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Transcript of Library Financial Management For Mortenson Associates September 27, 2007 Bob Burger, Professor...
Library Financial Management Library Financial Management For Mortenson AssociatesFor Mortenson Associates
September 27, 2007September 27, 2007
Bob Burger, Professor EmeritusUniversity of Illinois Library
Adapted from a presentation by Terry L. WeechGraduate School of Library and Information SciencesUniversity of Illinois, Urbana-Champaign and Richard Schnuer, Finance DirectorCity of Champaign, Illinois, USA
OutlineOutline
Overview Financial and Managerial Accountability Budgeting Capital Projects Revenue (taxes, fund raising, grants, etc.)
OverviewOverview
Definition of Financial Management
The Planning, Directing, and Monitoring of income and expenses to achieve service goals
The Reporting and Evaluation of the Outcomes and Results
RELATIONSHIP TO RELATIONSHIP TO OVERALL MANAGEMENTOVERALL MANAGEMENT
POSDCORB– Planning– Organizing– Staffing– Directing– Coordinating– Reporting– Budgeting
Context of Financial Accountability and Managerial
AccountabilityProfessional
– Discipline – Reputation
Legal– Audits– Laws
Ethical– Personal– Cultural
Role of Financial and Managerial Role of Financial and Managerial Accountability, Accountability, ContinuedContinued
What is the level of Accountability in your organizational setting? Who is responsible?
Does Accountability vary with type of library?
Does Accountability change over time in the same library?
Can you control what you are responsible for?
Role of Financial and Managerial Role of Financial and Managerial Accountability, Accountability, ContinuedContinued
Who evaluates your financial and managerial performance?– Government Officials?– Superiors in your organization?– Colleagues and Staff?– Public?– Other?
What happens when/if you are held accountable?
Financial Documentation TerminologyFinancial Documentation Terminology Account Number: A number assigned to indicate a specific account in a
series of accounts.
Allocation: Money available for spending by a specific department or organization
Audit Trail: The path of original documents by which financial transactions may be traced. Purchase Orders, Requisitions, Vouchers, Invoices, etc. are the documents that comprise the Audit Trail.
Balance: The difference between expenditures and allocations in an account Cash Flow: The tracing of income and expenditures from the deposit of funds
until expenditure Encumber: To set aside or commit funds for a specific purpose, such as a
book order, until they can be officially expended Voucher: A document showing authority to make a purchase. Purchase Order: An official commitment to purchase goods or services at a
stated price. Invoice: Description of goods or services and showing cost
BUDGETINGBUDGETING
Differences between Accounting
and Budgeting:Accounting is Accountability
‒The Audit Trail‒The Income‒The Expenditures‒The Cash Flow
BUDGETINGBUDGETING
Differences between Accounting
and Budgeting:Budgeting is Planning
‒Mission: What you need to do‒Goals: What you hope to do‒Objectives: What you can measure you
have done.‒How well you have done it‒What you will do next
The Budget Process
Cyclical ActivityProcesses VaryTwo Critical Systems
Fiscal ManagementPerformance
Measurement
The Budget Process
Drafting the Budget (service goals in monetary terms)– Who does this?
– How is it reviewed?
Presenting the Budget– Who Presents?– Who receives the Presentation?
Budget Approval Implementing the Budget Evaluating Results
Types of Budgets
Line Item (or Object) Budget‒Focus on Accountability‒Usually by department or division
Function (Program) Budget‒Focus on program inputs
Performance Budget‒Focus on outcomes
Types of Budgeting Systems Incremental (traditional) PPBS (Planning Programming Budgeting System)
– Includes components of both Program and Performance Budgets
ZBB (Zero Based Budgeting System)– Assumes justifying all programs each budget year
– Decision Packages to be used if programs are eliminated
Responsibility Based Budgeting System– Budget determined by resources unit brings to the organization
– Budget control at unit level, not central organization level
Newer Budget ModelsNewer Budget Models
Focus on Performance
Different methods used
Newer Budget ModelsNewer Budget Models
Recent Trends• Benchmarking• Standardizing Performance Measures
(ICCMA Project)• Service Efforts and Service
Accomplishments - SESA’s• Activity Based Costing - ABC• Performance Budgeting
EXAMPLES OF EXAMPLES OF RESPONSIBILITY BASED RESPONSIBILITY BASED BUDGETING SYSTEMSBUDGETING SYSTEMS
Responsibility Based Budgeting System UIUC: http://www.provost.uiuc.edu/communication/01/Comm01.pdf
Information Technology in University Management in Central and Eastern Europe Today by Peter Mederly and Pavol Mederly. http://leep.lis.uiuc.edu/seworkspace/weech/405/CMR9822.pdf
Capital Improvement PlanningCapital Improvement PlanningDefinitions
• Capital Project• Capital Improvement Plan (CIP)
Advantages• Financial Planning for large costs• Lead time to implement projects• Project Coordination
CIP Cycle
Revenue PoliciesRevenue Policies
Numerous SourcesGuiding Principals
– accountability– equity– efficiency– revenue stability– but: some objectives
mutually exclusive
Revenue Sources for Libraries Taxes Investment Tuition and/or User Fees Overdue Fines Grants Contracts For Profit Activities Fund Raising
– Gifts– Sales
Revenue Sources outside United StatesRevenue Sources outside United States
What revenue sources fund your library?
How much do you know about these sources?
What factors affect these sources?
SOURCES OF TAX REVENUESOURCES OF TAX REVENUE (FOR GOVERNMENT SUPPORTED (FOR GOVERNMENT SUPPORTED
ORGANIZATIONS)ORGANIZATIONS)
• National
• State/Province
• Local
TYPES OF TAXESTYPES OF TAXES (FOR GOVERNMENT SUPPORTED ORGANIZATIONS)(FOR GOVERNMENT SUPPORTED ORGANIZATIONS)
• Income• Sales• Value Added (VAT)• Excise (Gasoline, Boats, Automobiles)• Real Property• Personal Property• Intangible Property (Royalties, Stocks,
Bonds)• Other?
Other Income Sources Investments
– endowments and gifts– investment of operating funds
Tuition and/or User Fees– overdue fines– lost book charges– user charges for reserves or computer access
Cost Recovery (similar to fees, but based not on increasing income, but meeting costs)
Other Income Sources, Other Income Sources, Continued.Continued. Fund Raising
– Gifts Capital Gifts
Operating Fund Gifts
Endowments
Deferred Gifts
– Memorials• Book Plates
• Furniture
• Rooms
• Staff (endowed professorship/librarians, study centers)
• Other
– Book Sales, Bake Sales, Gift Shop– Carnivals, Fund Raising Dinners, etc.
Grants and ContractsGrants and Contracts
Grant: To request funds for a project you propose.
Contract: Request funds to undertake a project proposed by the funding organization.
Sources– Government– Private
Grants and Contracts, Grants and Contracts, ContinuedContinued Procedures
RFP (Request for Proposal)
Letter of Transmittal
Problem Statement
Program Objectives
Program activities and Personnel
Timetable
Evaluation Plan
Budget
Ability to Sustain Program
Dissemination of Results
Revenue ForecastingRevenue ForecastingApproaches
• Qualitative• Statistical (e.g.,
trends)• Causal
Considerations• Availability• Stability• Drivers
Financial ManagementFinancial Management
QUESTIONS?
COMMENTS?
Thank you for your interest and attention!