February 11, 2004
TO: Library Commissioners
Susan Hildreth, City Librarian
FR: George M. Nichols, Finance Director
RE: 2004-05 PROPOSED BUDGET
ACTION: Approve the Library’s proposed budget for 2004-05 as amended and discussed below.
DISCUSSION: Since the budget presentation on February 4, 2004, the baseline estimate has increased by $123,000. The increase is the result of updated estimates from several City departments regarding the cost of services they provide the Library that total $127,000; and, miscellaneous reductions of $4,000.
With regard to the $127,000 increase in the cost of services provided by other City departments:
- Workers Compensation is projected by the Department of Human Resources (DHR) to increase by $154,000 – from $651,000 to $805,000. According to DHR, their estimate is based on loss experience, cost trends, and reforms.
- Gardening services provided by Recreation & Parks Department (RPD) will increase $126,000 – from $150,000 to $276,000. The Library will not receive additional service. The Library receives the equivalent of 3.0 FTE (groundskeepers) which RPD in the past has apparently partially subsidized. With expected reductions of 15% in RPD’s baseline, RPD is adjusting the work order to fully recover the cost of these FTE.
- PUC charges for light, heat, power, and sewer services will increase $14,000 – from $585,000 to $598,000. This is a 2.3% increase.
- Telephone usage and circuit charges assessed by Department of Telephone and Information Services (DTIS) will decrease $151,000 – from $511,000 to $360,000. Reduction due to application of Federal E-rate and California TeleConnect discounts provided the Library by service providers.
- Reductions of $16,000 in various services provided by DHR ($4,387), DTIS ($5,723), and the Office of Administrative Services for vehicle maintenance ($5,650).
If all costs were known and revenue estimates were firm, the baseline increase of $123,000 would require us to reduce the proposed budget by a like amount. However, as the budget that we submit to the Mayor will not include the $644,000 estimated for increases in the cost of employee health plans – Mayor’s staff and Controller will post actual increases in March/April – proposed spending is $513,000 less than projected revenue. It is likely that cost estimates for health benefits, retirement, and work orders will change; that revenue projections will change; and that the budget will have to be adjusted after it is approved by the Commission and submitted to the Mayor.
RECOMMENDATION: Given the uncertainty of the budget situation, Library Administration recommends that the Library Commission:
1. Approve the proposed budget that was presented on February 4, 2004 as amended and described above. If it becomes necessary to reduce discretionary spending proposals as a result of higher than anticipated baseline costs (e.g., retirement contribution or health plan premiums); or a reduction in current revenue estimates, the Library would make reductions to spending initiatives based on priorities set forth previously (list attached).
2. Authorize the Library to include in the proposed budget $580,182 from Library Preservation Fund reserves to begin implementing RFID if following the public forum scheduled for March 4, 2004, the Library Commission determines that RFID is in the best interests of the Library and the community.
3. Should RFID not be approved, authorize the Library to add to the proposed budget $543,025 from Library Preservation Fund reserves for the second phase of the Automated Materials Sorting System. The Library proposes to accelerate the purchase and installation of the system and to budget the full $1.210 million in 2004-05 if RFID is not approved.
Following submittal of the budget to the Mayor on February 20, 2004, Library staff will report to the Commission on the status of the budget as it moves forward in the process. Please call me at (415) 557-4248 if you have any questions prior to the meeting.
Attachments
cc: Paul Underwood, Deputy City Librarian