (annexed) Gig Harbor (annexed)* Graham* Key Center* Lakewood (annexed)* Milton (annexed)* Orting (annexed)* Parkland/Spanaway* South Hill* South Prairie (annexed) Steilacoom (annexed)* Summit* Sumner (annexed)* Tillicum* University Place (annexed)* Wilkeson (annexed) * Denotes branch The total estimated population served in 2004 was 495,703. In August 2004, 219,946 people held Pierce County Library System library cards and the library collection included 1,229,018 items. In 2004, 5,476,660 items were circulated and there were 2,325,150 patron visits to the branches. In Washington State six library systems serve 250,000+ population, including Pierce County Library. In 2004, PCLS ranked fourth in population served and fourth in total circulation. These six library systems operate a total of 142 branches. In 2004, Pierce County Library had three branches in the top 20 busiest branches (circulation) out of 342 total branches in Washington State, reported by the Washington State Library. SERVICES The Library provides services through the seventeen branches, three bookmobiles, homebound and senior services, child care services, and the website. System level branches (Lakewood and South Hill) are open 56 hours per week, six days per week and provide a full range of services, including Reference and Youth Services librarians, meeting rooms, and extensive reference, fiction and non-fiction collections. Four regional branches (Parkland/Spanaway, Peninsula, Sumner, and University Place) are each open 56 hours, 6 days per week. All regional branches provide most of the services available at a system branch on a more limited basis. The eleven community branches (Bonney Lake, Buckley, DuPont, Eatonville, Graham, Key Center, Milton, Orting, Steilacoom, Summit, and Tillicum) provide smaller collections designed to meet the immediate needs of the local communities and are open from 14 hours three days per week to 40 hours five days per week. The Community & Outreach Services Department serves 19 nursing/retirement homes and 55 group homes and homebound patrons. Two bookmobiles currently serve isolated communities at 25 different locations, and Explorer, the new children's bookmobile, serves 16 different locations having children in low-income neighborhoods. The Youth 2006 Budget Page 22 Pierce County Library System

23 Services department serves 48 childcare centers and 68 family childcare programs. All Pierce County Library System services are available to residents or property owners in the Library district. Any citizen can access the Pierce County Library System's holdings and databases electronically through the website. Users of smaller branches are able to access the collections and many of the services available at larger branches by means of the online public access catalog, the Internet, TDD, reference databases, fax machines, and toll-free telephone access to the Reference Center. Please see the Map on the next page for branches located throughout Pierce County. KEY METRICS (2004) Population of service area: 488, ,703 Service Area Size (in square miles): 1,600 1,600 Library Materials: 1,244,070 1,229,018 Circulation: 5,345,062 5,476,660 Library Visits: 2,321,395 2,325,150 Open Hours/Week: No. of Registered Borrowers: 183, ,946 Nursing Homes, Childcare Centers & Homebound Served: Programs Given for Children: 1,483 1,566 Programs given for Adults: Program Participants: 54,766 55,621 Summer Reading Program Attendance: 21,817 21,150 Bookmobile Stops: 1,488 1,315 Volunteer Hours/Year: 8,000 4,698 Website Visits: 458,534 1,122,612 Staff (Employees): Staff (FTE equivalent): In Washington State, PCLS ranked in 2004: 4th in total circulation 4th in population served 4th in operating budget Nationally, PCLS is ranked in the recent 2004 HAPLR ratings as follows: 15th among 97 similar category libraries (population 250, ,999) Upper 75th percentile in 7 out of 15 HAPLR categories Scored 715 out of 1,000 (WA average is 654; national average is 503) 2006 Budget Page 23 Pierce County Library System

24 Figure 2 Map of Branch Locations in Pierce County 2006 Budget Page 24 Pierce County Library System

25 Figure 3 Organizational Chart Board of Trustees Neel Parikh Director PCLS Leadership Team* Storm Reyes Executive Assistant Mary Getchell Manager, Marketing & Communications Holly Gorski HR Manager Clifford Jo Director of Finance & IT Lynne Hoffman Development Director Georgia Lomax Deputy Director Becky Hester Coordinator, Collection Services Larry McCarty Facilities Manager David Kennicott Coordinator, Branch Services Judy Nelson Coordinator, Youth Services Cindy Bonaro Coord., Community & Outreach Services Sharon Ufer Collection Services Manager Rose Jetter Managing Librarian Bill Christiansen Managing Librarian Lynne Zeiher Managing Librarian Jennifer Patterson Managing Librarian Carol Bell Managing Librarian Kathleen Wolf Managing Librarian Lakewood DuPont Parkland/ Spanaway Eatonville Peninsula Key Center South Hill Graham Sumner Bonney Lake University Place Orting Tillicum Steilacoom Buckley Summit Milton * The Leadership Team is comprised currently of 5 members: Director, Deputy Director (vacant), Branch Services Coordinator, Youth Services Coordinator, Marketing & Communications Manager, and Director of Finance & IT. The Leadership Team has been in existence since April 2003 and serves at the pleasure of the Library Director Budget Page 25 Pierce County Library System

26 BUDGET SUMMARY

27 BUDGET SUMMARY P ierce County Library s 2006 budget was developed with the Balanced Scorecard in mind. Department Heads followed a process that required considering how their budgets incorporated the Library s Balanced Scorecard objectives and initiatives. BUDGET METHOD & SEQUENCE The 2006 budget was developed by applying the following method: 1. The Leadership Team, with the assistance of a consultant, created the Balanced Scorecard. 2. The Leadership Team discussed service priorities and changes in infrastructure (discussed in the Library Director s Message section). 3. The Finance Department calculated projected revenues and expenditures based on a conservative percentage of those from The Finance Department updated PCLS three-year cash flow driver (discussed in detail in the Cash Flow Analysis section). 5. All Department Heads were required to submit a 1% to 2% budget reduction proposal. Department Heads were allowed to present proposals for major budget additions. 6. Department Heads developed and submitted Capital Improvement proposals and Operating Budgets at the same time. 7. The Department Heads submitted budget proposals and made budget presentations to the budget review team (Director, Deputy Director, Director of Finance & IT). 8. The Finance Department calculated and compiled the departmental budgets; small adjustments were made. 9. The Library received Pierce County s preliminary certification which contained revenue projections. The budget review team reviewed the compiled list of additions and reductions, and calculated a draft balanced budget. 10. The 2006 draft balanced budget was presented at the October 2005 Board of Trustees meeting. 11. The 2006 draft budget book was presented at the November 2005 Board of Trustees meeting for public hearing and first reading. 12. The 2006 final budget book was presented at the December 2005 Board of Trustees meeting for second reading and passage. 13. The 2006 budget book was published in January 2006, and made available to the public via the website shortly thereafter. This method ensures that Library managers strategize service priorities year to year, and that funds are reallocated accordingly by discontinuing some services that were important but no longer relevant, and funding projects, programs, and services that meet or improve the Library s position in the community and accomplish the service directions outlined in the Strategic Plan and in the Balanced Scorecard. COMBINED FUNDS BUDGET The Library utilizes three funds: General/Operating Fund, Capital Fund, and Debt Service Fund. For 2006, the combined funds budget is $18,997,584. This represents 2006 Budget Page 27 Pierce County Library System

28 a 7.45% increase over the 2005 approved budget. Note that the Debt Service Fund, although available, remains unused because the Library carries no debt. Unlike the operating budget, the capital budget varies greatly from year to year, depending on capital improvements approved by the Board of Trustees. Each year, the Library plans the operating and capital budgets with an eye towards its mission, service directions, and fiscal responsibility. The Library s long history for receiving clean financial audits 11 spanning 22 years is an indicator that the budgets reflect providing fiscally responsible value to the Library s customers and communities. The 2006 budget continues that excellence by creating a budget that promotes the Library s service directions while staying within current fiscal realities. Table 1 - Combined Funds Budget (Expenditures) COMBINED FUNDS BUDGET (EXPENDITURES) FINAL FINAL FINAL FINAL BUDGET Operating (excludes carryovers) $ 14,735,504 $ 15,351,552 $ 15,977,242 $ 16,717,166 $ 17,692,650 Capital Improvement (excludes carryovers) 1,092, , , ,187 1,304,934 Debt Service TOTAL $ 15,827,504 $ 15,877,152 $ 16,954,004 $ 17,675,353 $ 18,997,584 Life The Light There is a poem in all of us if we d take the time to find A story unfolds of a young boy s love for his mother, soft and kind. Or perhaps of a woman s glory as she shares her thoughts and mind We could enjoy the poem in all of us if we d take the time to find. There is a poem in all of us and if we tried to understand We would see why she weeps at night from the fear of her lover s hand. Or the hopes of a child alive in a world where war plagues the land Let us read the poem in all of us and try to understand. There is a poem in all of us, could we stop to recognize? If we each paid heed to another s poem there d be less angered eyes. This place in which we live could be cleansed of deeds that terrify If that poem in all of us would just be recognized. If time permitted me so, though my heart might not endure I d read that poem in all of us, of this I am quite sure Our Own Words 9th & 10th Grade Poetry Winner Krystal Blackburn Spanaway Lake HS, 10th Grade 2006 Budget Page 28 Pierce County Library System

29 Figure 4 Budget Process & General Timeline July 2005 Balanced Scorecard Finalized Start 2006 Budget Process; Budget Calendar Created August 05 Budget Instructions Delivered to Managers Managers Develop Budget Proposals CPI-U recorded and COLA calculated 8/10/05 Board Review & Feedback of Budget Process September 05 Leadership Team Discusses Budget Directions Managers Present Budget Proposals to Budget Team Budget Team Develops Estimated Budget Preliminary Certification of Revenues 9/14/05 Board Review & Feedback of Estimated Budget October 05 Director s Approval for Draft Balanced Budget Elements Budget Team Develops Draft Balanced Budget Implicit Price Deflator (IPD) Recorded 10/19/05 Board Review & Feedback of Draft Balanced Budget November 05 Finance Dept. Develops Budget Document 11/9/05 Public Hearing and Board 1st Reading of Budget December 05 Final or Revised Certification of Revenues (if any) Finance Dept. Revises Budget Document 12/14/05 Public Hearing and Board 2nd Reading & Final Passage January 2006 Final Budget Published (Printed & On Website) 2006 Budget Page 29 Pierce County Library System

30 2006 OPERATING BUDGET SUMMARY The summarized version of the 2006 PCLS operating budget is presented in Table 2 as a balanced budget, where expenditures match revenues. A detailed discussion of revenues and expenditures follows in the next two sections. Table Operating Budget Summary GENERAL FUND % CHANGE FINAL BUDGET SUMMARY FINAL MID-YEAR BUDGET 2005 TO 2006 CARRY-FORWARD Carry forward from 2005 $ 750,883 *$ 1,508,509 $ 316, % REVENUES Taxes $ 16,130,166 $ 16,179,394 $ 17,025, % Intergovernmental % Charges for Services 57,000 61,800 57, % Fines 450, , , % Miscellaneous 80, , , % TOTAL REVENUES 16,717,166 16,949,184 17,692, % TOTAL AVAILABLE FUNDS 17,468,049 18,457,693 18,009, % EXPENDITURES Personnel 11,236,934 11,202,113 12,007, % Maintenance & Operations 2,304,853 2,378,495 2,338, % Materials 3,074,747 3,074,747 2,830, % Subtotal 16,616,534 16,655,355 17,176, % ELECTION COSTS 350, % FUNDING RESEARCH & COMMUNITY OUTREACH 57, % POTENTIAL ELECTION COSTS 292, ,000 - CONTINGENCY 167, , , % TRANSFERS TO CIF 334,343 *1,071, , % Subtotal 851,515 1,588, , % TOTAL EXPENDITURES 17,468,049 18,265,207 18,009, % REVENUES LESS EXPENDITURES $ 0 $ 213,368 $ % * In 2005, the Board of Trustees approved unanticipated revenues and savings from 2004 be transferred to the Capital Improvement Fund. This required increasing the 2004 to 2005 carry-forward Budget Page 30 Pierce County Library System

31 REVENUES

32 REVENUES Table General Fund Revenue Summary GENERAL FUND % CHANGE 2005 REVENUE SUMMARY FINAL MID-YEAR BUDGET FINAL TO 2006 Taxes $ 16,130,166 $ 16,179,394 $ 17,025, % Intergovernmental % Charges for Services 57,000 61,800 57,000 0% Fines 450, , , % Miscellaneous 80,000 *257, , % TOTAL REVENUES $ 16,717,166 $ 16,949,184 $ 17,692, % * The Library s Fiscal Management policy stipulates that gifts, donations, and grants are not budgeted, but instead recognized in actuals or the mid-year budget. Therefore, the 2005 and 2006 budgeted amounts show an unusual difference from the 2005 mid-year adjustment. REVENUE ASSUMPTIONS Property tax revenues are based on preliminary information provided by the Pierce County Office of the Assessor-Treasurer. Final estimates are not available until mid- December of each year. As a result, the property tax revenue estimates are based on the best information available in the September or October timeframe when the budget is being prepared. All other revenues are estimated on an analysis of funds collected in the previous year and projections of future revenue trends. Since fiscal year 2002, property tax collections are limited to 1% over the previous year. Alone, property tax collections would present significant budget challenges for the Library. However, the Library collects revenues from new construction and other sources allowed by state law. The net result for 2006 is a revenue increase of 5.84%. For the 2006 budget, new construction came in significantly higher. It s important to note that new construction cannot be counted on to meet shortfalls. Continuing since the 2003 budget, the Library no longer budgets for donations, gifts, or grants. These funding sources vary greatly from year to year and cannot be accurately predicted. These are reflected in year end actuals and in any mid-year budget adjustments. The Government Finance Officers Association (GFOA) Best Practices recommends analyzing revenue trends and forecasts. Although it doesn t specify how many prior years to report, for discussing 2006 revenues the starting point is set at 2002, when state law was changed to provide only 1% increase in property taxes over the previous year. At the end of this chapter are two tables: one showing proposed revenues for 2006 along with budgeted revenues from 2002 through 2005, the other showing the same proposed revenues compared to actual revenues from 2002 through 2004 and projected 2005 revenues Budget Page 32 Pierce County Library System

33 F or 2006, total revenues are budgeted to increase by $975,434 over 2005, a 5.84% increase. The majority of this increase, at almost 72%, is due to new construction in the County. As a point of reference, the total revenue increase from 2004 to 2005 was $739,924. Although 2006 s new construction was assessed at $1.521 billion, and we normally estimate it at around $800 million, this favorable scenario is not known to be sustainable. The average of Library revenues due to new construction was $461,957, with two years ago having the lowest at $405,227. With interest rates rising and construction costs increasing, we continue to factor that the 5- year moving average of new construction will begin decreasing, as early as The Pierce County Office of the Assessor- Treasurer informed the Library that the millage rate declined dramatically to per $1,000 of assessed value. This is because property values increased 20.05%, and due to the eroding effect of state law s 1% limit the effective levy rate decreased. Revenues other than taxes increased based on experience and predicted trends. Begun in 2004, note that items such as donations and gifts are no longer budgeted. This is consistent with FitchRatings Public Finance recommendations of avoiding budgeting nonrecurring revenues. Due to the cyclical nature of revenue receipts versus the regularity of expenditures, there will be temporary shortfalls in available cash (generally in April and October). To fund these shortfalls in 2006, the 2005 Ending Fund Balance and, if necessary, an inter-fund loan from the Capital Improvement Fund will be used to finance these shortfalls. Continuing in 2006, a small amount of money will be set aside in contingency to assist in paying the bills during shortfalls. More information on contingency is discussed in the Cash Flow Analysis section. TAXES $ 17,025,650 Local property taxes constitute over 96% of the 2006 revenues. The breakdown of the 2006 taxes is provided as follows: Property Taxes Current... $ 16,310,240 Property Taxes Delinquent ,410 Sale of Tax Title Property... 3,000 Private Harvest Tax... 50,000 Leasehold Excise Tax 10,000 TOTAL TAXES... $ 17,025,650 The total allowable levy (Property Taxes Current) is calculated by Pierce County Office of the Assessor-Treasurer using statutory rates and limitations. A history of the tax base is provided in the following table: For Property Year Tax Base $ 42,385,528,523 (estimate) ,306,548, ,318,475, ,377,319, ,255,137, ,025,182,627 This base includes the growth in assessed valuation (AV) of existing property in Pierce County and all new construction. For 2006, the estimated tax base to levy is $42,385,528,523, which represents a 20.05% increase over 2005 s assessed valuation. Inflation: Prior to 2002, the Library received a Certification of Assessed Values that would allow the Library to pass budgets that levied the statutory limit of 50 per $1,000 of assessed value or up to 6% more due to increased property values over the previous year. Beginning in 2002, the increase was limited to 1% over the previous year, and the 50 per $1,000 calculation had little bearing on determining Library revenues. New Construction: New construction varies year to year, depending on property improvements generated by construction (such as new homes, apartments, etc.). For every $1,000 of new construction, the Library may levy at its current levy rate (45.82 for 2006 Budget Page 33 Pierce County Library System

34 2005). State law does not apply the 1% limit for revenues received from new construction. New construction has a significant effect on PCLS revenues, as the values can contribute between 2% to 4% of revenue growth. Below is a breakdown that shows new construction values for the past five years: For New PCLS % of Year Construction Revenue Budget $ 1,519,842,131 $ 696, % ,092,187, , % ,593, , % ,026,298, , % ,103, , % ,955, , % Calculation of Mill Rate ( Millage ): The district s property value is used to calculate the rate of assessment (mill rate) of individual properties and the amount the Library will receive for regular property taxes. The statutory limit for taxes is $ per $1000 of assessed valuation. Recent mill rates were as follows (a graph is provided below that includes projected mill rates): For Calculated Year Mill Rate (estimate) Revenue Calculation from Taxes: In years past, for budget purposes the Library applied a 95% collection rate on current property taxes and 5% of the forecasted collection of current taxes as delinquent taxes to be collected. The delinquency collection rate is based on previous years experience. For 2006, this ratio is adjusted to 96%/4% due to more property owners paying taxes on time. The Library forecasts current tax revenue collections of $16,310,240 and delinquent tax collections of $652,410. Private Harvest Tax: Another source of revenue is the private harvest tax. Once a major source of revenues, this had been steadily declining between 1998 and 2003, with a resurgence for 2004 and 2005, as seen in the following table. In 2005 the Library is projected to receive about the same as was collected in Because this category is unpredictable, for 2006 the budget will remain unchanged at $50,000. Year Private Harvest Revenue $ 50,000 (estimate) ,000 (projected) , , , , , , , Other tax collections, but not discussed here, include sale of title property and leasehold excise taxes. CHARGES FOR SERVICES $ 57,000 Library charges for services include revenue from photocopying, Internet printers, meeting room fees, non-resident fees, and fees for interlibrary loans Actual M ill Rate Projected M ill Rate Photocopy Fees... $ 25,000 All branches provide photocopiers for public use. The fee of 10 per copy will remain in place for Budget Page 34 Pierce County Library System

35 Printer Fees...$ 25,000 All branches offer Internet access and the availability of laser printers for patrons to print to. Beginning in 2003, the free 5 copies was eliminated, and branch staff noted that the amount of paper consumed decreased significantly. In 2004, Microsoft Word, Excel, and Powerpoint were made available at all branches for public use also saw an increase, so this item was adjusted for Meeting Room Fees...$ 4,000 A small amount of revenue is generated from fees paid to PCLS for PAC and branch meeting room usage by organizations pursuing commercial purposes. The fees include receipt of charges for cleaning the rooms and repairs of damage. Meeting rooms are provided free of charge as a public service to non-profit community groups. Meeting rooms are available to commercial groups for a fee of $20 for the first 2 hours and $20 for each additional hour. The amount budgeted for 2006 remains from the same as Library Use Fees...$ 3,000 Non-residents of the Library who are not covered by a reciprocal agreement with another library system can check out materials from any of PCLS branches by obtaining a non-resident card. In 1998, the Board of Trustees passed a policy establishing a method for calculating the rate of the non-resident fee. Based on this policy, the fee was $80 per card in Additionally, the Board decided to stop issuing non-resident cards to individuals who resided in cities and towns that did not provide library services. This policy took effect June 30, 2000 and impacted the citizens of Fife, Fircrest, and Carbonado remains the same as LIBRARY FINES $ 460,000 Library fines are received from library patrons for overdue books and other materials. Printed materials, compact disks, non-fiction videos, and talking books have a three-week loan period while fiction videos and DVD s have a one-week loan period. Materials returned after the due dates are considered late and subject to fines. The daily fine for overdue videotapes, DVD s and reference books is $1.00. The daily fine for all other overdue materials is 15. Based on 2005 experience, the budgeted amount has been increased by $10,000. MISCELLANEOUS $ 150,000 Miscellaneous revenues include interest which is earned on investments, and revenues not included in any other account. Miscellaneous revenues from junk sales of assets, Friends and Foundation donations, and collection agency revenues will not be budgeted, but will be recorded in actuals or in mid-year budget adjustments. Investment Income... $ 100,000 On a weekly basis, the Library invests any substantial amounts of excess cash available after calculating the immediate expenditure needs. This line item is expected to increase substantially due to interest rates rising. Book Sale Revenue... $ 15,000 The Library sends surplus books to an online retailer that sells materials on Amazon.com. A portion of the sales are forwarded to the Library. Selling books online is a costeffective alternative to booksales held at PAC three times a year, which were laborintensive. Revenues from online sales continue to grow, and is budgeted accordingly. Other Miscellaneous Income... $ 35,000 This includes refunds, pay telephone revenue, lost/damaged materials revenue, revenue from lost key cards, insurance settlements, jury duty fees received, etc. This category was budgeted less for Budget Page 35 Pierce County Library System

36 Table 4A General Fund Revenue (Final Budget) GENERAL FUND % CHANGE REVENUES BUDGET FINAL FINAL FINAL FINAL BUDGET 2005 TO 2006 TAX REVENUES Property Taxes Refunded $ (20,000) $ (21,000) $ (22,000) $ 0 $ 0 0% Property Taxes Current 13,404,936 14,023,834 14,659,278 15,302,063 16,310, % Property Taxes Delinquent 536, , , , , % Sale of Tax Title Property 3,000 3,000 3,000 3,000 3,000 0% Private Harvest Tax 100,000 80,000 50,000 50,000 50,000 0% Leasehold Excise Tax 10,000 10,000 10,000 10,000 10,000 0% Subtotal $ 14,034,132 $ 14,797,025 $ 15,433,242 $ 16,130,166 $ 17,025, % 762,893 (5.44) 636,217 (4.30%) 696,924 (4.52%) 895,484 (5.55%) OTHER REVENUES Indirect Federal Grants 27, Reforestation Taxes FEMA-Administration Fees Contract Fees-Cities 9,372 9, Copier Fees 36,000 28,000 30,000 30,000 25, % Graphics Services Charge 10,000 9, Printer Fees 9,000 10,000 20,000 25, % Meeting Room Fees 5,000 5,000 5,000 4,000 4,000 0% Library Use Fees 4,000 4,000 4,000 3,000 3,000 0% Interlibrary Loan Fees Library Fines 400, , , , , % Investment Income 60,000 30,000 25,000 30, , % Other Interest Earnings Key Peninsula Lease Foundation Donations 45, Foundation Reimbursement Friends' Donations 15, Friend s Reimbursement Donations Other Tuition Assist. Donations Sale of Scrap and Salvage 20, Book Sale Revenue 10,000 15, % Miscellaneous Revenue 30, Payment for Lost Materials 30,000 30,000 30,000 30,000 25, % Fee for Lost Library Cards 10,000 10,000 10,000 10,000 10,000 0% COBRA 2% Administration Fee Unclaimed Property Collection Agency Revenue Jury Duty Reimbursement Prior Year s Refunds Sale of Fixed Assets Subtotal $ 701,372 $ 544,527 $ 544,000 $ 587,000 $ 667, % TOTAL REVENUES $ 14,735,504 $ 15,341,552 $ 15,977,242 $ 16,717,166 $ 17,692, % 2006 Budget Page 36 Pierce County Library System

37 Table 4B General Fund Revenue (Actuals) GENERAL FUND * 2006 % CHANGE REVENUES ACTUALS ACTUALS ACTUALS ACTUALS PROJECTED BUDGET 2005 TO 2006 TAX REVENUES Property Taxes Refunded $ (19,925) $ (11,266) $ 0 % Property Taxes Current 13,609,205 14,130,978 14,955,753 $ 16,310,240 % Property Taxes Delinquent 589,541 1,152, , ,410 % Sale of Tax Title Property 1, ,335 3,000 % Private Harvest Tax 78,420 43, ,512 50,000 % Leasehold Excise Tax 11,333 13,605 13,858 10,000 % Subtotal $ 14,270,125 $ 15,329,870 $ 15,671,526 $ $ 17,025,650 % 1,059,745 (7.43%) 341,656 (2.23%) xxx,xxx (x.xx%) xxx,xxx (x.xx%) OTHER REVENUES Indirect Federal Grants 50,000 4,437 50,294 $ Reforestation Taxes 14,425 7,020 9, FEMA-Administration Fees 2, Contract Fees-Cities 9, Copier Fees 25,898 30,669 26,927 25,000 % Graphics Services Charge 12,736 (7) 16, Printer Fees 10,421 18,947 24,007 25,000 % Meeting Room Fees 5,548 6,346 5,490 4,000 % Library Use Fees 2,455 2,890 3,114 3,000 % Interlibrary Loan Fees Library Fines 440, , , ,000 % Investment Income 31,151 24,081 51, ,000 % Other Interest Earnings Key Peninsula Lease 1, Foundation Donations 71,638 80,142 80, Foundation Reimbursement 5,000 10, Friends' Donations 18,946 17,917 18, Friend s Reimbursement 27,563 26,348 19, Donations Other 7,746 9, Tuition Assist. Donations 6,615 8, Sale of Scrap and Salvage 175 2, Book Sale Revenue 22,015 4,131 24,989 15,000 % Miscellaneous Revenue 52,066 3,717 14, Payment for Lost Materials 25,160 25,704 27,713 25,000 % Fee for Lost Library Cards 7,273 6,869 6,693 10,000 % COBRA 2% Administration Fee Unclaimed Property Collection Agency Revenue 4,634 7, Jury Duty Reimbursement Prior Year s Refunds 21, Sale of Fixed Assets 89, , ,623 Subtotal $ 929,352 $ 909,825 $ 1,064,223 $ $ 667,000 % TOTAL REVENUES $ 15,199,478 $ 16,239,696 $ 16,735,749 $ xx,xxx,xxx $ 17,692,650 % * Projected 2005 numbers are entered just prior to final printing Budget Page 37 Pierce County Library System

38 Figure 5 Source of Revenues Charges for Services 0.3% Taxes 96.2% Other 3.8% Fines 2.6% Miscellaneous 0.8% The above pie chart shows the breakdown of 2006 revenues by category. Each year, the Library s majority of revenues from property taxes is between 95% and 97%. For 2006, the proportion is 96.2%. Balloons For my birthday, I received a bouquet of balloons. They bobbed behind me as I ran, white streamers tightly clenched in one fist, pink and red and more white. My hair crackled with a Styrofoam noise. The next day, they hung in midair, occasionally limping up (ungracefully) to glare at me (reproachfully), then sinking down again. Later they lounged, shrunken. Few were still apple-firm; most were like flaccid walnuts, or grapefruits. Their ribbons tangled behind them, drawn and looped like tapeworms. With regret, I punctured them, and watched with vague horror as their helium-breath left them and they died. Jessie Roy Emerald Ridge HS, 10th Grade 2005 Our Own Words 9th & 10th Grade Poetry Winner 2006 Budget Page 38 Pierce County Library System

39 EXPENDITURES

40 EXPENDITURES Table Expenditure Summary GENERAL FUND % CHANGE 2005 EXPENDITURE SUMMARY FINAL MID-YEAR BUDGET FINAL TO 2006 Personnel $ 11,236,934 $ 11,202,113 $ 12,007, % Maintenance & Operations 2,304,853 2,378,495 2,338, % Materials 3,074,747 3,074,747 2,830, % Subtotal 16,616,534 16,655,355 17,176, % ELECTION COSTS 350, % FUNDING RESEARCH & COMMUNITY OUTREACH 57,500 % POTENTIAL ELECTION COSTS 292, ,000 % CONTINGENCY 167, , , % TRANSFERS TO CIF 334,343 *1,071, , % Subtotal 851,515 1,588, , % TOTAL EXPENDITURES $ 17,468,049 **$ 18,244,324 $ 18,009, % * In 2005, the Board of Trustees approved unanticipated revenues and savings from 2004 be transferred to the Capital Improvement Fund. This required increasing the 2004 to 2005 carry-forward. ** Mid-Year Savings recorded: $213,368. EXPENDITURE ASSUMPTIONS F or the 2006 budget process, Department Heads were given budget worksheets for developing their budgets. Department Heads had leeway to fund personnel and purchases based on what they believed were required to operate successful departments in After developing their proposed budgets, Department Heads met with the Library Director, Deputy Director, and Director of Finance & IT to present their budgets. Current funding is a limiting factor for serving our growing district. Medical benefits continue to rise by more than 10%, retirement rates are doubling, and the buildings are showing their age. However, revenues will average between 4% and 5% per year, which has created a significant service gap as outlined in the Director s message. Department Heads were required to propose a 1% to 2% reduction of their expenditures, should it be a necessary consideration to balance the budget. For Materials, the Library s goal is 16% of revenues, continue for PCLS budget is made up of three major areas of expenditures that account for over 95%: Personnel 68.1% 67.1% 67.6% 67.2% 67.9% Maint. & Ops 14.0% 13.1% 13.4% 13.8% 13.2% Materials 16.4% 15.5% 16.0% *16.0% 16.0% TOTAL 98.5% 95.7% 97.0% 97.0% 97.1% * Excludes the $400,000 carry-forward from The ratio for the three main categories remains mostly consistent since Budget Page 40 Pierce County Library System

41 Table Expenditures By BARS Category GENERAL FUND % CHANGE 2005 EXPENDITURES FINAL MID-YEAR BUDGET FINAL TO 2006 PERSONNEL 5.11.xx Salaries & Wages $ 8,893,151 $ 8,818,921 $ 9,384, % 5.12.xx Overtime Wages 21,502 29,535 21, % 5.2x.xx Employee Benefits 2,322,281 2,353,657 2,600, % Subtotal 11,249,934 11,202,113 12,007, % MAINTENANCE & OPERATIONS 5.31.xx Supplies 197, , , % 5.32.xx Fuel 20,000 25,000 30, % 5.35.xx Small Tools and Minor Equipment 311, , , % 5.41.xx Professional Services 403, , , % 5.42.xx Communications 190, , , % 5.43.xx Travel 41,200 45,700 50, % 5.44.xx Advertising 11,700 32,200 59, % 5.45.xx Operating Rentals/Leases 82,142 82,142 97, % 5.46.xx Insurance 127, , , % 5.47.xx Utilities 279, , , % 5.48.xx Repair and Maintenance 514, , , % Registrations & Tuition Assistance 44,400 41,400 44, % x Miscellaneous 58,095 58,095 62, % 5.51.xx Intergovernmental 22,000 22, % 5.82.xx Interest Expense % Subtotal 2,303,970 2,378,495 2,338, % MATERIALS 5.34.xx Materials 3,074,747 3,074,747 2,830, % OTHERS ELECTION COSTS 350, % FUNDING RESEARCH & COMM. OUTREACH 57, % POTENTIAL ELECTION COSTS 292, , CONTINGENCY 167, , , % TRANSFERS TO CIF 334,343 *1,071, , % Subtotal 851,515 1,588, , % TOTAL EXPENDITURES $ 17,468,049 **$ 18,244,324 $ 18,009, % * In 2005, the Board of Trustees approved unanticipated revenues and savings from 2004 be transferred to the Capital Improvement Fund. This required increasing the 2004 to 2005 carry-forward. ** Mid-Year Savings recorded: $213, Budget Page 41 Pierce County Library System

42 PERSONNEL $12,007,228 Personnel costs account for nearly 68% of the expenditures and pay for staffing the Library to meet its mission and goals. The total increase for 2006 from 2005 is 6.86%. Please see Table 7 for a detailed listing of personnel costs. Personnel costs reflect the labor agreement. July 2005-June 2006: 2.195% July 2006-June 2007: 3.065% July 2007-June 2008: 5.940% July 2008-June 2009: 8.190%. Budgeting for benefits when retirement contributions are doubling is a major factor in current and future fiscal years. The following chart depicts the Library s total budgeted benefit costs since 1995 and projected through Salaries and Wages...$ 9,384,937 Staffing includes all full and part-time personnel (and overtime) located in the seventeen branches and the Processing and Administrative Center. Steps and Cost of Living Adjustment of 2.07% (90% of CPI-U, which was 2.3%) was applied to Salaries and Wages. 4,000 3,500 3,000 2,500 2,000 1,50 0 1, Benefits Costs (In Thousands) Please see Table 8 on the next page for staffing of departments. Overtime...$ 21,947 Overtime costs are established by Department Heads to plan for costs associated with working beyond the 40-hour week. Fiscal Year Budget On the following page are two charts, one for personnel detail expenses, and the other showing staffing numbers. Benefits...$ 2,600,344 The current labor agreement requires the Library to pay up to 10% more in individual medical benefits than in the previous year for employees who are eligible as of November 1, Last year, the Library considered two retirement rate increase proposals by the Legislature, one by the State Actuary and one by the Association of Washington Cities (AWC). The 2005 Legislature passed retirement rate increases for These increases have a major impact to the Library s budget Budget Page 42 Pierce County Library System

43 Table Personnel Detail GENERAL FUND % CHANGE 2005 PERSONNEL FINAL MID-YEAR BUDGET FINAL TO Salaries & Wages $ 8,450,787 $ 8,359,174 $ 8,871, % Additional Hours 442, , , % Tuition Assistance Program 3,383 11, Overtime Wages 21,502 29,535 21, % Industrial Insurance 98,015 98, , % Medical Insurance 1,181,717 1,181,576 1,312, % FICA 676, , , % Retirement 165, , , % Dental Insurance 154, , , % Life and Disability Insurance 19,577 19,639 16, % Unemployment Compensation 25,000 25,000 25, % Uniforms 300 1, % TOTAL PERSONNEL $ 11,236,934 $ 11,202,113 $ 12,007, % Table PCLS Staffing TOTAL 2006 # OF FTEs DEPARTMENT FTE STAFFING WITH MLS/MLIS* Branch Services Collection Services Department Community & Outreach Services Department Director s Office Facilities Management Department Finance Department Fund Development Department Human Resources Department IT Department Marketing & Communications Department Public Services Youth Services Department Grants 1.20 TOTAL FTE COUNT Change from (1.8%) (5.5%) *MLS or MLIS: Masters of Library Science or Library Information Science graduate degree, a requirement to hold the title Librarian Budget Page 43 Pierce County Library System

44 MAINTENANCE & OPERATIONS $2,338,608 Supplies...$ 237,312 The Supplies category includes office and operating supplies, custodial supplies, maintenance supplies, materials processing supplies, audiovisual and book processing supplies, supplies for the Summer Reading Program, and audio/visual replacement parts. The amount budgeted is 20.02% ($39,592) more than budgeted in For 2006, the budget increased significantly due to paper for receipt printers and marketing costs. Fuel...$ 30,000 Fuel consists of charges for gasoline, diesel, and propane. There was a 50% increase due to fuel rate increases of gasoline. Smalls Tools & Minor Equipment.$ 278,450 Minor equipment includes furniture, computers, printers, scanners, and software. This category decreased by 10.6% ($33,000) from 2005, mostly due to limiting computer procurement costs. Professional Services...$ 305,269 This category includes services provided by a private business or governmental agency. In addition to the services of attorneys, accountants, and labor consultants, this classification includes software consultants, interpreters, maintenance-related services, etc. There was a decrease of 24.43% ($98,713) from Savings was made by limiting computer-related consulting. Also, costs for the marketing plan were moved to other budget categories. Communications... $ 223,343 Communications include all Library mailings (postage, Federal Express, UPS, courier services); voice communication service (monthly service and long distance, TDD, and cellular); costs associated with the leased data lines connecting all Library computers together and to the Internet; leased telephone lines used in support of Internet access; and costs associated with alarm monitoring. Communications increased by 17.36% due to upgrading Internet access performance and increasing postage. Travel... $ 50,450 This includes reimbursement to employees and Board of Trustees for use of personal automobiles on Library business, and travel expenses associated with attendance at continuing education events, conferences, and seminars. The amount budgeted in 2006 is 22.45% ($9,250) higher than in Includes ALA and PLA conferences. Advertising... $ 59,775 This includes newspaper advertising for employees and Board of Trustees vacancies, requests for bids, and placing ads in phone books, and the new marketing plan. The amount budgeted for 2006 is % ($48,075) more than in 2005 due to the marketing plan. It s important to note that funding for marketing resided in professional services, which was moved to several categories including Advertising. Operating Rentals/Leases... $ 97,000 This includes leases of copy machines, and beginning with 2005, the DuPont lease. For 2006, this amount budgeted decreased by 18.09% ($14,858) because DuPont lease now is at the full rate Budget Page 44 Pierce County Library System

45 Insurance...$ 122,000 This includes all insurance for the Library s real and personal property, vehicles, fidelity, errors and omissions, employment practices, and an umbrella plan. Insurance for 2006 is budgeted at -4.31% ($5,500) lower, due to adjusting the line item to be closer to predicted costs. Utilities...$ 282,000 Utilities include electricity, natural gas, water, sewer, and refuse collection for all Library facilities. In 2003, the Facilities Management Department implemented significant energy conservation projects throughout the system which continue to result in dramatic year to year offsets of significant rate increases. For 2006, the amount budgeted is 1.08% ($3,000) more than in 2005, a nominal increase. Repair & Maintenance...$ 546,124 This category includes commercial repair of the Library s office equipment; fees for the maintenance and/or service contracts for the Polaris ILS and related hardware; telecommunications system, personal computer and peripheral maintenance, elevator service, heating, ventilation and air conditioning preventive maintenance; and unscheduled commercial repairs, septic tank cleaning, and pest control. The budget was increased 5.31% ($27,367) from 2005 because of rising facilities-related maintenance costs. Training...$ 44,290 Training includes costs related to attendance at training classes and seminars. The training budget is -1.10% ($493) less than Includes ALA and PLA, and customer focus training. Interest Expense...$ 0 To cover cash shortfalls, when cash on hand is less than expenditure needs due to cyclical nature of revenue collection, the Library borrows from the Capital Improvement Fund. When interfund loans are made, the Library is required to pay interest to the Capital Improvement Fund. The interest anticipated for 2006 continues to be low, if any, due to having enough in the ending fund balance to fund the majority of the shortfall. Intergovernmental... $ 500 This category includes costs associated with fees paid to other governmental agencies. The amount budgeted for 2005 is 97.73% ($21,500) lower than in 2005, due to not needing to pay for the financial audit. Miscellaneous... $ 62,095 This category includes memberships in ALA, WLA, and PNLA, and dues for local Chambers of Commerce and other groups; sales tax payable on photocopies/printers and graphics sales, use tax on out-of-state purchases, and sewer assessments/surface water management fees. It also includes fees for driving records requests, bad debt expenses/bank fees, and charges associated with the collection of fines, and other charges at the branches. This category increased by 6.89% ($4,000) from A Rocking Horse A rocking horse With torn fabric, An eye missing, Ragged mane, Frayed tail, But in the one good eye There are many stories to be told, Times when a day never went by When it wasn t ridden by a child, Children loved this simple toy For simply what it was, And left it loved and old, They kept the memories of good times Fresh in their minds. Heather Perry Aylen JH, 8th Grade 2005 Our Own Words 7th & 8th Grade Poetry Winner 2006 Budget Page 45 Pierce County Library System

46 Table Maintenance & Operations Detail GENERAL FUND % CHANGE 2005 MAINTENANCE & OPERATIONS FINAL MID-YEAR BUDGET FINAL TO Office/Operating Supplies $ 95,911 $ 113,361 $ 126, % Custodial Supplies 25,000 25,000 25, % Maintenance Supplies 24,000 40,000 35, % A/V Processing Supplies 28,059 28,059 30, % Book Processing Supplies 18,710 18,710 16, % Graphics Supplies Sum. Reading 2,040 2,040 2, % A/V Replacement Parts 4,000 1,500 2, % Fuel 20,000 25,000 30, % Minor Equipment 33,850 46,800 37, % Furnishings 40,300 40,300 35, % PC Hardware 177, , , % Printers 38,500 38,500 32, % Scanning Equipment 1,000 1,000 1, % Software 15,000 15,000 10, % Server Software 5,000 5,000 5, % Professional Services 267, , , % Legal Services 13,000 32,000 13, % Graphics - Sum. Reading 8,250 8,250 8, % Resource Sharing Services 21,000 21,000 15, % Bibliographics Services 48,000 48,000 48, % Printing and Binding 5,000 5,000 5, % Vendor Processing Services 40,000 40,000 40, % Inter Library Loan Lost Item Charges % Postage 60,000 60,000 63, % Telephone/Data Lines 130, , , % Travel 29,650 34,150 38, % Mileage Reimbursements 11,550 11,550 11, % Advertising 11,700 32,200 59, % Rentals/Leases 82,142 82,142 97, % Insurance 127, , , % Electricity 212, , , % Natural Gas 10,000 10,000 12, % Water 20,000 20,000 20, % Sewer 16,000 16,000 16, % Refuse 21,000 21,000 19, % General Repairs/Maintenance 131, , , % Contracted Maintenance 364, , , % Maint. Telecomm Equipment 18,000 18, % Rep & Maint Scanning Equipment 1,000 1,000 1, % Registrations 41,400 41,400 44, % Dues and Memberships 22,945 22,945 25, % Taxes and Assessments 26,500 26,500 27, % Licenses and Fees 6,000 6,000 6, % Miscellaneous 2,650 2,650 2, % Tuition - TAP Program 3, % COBRA % Intergovernmental 22,000 22, % Interest on Interfund Debt % Total Maintenance & Operations $ 2,303,970 $ 2,378,495 $ 2,338, % 2006 Budget Page 46 Pierce County Library System

47 MATERIALS $2,830,824 Materials are printed and non-printed materials/media for the use of the patrons of the Library. It includes books, DVDs, talking books, and other formats. Funds are allocated by the Collection Services Department into the appropriate categories, after establishing the overall Materials budget. The Materials budget is set at 16% of revenues for Below is a chart depicting the historical funding of the Materials budget: 20% 19 % 18 % 17% 16 % 15% 14 % 13 % 12 % 11% 10 % Figure 6 Materials Budget History 11.0% 12.6% 13.0% 12.1% 14.1% 15.3% 16.3% 16.3% 16.0% 15.5% 18.4% 16.0% Fiscal Year (Budget) The 2005 Materials budget was much higher, by $400,000, due to carrying forward 2004 unexpended funds. In 2004, the library s computer catalog system replacement project delayed purchasing and processing materials. Figure 7 shows PCLS Materials budget per capita, an important factor in considering how much is spent on providing books for the district the library serves. $7 Figure 7 Materials Expenditures Per Capita History (Actuals through 2004) $6.31 While some library systems have a lower percentage to revenues, PCLS normalizes this measure by considering the per capita spending for the service district. Below shows recent comparisons with other library systems budget performance by capita: Figure Materials Expenditures Per Capita Comparison* Tacoma Public Library King County Library North Central Regional Sno-Isle Regional Timberland Regional Seat t le Public Kitsap Regional Spokane Public Pierce Count y Library Fort Vancouver Regional Yakima Valley Regional Spokane County M id-columbia Library $4.63 $4.62 $4.30 $3.91 $3.6 4 $3.44 $5.3 3 $5.21 $5.93 $7.08 $6.96 $8.21 $7.93 $- $1 $2 $3 $4 $5 $6 $7 $8 $9 * Source: Washington State Library In 2003, PCLS was 8th out of 13 libraries in the chart above. For 2004, PCLS dropped to 9th. The primary reason this occurred is the replacement of the computer catalog system, which delayed purchases and processing of materials. This statistic continues to be a strong concern of the Library. The details of the 2006 Materials budget are provided in Table 10 on the following page. $6 $5 $4.35 $4.88 $4.76 $4.87 $4.71 $4 $3 $2.63 $2.85 $3.06 $3.30 $3.53 $2 $1 $ Fiscal Year Report to State Library (A ctuals); 2005 Estimated 2006 Budget Page 47 Pierce County Library System

48 Table Materials Detail GENERAL FUND % CHANGE 2005 MATERIALS FINAL MID-YEAR BUDGET FINAL TO Adult Materials $ 1,084,403 $ 1,084,403 $ 929, % Serials 53,104 53,104 32, % Periodicals 99,171 99,171 95, % Juvenile Books 580, , , % Professional Collection 20,331 20,331 22, % International Collection 50,606 50,606 45, % Audiovisual Materials - Adult 583, , , % Audiovisual Materials - Juvenile 109, , , % Reference Materials 179, , , % Electronic Info Sources 266, , , % Reference Serials 47,227 47,227 47, % Gifts - Materials % TOTAL MATERIALS $ 3,074,747 $ 3,074,747 $ 2,830, % OTHER EXPENDITURES $ 832,780 Potential Election Costs...$ 302,000 The Library will carry forward the remainder of the election monies budgeted in Depending on recommendations provided by the community, the Library may conduct a levy lid-lift election. Costs for the election include ballot preparations, postage, professional services, office supplies, etc. Contingency...$ 176,927 The Library uses contingency as a floating variable to calculate cash-solvency to pay April s bills two fiscal years ahead. For 2006, this means that enough contingency money is being set aside to plan for paying April 2008 s bills. Contingency is set at about 1% of revenues, and may fluctuate year to year. A more in-depth discussion of this is available in the Cash Flow Analysis section. Transfers to Capital Imp. Fund...$ 353,853 Some funding for the Capital Improvement Plan comes from the General Fund. For 2006, the CIF transfer is maintained at 2% of revenues. Prior to 1998, very little funds were budgeted for transfer from the General Fund to the Capital Improvement Fund. Historically, however, the CIP budget was funded at a higher annual rate of budgeted transfers. In previous years the Capital Improvement Fund has benefited from annual transfers from the ending fund balance. The Library does not expect to be able to transfer at the same rate. Transfer to CIF Year Budget Actual $353, ,343...*$1,915, , , , , , , , , , , , , ,836 * Projected for 2005; includes Board-approved transfers of unanticipated revenues and savings from fiscal year The projected amount in 2004 included savings from the mid-year budget and unanticipated revenues from Sales of Fixed Assets. The chart below shows the Capital transfers from 1998 through Budget Page 48 Pierce County Library System

49 Figure 9 CIF Transfer History (Actuals Through 2004) $2,000 $1,916 $1,800 $1,600 $1,400 T $1,200 $1,000 $800 $600 $400 $200 $- $827 $855 $699 $587 $427 $477 $320 $ projectedbudget Daddy Daddy, why did you do the things you did? Didn t you love me? I know now you are the one with the problem, not me. You re the one who left a daughter and son. How do you even sleep at night? Do you ever wonder if we re all right well..we are, mommy tucks us in tight. Sometimes I forgive you and miss you, mommy makes it alright. You broke your children when you left that night, mommy is here to make it alright. We are all okay mommy s here and its alright but daddy late late at night if you ever wonder we re alright! 2005 Our Own Words 11th & 12th Grade Poetry Winner Lynnette Vermillion Orting HS, 11th Grade 2006 Budget Page 49 Pierce County Library System

50 GENERAL FUND BALANCE

51 GENERAL FUND BALANCE Table General Fund Balance Summary GENERAL FUND BALANCE SUMMARY PROJECTED BUDGET Beginning Fund Balance, January 1 $ 6,441,583 $ 5,402,075 INFLOWS Total of Revenues 17,093,569 17,692,650 Total of Inflows 17,093,569 17,692,650 OUTFLOWS Total of Expenditures 15,748,472 17,161,870 Budgeted Transfer to Capital Fund 334, ,853 Mid-year Savings Transfer to Capital Fund 213,368 Year-end Savings Transfer to Capital Fund 630,384 Subtotal 16,926,567 17,515,723 Uses of Carry-Forwards Materials 400,000 Diversity Donations 500 6,279 Tuition Assistance Donations 383 8,511 Funding Research and Community Outreach 48,000 Discurren Grant Remainder 20, Unanticipated revenues & savings 737,626 transferred to Capital Fund in 2005 Potential Election Costs 302,000 Subtotal Carry Forwards 1,206, ,790 Total of Outflows 18,133,076 17,832,513 Net of Total of Inflows and Outflows (1,039,507) (139,863) Ending Fund Balance, December 31 (estimated) $ 5,402,076 $ 5,262,212 Ratio of Fund Balance to Next Year s Revenues 30.5% 28.8% GENERAL FUND BALANCE SUMMARY T he Library budgets funds out of the General Fund balance for special purposes. This includes charging expenditures to the General Fund balance, and identifying special funds that carry forward from one fiscal year into the next. This is compliant with Board Policy 3.15, Fiscal Management Policy, which states that fiscal year carryovers of funds within the General Fund are limited in nature, and are used for special purposes that are related to grants, gifts/donations, and collection materials. By default, all sources of unexpended revenues are released into the General Fund at year-end, unless the Board takes action to identify and approve carry-forward funds. The General Fund Balance is a key tool for managing the Library s cash flow. Should the 2006 Budget Page 51 Pierce County Library System

52 General Fund Balance get too low, not enough funds are available to pay for the first four months of each year (until tax collections are received), requiring the Library to borrow from the Capital Fund or establish a line-ofcredit with a bank. Figure 10 General Fund Ending Fund Balance 7,000,000 6,000,000 5,000,000 Figure 11 Ending Fund Balance as % of Year-End Actual Revenues 40.0% 35.0% 30.0% 25.0% 20.0% 15.0 % 10.0 % 5.0% 4,000,000 3,000, % Pr oj ected Pr oj ected 2,000,000 1,000, Pr oj ected Pr ojected Figure 10 shows the record of the ending fund balance, estimated at reaching just shy of $5.4 million by year end From a cash flow perspective, this was adequate to pay bills in the first four months without having to borrow from any other funding sources. The General Fund s ending balance as a percentage of each year s revenues from 1995 through 2004 averaged 22.5%. In 2004, that percentage was 37.8%. This figure was extremely high, precipitating a survey conducted in the summer of 2005 of large libraries in Washington State. It was discovered that the average fund balance was approximately 29%. The Library decided on a course of action to set the ending fund balance at a goal of approximately 29%. In order to accomplish this, funds were and will be transferred to the Capital Fund per the Board s Fiscal Management Policy. As a result, the 2005 and 2006 ratios are estimated to be 30.5% and 28.8%, respectively. Figure 11 below shows the percentage of the yearend actual revenues to ending fund balance. Potential Election Costs... $ 302,000 In 2005, the Library conducted a study of whether the community would support a levy lid-lift election. The original set-aside for an election was $350,000, which was approved by the Board in The remainder of this balance is carried forward into Tuition Assistance Donations... $ 8,511 Tuition assistance provides funding to enroll staff in collegiate studies or continuing education. Some of the funds are budgeted by the Library as part of the General Fund budget, others are provided by personal donations to the Library or through the Foundation. Funds stemming from donations will be carried forward into Diversity Donations... $ 6,279 The Serving Cultural Diversity project was a major success in Most of the funding came from a federal LSTA grant, which was satisfied in September However, because this project was so successful, subsequent funding was provided by the Library s Foundation as a donation to continue the project. Unspent portions of this donation will be carried forward into Budget Page 52 Pierce County Library System

53 DEBT SERVICE, CASH, INVESTMENTS

54 DEBT SERVICE, CASH, INVESTMENTS DEBT SERVICE I n 1986, the Library passed a $28.9 million bond levy to construct new library facilities, including the purchase of building sites and the acquisition of furniture and equipment. It also included funds to remodel/renovate existing library facilities throughout the Library and purchase books and non-print materials. Bonds were issued in 1986 ($18 million), ($8 million), and 1992 ($2.9 million). In 1995, a portion of the 1986 and issues was refinanced; the value of this refunding was $6.93 million. With the payment of principal and interest in December 2002, the entire debt was retired. Thus the Library continues to carry no debt. The Library will continue to collect delinquent tax collections on previous years tax levies for debt service, of which these funds will be deposited into the General Fund. CASH In the General Fund, due to the cyclical nature of revenue receipts versus the regularity of expenditures, there will be temporary shortfalls in available cash (generally April and October). For the most part, the previous year s ending fund balance finances these shortfalls. However, when the balance proves insufficient, interfund loans from the Capital Improvement Fund to the General Fund will be made by authority of the Board of Trustees. These loans are interestbearing. Additionally, in 2006, a certain amount of cash contingency is set aside to ensure solvency. Black Black is the sky, Black is the night Black is the bird that takes to the air in flight Black is space, Black is the rock Black is the asteroid that falls down to earth Black is the mane, Black is the tail Black is the horse that runs free and wild Black is the coal, Black is the smoke Black makes the fires that warm our homes Black are your eyes, Black is your hair Black are your features that make me smile Black is the sky, Black is tonight Black is the color that makes me feel right Briana Bowers Homeschool, 7th Grade 2005 Our Own Words 7th & 8th Grade Poetry Winner INVESTMENTS When the available cash exceeds the current needs, the Library has Pierce County invest the excess amounts which earns investment income for the Library Budget Page 54 Pierce County Library System

55 CAPITAL IMPROVEMENT FUND

56 CAPITAL IMPROVEMENT FUND SUMMARY T he Capital Improvement Fund (CIF) was established in 1998 as a mechanism to fund large projects or equipment purchases, which may cross fiscal years. In order to receive an allocation through the Capital Improvement Fund, a project must be approved and be included in the Capital Improvement Plan (CIP). The following criteria must be met for a project to be considered in the CIP: The value of the asset/project is equal to or greater than $5,000; and Has a useful life equal to or greater than three (3) years. A major repair or maintenance project can be included in the CIP if it meets the above two criteria and the project increases capacity and/or extends the original useful life of the asset. Additionally, ongoing maintenance as a part of a system-wide project or smaller capital items, beneath the threshold needing to be purchased as a larger group, can be aggregated into larger-value capital improvement projects. In 2002, the policy on the Capital Improvements Plan/Budget was revised. In order to streamline accounting activities, the Accumulation Fund was transferred into the Capital Improvement Fund. As has occurred since 2001, both the Capital Improvement Plan and its corresponding budget will be reviewed mid-year in 2006 and revised as needs and funding dictate. FINANCING SOURCES Funding available for the Capital Improvement Plan comes from three sources: monies already in the Capital Improvement Fund, monies earmarked to be transferred from the General Fund as budgeted, and monies transferred from the General Fund due to unanticipated revenues and savings. At the end of 2005, it is estimated that the Capital Improvement Fund balance will be approximately $2.2 million. Adding monies to be received in 2006 from investment income and transfers from the General Fund the total available is expected to be approximately $2.6 million. CARRYOVER PROJECTS $481,411 Every year, the Library requests the Board approve carryovers to fund multiyear projects. While developing next year s budget, capital carryovers are estimated and included in the CIP budget. ILS Replacement... $ 10,000 The contract with GIS to install Polaris was signed in November The contract required a portion of the cost to be paid in 2003, and then the remaining was paid in The 2005 balance for this project needs to be carried over into 2006 to pay for additional work on the Polaris system. Wireless... $ 47,500 Providing WiFi access for patrons in the branches will be conducted. This is a significant benefit for patrons whom own laptops and want to access the Library s network and Internet without using an OPAC. This project will implement WiFi at the 9 largest branches. Website Revamp... $ 89,593 In October 2005, the Library signed a contract with SiteCrafting, Inc. to replace the website. Funds will be carried forward into Systems Programmer Consultant.. $ 79,500 The IT Department retained a systems programmer consultant to help address a backlog of projects. The consultant will be on board for approximately 12 months. The balance needs to be carried forward Budget Page 56 Pierce County Library System

57 Accounting System Review...$ 30,000 The costs for supporting Bi-Tech are estimated to be over $1,000,000 in a 10-year period. This project will assess whether Bi- Tech is an appropriate system for the Library. UP Move/Expansion/Remodel...$ 90,000 Funds set aside for this project in 2005 need to be carried forward into Little was expended in 2005 due to the continued delay by the city to start the project. However, the Library and the City of UP has agreed to build a storefront library facility beginning in 2006 (see 2006 Capital Improvement Plan below). Express Checkout UP...$ 36,168 Express Checkout at UP will occur as part of the UP Branch move. Merchandising: UP...$ 28,650 UP is separated out from the other merchandising projects due to its dependence on when and how the UP branch will be relocated and remodeled. Books+ To Go...$ 25,000 Popular titles are purchased for the Books+ to Go shelves installed for each branch where merchandizing and express checkout are implemented. PAC: First Floor Remodel...$ 45,000 Various departments at PAC are in need of remodeling due to staffing and workflow requirements; amount carried forward will be increased by $30,000 (see below) CAPITAL IMPROVEMENT PLAN $1,304,934 CIP budgets fluctuated as shown in the chart below. The average CIP budget for 2000 through 2006 is $875,307. Figure 12 CIP Budget History (Excludes Carry Forwards) Thousands $1,400 $1,200 $1,000 $800 $600 $400 $200 $- $ $1,092 $ $ $ $ $1, A concern may be raised given that the average budgeted transfer for 2000 through 2006 is $739,241, which is short the average CIP budget by over $136,000. CIP budgets are multiyear budgets, so not all funds are spent during the budgeted year. At times, CIP projects are cancelled as circumstances warrant. However, because the Capital Improvement Fund will take on a more prominent role to use to borrow funds during cash shortfalls, future CIF transfers and budgets planned carefully s CIP list has several large projects, including Branch Renovations, significant facilities-related projects, vehicle projects, and a host of smaller projects: Branch Renovations Year 2... $ 470, s renovation projects include the following branches: SMT, LWD, SUM, GRM, and 3 community branches. These projects include Express Checkout systems to automate the patron/materials process and give patrons more self-sufficiency similar to grocery store express checkout systems. These branches also benefit from merchandizing by buying special collections of hot titles to be displayed prominently in the Library. Merchandising redesigns our service to the public, providing more personalized and browse-friendly environments Budget Page 57 Pierce County Library System

58 UP LEED Certification Study...$ 7,500 As part of the UP branch move, a study of LEED certification will be conducted, to incorporate sustainable building practices. Replace Bookmobile Generator...$ 17,000 Bluebird s generator will be replaced. Sprinter for COS...$ 40,000 A new vehicle will be purchased for Community and Outreach Services, which will include a lift to lift and lower heavy bookcarts. The lift will be separately funded by the Foundation. PAC First Floor Remodel...$ 30,000 Various departments at PAC are in need of remodeling due to staffing and workflow requirements. The carry forward amount of $45,000 adds to the budget to this project for a total of $75,000. Interior Painting...$ 46,000 EAT, KC, SMT, and SUM will have their interiors repainted in Carpeting...$ 90,000 EAT, KC, and SMT will have their replaced in Branch Security Improvements...$ 27,000 Branches are in need of improvements to handle increased security problems around premises. PKS will have a new fence added; LWD, SH, PKS, GHM will have video monitoring added to the exterior of the building. Network Upgrades... $ 141,000 This project fixes network performance, including Internet access and overall network performance relief for Lakewood and South Hill. Systems Programmer Consultant $ 125,000 Funds to pay for continuing the project from 2005, in addition to the amount carried forward. Total project budget for 2006 is $204,500. Accounting System Replacement $ 100,000 Pending the outcome of the study, funds are set aside to replace Bi-Tech, if recommended. Total project budget for 2006 is $130,000. FUND BALANCE As with the General Fund, the Capital Fund s balance is also an important factor in cash flow. However, the Capital Fund balance is more susceptible to wider fluctuations. Since 1995, the Library has dramatically improved the Capital Fund balance, which was used as a source to borrow when General Funds were low. It is projected, however, that Capital Fund expenditures will erode the fund s balance, as the amount transferred can be less than the budgeted project expenditures. Below is a chart showing the history of the scapital Fund s ending fund balance. Figure 13 Capital Fund Ending Fund Balance 2,500,000 2,250,000 Parking Lot...$ 21,000 PKS needs to have its parking lot reconfigured to all for a left turn lane. South Hill Roof...$ 136,000 The South Hill branch requires PVC roof sections to be replaced. South Hill HVAC...$ 54,000 The HVAC system at South Hill needs to be replaced. 2,000,000 1,750,000 1,500,000 1,250,000 1,000, , , , Pr ojected Pr ojected 2006 Budget Page 58 Pierce County Library System

59 Table 12 - Capital Improvement Fund Detail CAPITAL IMPROVEMENT FUND * BUDGET MID-YEAR BUDGET ESTIMATED ESTIMATED ESTIMATED ESTIMATED Beginning Balance, January 1 $ 1,492,760 $ 2,244,729 $ 872,237 $ 826,010 $ 724,323 $ 914,742 CIP FUNDING Interest Earnings... 20, , , , , ,000 Budgeted transfer from General Fund , , , , , ,340 Various unanticipated transfers 737,626 TOTAL CIP FUNDING 1,091, , , , , ,340 AVAILABLE FUNDS: $ 2,587,729 $ 2,658,582 $ 1,262,360 $ 1,226,823 $ 1,132,792 $ 1,341,082 CIP EXPENDITURES Project Management (Director s Office) Branch renovations: PEN,BLK,PKS,SH , Branch renovations: SUM,GHM,SMT,LW ,152 Branch renovations: 3 community branches , Merchandising: 2 community branches , Merchandising: UP , Express Checkout: UP , Books+ to Go , UP Move/Expansion/Remodel , , UP LEED Certification Study , Facilities Management Establish Dupont Storefront Branch... 45, Vehicle Improvement Projects Remodel mobile services van interior... 7, Replace BKM Generator (Bluebird) , Replace BKM Generator (Gertie) ,000 Replace/Rebuild BKM Engine (Bluebird) , Sprinter for Community & Outreach Services , Staff Vans , , Interior Improvement Projects PAC: First floor remodel... 45, , Total Interior Painting... 27, , , , , Carpeting EAT , KC , LWD... 85, PKS... 65, SH , SMT , SUM Total Carpeting , , Exterior Improvement Projects Exterior Painting/Sealing BUC... 5, Total Exterior Painting/Sealing... 5, Total Parking Lot Maint./Improvements... 48, , , , ,500 Total Auto Door Maint./Improvements... 8, , , ,000 Replace/Repair Roofs PAC , BUC ,000 GHM ,000 PKS , PEN , SH , SMT... 25, SUM , Total Replace Roofs... 25, , , , , ,000 - CONTINUED ON NEXT PAGE Budget Page 59 Pierce County Library System

60 - CONTINUED FROM PREVIOUS PAGE - CAPITAL IMPROVEMENT FUND BUDGET MID-YEAR BUDGET ESTIMATED ESTIMATED ESTIMATED ESTIMATED System Improvement Projects LWD: Replace Boilers... 40, PAC: HVAC shunt switches for garage drs... 6, PAC: Site drainage rehabilitation... 19, PAC: Clean/seal HVAC vaults... 27, PAC: Supplemental A/C unit for training rm... 5, EAT: Replace HVAC Units , LWD: Replace HVAC Units , PKS: Replace HVAC Units ,000 SH: Replace HVAC Units , Branch perimeter security (LWD,SH,PKS,GHM) , Community and Outreach Services Kid s Bookmobile: Satellite Connection... 15, Communications Department High-speed Copier... 15, , Information Technology Upgrade Library System s Telecom Network Purchase of Integrated Library System... 15, , Wireless Connectivity within the Branches... 50, , Network Upgrades , Network Upgrade, Phase , Accounting System (Review in 2005)... 30, , Systems Programmer Consultant , , TOTAL CIP EXPENDITURES: 1,545,558 1,786, , , , ,500 Ending Balance, December 31 $ 1,039,171 $ 872,237 $ 826,010 $ 724,323 $ 914,742 $ 1,147,582 * For 2006, the numbers reflect the capital carryover projects or funds, therefore the 2005 ending fund balance will not match the 2006 beginning fund balance. Simply Me My identity is in danger, though you cannot see, So many cliques, not one I want to be. The cheerleaders that prance around, graceful in every way, The jocks that always succeed in any sport they play. The punks that walk around, thinking they re hardcore, And the preps that diss the punks, whom they secretly adore. The nerds, the geeks, the freaks, and the weirdoes, My high school life is like looking through a window. I see the cliques and want to give in, I want to belong, to be one of them. But when the light hits the window, I can truly see, The person that I m meant to be, Simply me. Madison Graffe Gig Harbor HS, 10th Grade 2005 Our Own Words 9th & 10th Grade Poetry Winner 2006 Budget Page 60 Pierce County Library System

61 CASH FLOW ANALYSIS/BUDGETING

62 CASH FLOW ANALYSIS/BUDGETING CASH FLOW ANALYSIS G iven that the Library operates significantly under its statutory limit of revenues, the budgeting strategy is designed to meet two key objectives: 1. Look far enough into the future to proactively address budget shortfalls, and 2. Do not look too far into the future to make judgments, and therefore short-term budget policies, about economic conditions. Continuing since the 2004 budget, a mediumrange budgeting tool is utilized to analyze and budget to cash flow. Cash flow analysis determines how budgets will be established and balanced in future years. The general strategy is as follows: Be able to pay bills in April three (3) fiscal years ahead. April is a key month for the Library, as the Library needs to operate for four months with very low revenues until the property tax payments are received in April. Have enough money in the ending fund balance and in the Capital Improvement Fund to pay each year s April bills. When there are shortages in the General Fund cash balance, request the Board to approve borrowing from the Capital Improvement Fund. Exclude any funds set aside for elections from the calculation of available cash to pay bills. Budget the Contingency to build enough of an ending fund balance year to year to pay the bills. Determine how much the budget needs to be cut annually in order to fund Contingency. This strategy ensures that the Library budgets enough in advance so as to pay its bills. Please see the next page for the cash flow analysis worksheet. Budgeting to a positive cash flow in April 2008 is a two step process as noted on the worksheet: Step 1: Adjust the Contingency for 2006, 2007, and 2008 so that the Jan Apr cash balance is positive. Step 2: The budget cuts are then calculated and must be made to ongoing operations in order to balance the following year s budget and ensure that any cuts carry forward to later years. Last year the Library estimated a reduction of the budget by about $297,000 in 2006 and $522,000 in This is based on one of two retirement rate scenarios that were considered by the Legislature, which enacted a version that phases in smaller increases than what the State Actuary and AWC proposed. For fiscal year 2006, the cash flow outlook is changed for the following reasons: The Library accounted for unanticipated 2005 first-half revenues and savings of over $213,000 during the mid-year budget, which contributed to long-term cash available. Since the 2005 mid-year, the Library received over $100,000 in unanticipated revenues from several revenue sources, such as timber harvest, contributing to long-term cash. Since the 2005 mid-year, the Library saved an additional $20,000, contributing 2006 Budget Page 62 Pierce County Library System

63 to long-term cash available. The final amount will be higher, and calculated in December property tax revenue projections include almost $300,000 more from new construction, which helped prevent budget reductions. The COLA was at 2.07%, which also helped prevent budget reductions. Personnel cost increases for 2007 and 2007 reflect the likely cost-of-living and benefit increases (aggregate +7.93% for 2007 and +7.28% for 2008). Figure 14 Combined Funds Ending Fund Balances 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Pr oj ected Pr oj ected GENERAL FUND CAPITAL FUND COMBINED FUNDS (GF & CF) These factors have both positive and negative effects on future cash flow for the next three years. On the cash flow statements below in table 13, it s noted that major budget reductions are anticipated in 2007 and Future Major Reduction Year To Balance the Budget $476, $507,970 * Reductions are primarily due to rising personnel costs, including retirement, health care coverage, and increased cost of living adjustments. Finally, the Library s cash balance after paying bills in April 2008 is $584,046, an acceptable figure precluding the need to secure a line of credit. Figure 14 is a chart showing the combined funds of the General Fund and Capital Fund that contribute to the cash flow of the Library. The record shows a steady increase in the combined funds ending fund balances from nearly $1.8 million in 1995 to an estimate of $7.6 million in These combined funds allow the Library to operate without borrowing money from a lending source Budget Page 63 Pierce County Library System

64 Table 13 - Cash Flow Analysis/Budget Worksheet GENERAL FUND CASH FLOW ANALYSIS FINAL MID-YEAR PROJECTED BUDGET PROJECTED PROJECTED Beginning Fund Balance $ 5,690,750 $ 4,933,074 $ 5,235,074 $ 5,085,285 $ 5,262,212 $ 5,430,212 (Excluding Carry Forwards) REVENUES Previous Year Carry-Forward 750,833 1,508,509 1,206, ,790 Tax revenue (property/harvest/leasehold) 16,130,166 16,179,394 16,197,205 17,025,650 17,589,929 18,164,558 Intergovernmental (grants) Charges for Services (graphics/photocopy) 57,000 61,800 63,096 57,000 57,000 57,000 Fines 450, , , , , ,000 Miscellaneous (interest/donations/salvage) 80, , , , , ,000 TOTAL 17,467,999 18,457,693 18,300,077 18,009,440 18,266,929 18,851,558 EXPENDITURES Personnel (COLA, steps, benefits) 11,237,317 11,202,113 10,802,113 12,007,228 12,908,065 13,847,847 Materials 3,074,747 3,074,747 3,074,747 2,830,824 2,922,709 3,016,249 Maintenance and Operations 2,304,470 2,378,495 2,292,495 2,338,608 2,379,260 2,426,845 Accumulated cuts from previous years 0 (476,444) Election-related 350, ,000 48, ,000 Transfer to CIF From General Fund 334, , , , , ,031 Transfer to CIF mid-year budget adj. 213, ,368 Transfer to CIF Unanticipated revns/svngs 737,626 1,368,010 Total Transfers to CIF 334,343 1,285,337 1,915, , , ,031 Contingency (add to ending fund balance) 167, , , , , ,000 TOTAL 17,468,049 18,457,692 18,300,076 18,009,440 18,743,373 19,359,528 Adjust these values to affect STEP 1 below Ending Fund Balance* $ 5,857,872 $ 5,100,075 $ 5,402,076 $ 5,262,212 $ 5,430,212 $ 5,598,212 (% of next year s revenues) 33.12% 28.83% 30.54% 28.81% 28.81% 28.81% *Assumes Contingency was not spent and budget is balanced Revenues: 17,468,049 18,457,693 18,300,077 18,009,440 18,266,929 18,851,558 Expenditures: 17,468,049 18,457,693 18,300,077 18,009,440 18,743,373 19,359,528 Difference: (476,444) (507,970) STEP 2: If negative (red): must cut the budget by this amount Ave. monthly expenditures (less transfers) 1,413,878 1,417,113 1,351,446 1,456,555 1,517,503 1,567,875 Ave. monthly expenditures (balanced budget) 1,413,878 1,417,113 1,351,446 1,456,555 1,477,799 1,525,544 Cash Required To Remain Solvent January - April Every Year Available: Ending Fund balance from the previous year (balanced budget) 6,441,583 5,402,075 5,262,212 5,430,212 Amount in CIF Fund contributing to cash flow** 1,492,760 2,244, , ,010 Revenues for first 3 months 400, , , ,000 Total Funds Available: 8,334,343 8,071,804 6,559,449 6,686,222 Less Need (Ave. Monthly Exp. (balanced budget) X 4 months): 5,405,785 5,826,220 5,911,197 6,102,176 Jan-Apr Cash solvency (Available funds less need) 2,928,558 2,245, , ,046 Assumptions: 2007 & 2008 COLA & Steps at 5.12%; medical/dental increases at 10% 2007 & 2008 retirement increases at 5.94% and 8.19% respectively STEP 1: Positive value means solvent until 2007 & 2008 straight-lines for M&O at approximately 2% of previous year Materials budget set at 16% of revenues revenues received--don't have to borrow Capital Fund transfer at 2% of revenues Contingency set (approx. 1% of revenues) so that Ending Fund Balance is about 29% of following year s revenues Budget Page 64 Pierce County Library System

65 GLOSSARY

66 GLOSSARY ALA: American Library Association. The premier association for libraries in the United States, which include all forms of libraries (e.g., public, K-12, higher education, corporate). See also PLA, WLA. AWC: Association of Washington Cities. An organization that serves Washington cities, providing among many services such as conferences, training, research, and networking. BI-TECH: A computerized integrated fund accounting system provided by Sungard Corporation. The Bi-Tech system is used to manage the Library s finances and human resources records. BUDGET, FINAL (OR FINAL BUDGET, FB): A fiscal year s budget approved by the Board of Trustees upon second reading and final passage, which occurs during the December Board meeting. BUDGET, MID-YEAR (OR MID-YEAR ADJUSTMENT, MYA): A fiscal year s revised budget of revenues and expenditures approved by the Board of Trustees during the summer. CAPITAL IMPROVEMENT FUND: An accounting fund category for which the Library uses to pay for capital improvement projects. CAPITAL IMPROVEMENT PROJECT: A project that improves a major aspect of the Library. CAPITAL IMPROVEMENT PLAN (CIP): The list of capital improvement projects approved by the Board of Trustees for current and future years. CASH FLOW ANALYSIS: A financial tool used by the Library for multi-year financial planning purposes. The Library uses it primarily to determine how much cash is required to be set aside in the general and capital funds in order to pay bills during the first four months of the next three fiscal years. CF or CIF: Capital Fund, or Capital Improvement Fund. See CAPITAL IMPROVEMENT FUND. CIPA: Children s Internet Protection Act. This Federal Act requires that institutions receiving reimbursements for telecommunications costs, through the federally administered E-Rate program, implement an Internet filtering policy. COLA: Cost of Living Adjustment. The adjustment applied by an organization to all of its salary and wage tables, usually by a percentage tied to a local or national inflationary index. For the Library, the COLA is negotiated in its labor agreement as 90% of the July to July Seattle-Tacoma-Bremerton CPI-U, and has minimum and maximum caps. See also CPI-U and IPD. CONTINGENCY: Monies set aside in the General Fund to be used to address cash needs or respond to emergencies. CPI-U: Consumer Price Index-Urban Workers. The CPI- U is an inflationary index used to establish the Cost of Living Adjustment to wages and salaries. CPI s are established at a national level and throughout the nation and states at regional levels. The Library has negotiated in the Union Labor Agreement to use the July to July Seattle-Tacoma- Bremerton version. See also COLA and IPD. DEBT-SERVICE FUND: An accounting fund category for which the Library uses to pay off public debt, such as bonds. EXPRESS CHECKOUT: A means for providing patrons the ability to checkout materials by themselves. Express Checkout stations are used across the country in various retail stores, such as Fred Meyer and Home Depot. Express Checkout is being implemented along with merchandizing. See also MERCHANDISING. FTE: Full-Time Equivalent. The equivalent of a full-time position in the Library, defined as working 40 hours per week. GENERAL FUND: 2006 Budget Page 66 Pierce County Library System

67 An accounting fund category for which the Library uses to receive revenues and pay for ongoing operations. HAPLR: Hennon s American Public Library Rating. An index that rates public libraries of similar size based on a number of indicators, such as expenditures per capita and cost per circulation. The summarized version of the 2005 HAPLR ratings of 2003 fiscal year data is available at ILS: Integrated Library System. A mission-critical electronic data processing system that provides turnkey automation of a library s catalog and patron transaction system. PCLS uses the Polaris ILS. assessor/treasurer s office for the taxing district, upon release of the preliminary and final certifications of property tax revenues. MLS/MLIS: Masters of Library Science/Masters of Library and Information Sciences. The graduate degree required in the industry to be called Librarian. MLIS adds focus to information technology as part of the definition of being a librarian. OCLC: Online Computer Library Center. A nonprofit, membership, computer library service and research organization dedicated to the public purposes of furthering access to the world s information and reducing information costs. OCLC provides services to locate, acquire, catalog, lend and preserve library materials. OPAC: Online Public Access Computer. A PC in the branches dedicated for patrons to use to access the Internet or other electronic resources, such as the online catalog or other electronic information sources. PCLS OPACs also offer patrons access to office automation applications such as word processing and spreadsheets. IPD: Implicit Price Deflator. The national index used in Washington State for purposes of establishing the lawful property tax levy rate for revenues. Under Initiative 747, if the IPD is less than 1%, the Board of Trustees must take action to levy the full 1%. If the IPD is more than 1%, the Board does not need to take action and the Library receives the full 1% levy rate. See also COLA and CPI-U. MERCHANDISING: A new activity and term for which the Library devotes resources to display and promote the collection and branches. Merchandising is being implemented along with the Express Checkout. See also EXPRESS CHECKOUT. MILLAGE RATE: The effective levy rate for a taxing district. If the millage rate is , then the effective levy rate is 50 per $1,000 of assessed value. The millage rate is calculated every year by a county s PAC: Processing and Administrative Center. The building facility of the Library s various departments, such as HR, Finance, and Collection Services. PCLS: Pierce County Library System. A junior taxing district that provides library services to residents in the Pierce County taxing district. PEBB: Public Employees Benefits Board. The statemanaged organization that administers benefits, such as medical and dental coverage, and life insurance. The Library participates in PEBB s medical insurance program. See also WCIF. PERS: Public Employees Retirement System. PERS is managed by the state s Department of Retirement, and is offered to all retirement-eligible employees. There are three plans, PERS 1, PERS 2, and PERS 3, only of which PERS plans 2 and 3 are available to employees. PLA: 2006 Budget Page 67 Pierce County Library System

68 Public Libraries Association. The association for public libraries. PLA s parent organization is ALA. See also ALA, WLA. POLARIS: The new online catalog system developed and sold by GIS Information Systems Corporation. Polaris provides staff and patrons electronic access to the catalog, and manages all transactions from materials purchase, cataloguing, circulation, and final disposal. OPERATING FUND: See GENERAL FUND. WCIF: Washington Counties Insurance Fund. An insurance pool that provides medical and dental coverages, and life insurance. The Library participates in the WCIF dental/life insurance program. See also PEBB. WIFI: Wireless Fidelity, or Wireless. This contemporary technology provides a computer user to use a computer, most often a laptop, to access the Internet or other network resources without the need for a physical network cable. WiFi technology most often is referred to as IEEE standard a/b/g, which is the same technology used for cordless phones. The effective WiFi distance between a laptop and the source antenna is usually limited to around 100 feet. In library nomenclature, WiFi has come to mean providing computer owners the ability to bring in their laptops into branch premises and access the Internet via the library s network. Fat I find her in the girl s room, slumped against a bathroom stall She is crying A puddle of sadness lies at her feet I wish I were beautiful, she says. I stand in a corner close to the door Huff, huff, huff Trying to catching my breath After chasing her After they called her that name Fat And she is crying, crying tears like she could fill the ocean Grace Crumpton Tacoma School of the Arts, 11th Grade 2005 Our Own Words 11th & 12th Grade Poetry Winner WLA: Washington Library Association. The Washington State association for state libraries. See also ALA, PLA. WSL: Washington State Library. The State Library, currently reporting to the Washington State Secretary of the State. WSL provides some branch services, special library services to the state, training for library employees, administration of the K-20 network, and general resources to the library community Budget Page 68 Pierce County Library System

69 REFERENCES 2006 Budget Page 69 Pierce County Library System

70 REFERENCES 2004 Pierce County Library System Budget; Final Budget for Fiscal Year Pierce County Library System. December 9, Pierce County Library System Budget; Final Budget for Fiscal Year Pierce County Library System. December 8, Agreement by and Between Pierce County Rural Library District and Washington State Council of County and City Employees, Local 3787, January 1, 2004 through December 31, January 14, Best Practices in Public Budgeting. Government Finance Officers Association (GFOA) Board Policy 3.15 Fiscal Management Policy. June Budget Suggestions for 2005; Information Bulletin No Municipal Research and Services Center of Washington (MRSC). August Hennon s American Public Library Report, American Library Association. October Our Own Words, 2005 Winners. Pierce County Library System The 12 Habits of Highly Successful Finance Officers. Fitch Ratings. November 21, Washington State Public Library Statistics; Annual Reports. Washington State Library Budget Page 70 Pierce County Library System