GVPL Briefing Notes - Provisional 2016 Operating Budget
Detailed notes explaining budget variances and the impact of the new Langford branch opening.
BRIEFING NOTES
FOR MEMBERS OF COUNCIL, LIBRARY BOARD AND MUNICIPAL CAO'S/ TREASURERS
Subject: Provisional 2016 Operating Budget
Date: October 20, 2015
Purpose: To provide additional notes and variance explanations.
Summary:
- For receipt by Council; request feedback or recommendations for amendment by December 15, 2015
- Total budget increase, net of transfer for the new branch startup costs, is 1.97%
- Total budget increase, net of all transfers, including the branch startup, is 2.49%
- Municipal contribution increase of 2.76% (higher than budget increase due to decline in other revenue)
- Total expenditure increase of 6.39% primarily due to $765,000 for start-up costs for Langford branch, funded by Langford
- Library system cost per capita increase of $1.37 (2015 increase was $1.89).
New Branch in 2016
The new branch in Langford is planned to open on April 1, 2016. Accordingly, the 2016 operating budget includes:
- Start-up funds and expenditures for furnishing and equipping the new branch, totaling $765,000, are for the funds to be received from Langford (per LOA section 8 – Branches). This start-up is considered to be a “transfer” revenue. The budget increase, after removing the portion related to the branch start-up, is as follows:
| 2016 Increase | Branch start-up funded by Langford | Balance of increase | |
|---|---|---|---|
| Salaries & benefits | $308,329 | - | $308,329 |
| Library materials | 394,894 | 350,000 | 44,894 |
| Supplies & services | 35,301 | 8,438 | 26,863 |
| Building occupancy | 30,186 | - | 30,186 |
| Other | 4,251 | 5,178 | (927) |
| Capital expenditures | 328,717 | 401,384 | (72,667) |
| Contribution to reserves | 5,000 | - | 5,000 |
| Total | $1,106,678 | $765,000 | $341,678 |
| % increase | 6.39% | 4.42% | 1.97% |
- New branch operating costs, such as salaries and benefits, network and phone, utilities, janitorial, are included and pro-rated from April 1st. Annualized, these costs total approximately, $314,000. However, budget savings found throughout the library system have been applied towards the additional operating costs of the Langford branch.
Variance Explanations (2016 over 2015 Budget):
Expenditure
Expenditures are increasing by 1.97% after removing the impact of the new branch start-up costs. Expenditures are increasing a further 0.52% to a total increase of 2.49% after removing the impact of changes in transfers for one-time expenditures funded from reserves ($80,415):
| 2016 Increase, excluding branch start-up | Change in transfers from reserves | Total increase, Net of Transfers | |
|---|---|---|---|
| Salaries & benefits | $308,329 | $27,773 | $336,102 |
| Library materials | 44,894 | 15,000 | 59,894 |
| Supplies & services | 26,863 | - | 26,863 |
| Building occupancy | 30,186 | (20,000) | 10,186 |
| Other | (927) | 10,325 | 9,398 |
| Capital expenditures | (72,667) | 47,317 | (25,350) |
| Contribution to reserves | 5,000 | - | 5,000 |
| Total | $341,678 | $80,415 | $422,093 |
| % increase | 1.97% | 0.52% | 2.49% |
This 2.49% increase allows for operating costs for a new branch, allows all branches to be open from 1:00 to 5:00 p.m. on Family Day, and includes a full network upgrade funded through savings from the new integrated library system and hardware. The network upgrade enables both staff and patron-focused technologies and services, by increasing patron and staff network capacity (10x bandwidth), improving sustainability and capacity management, and reducing maintenance, management costs and support requirements.
The budget also includes $19,389 in 2016 for a DigiLab project funded through the United Way Youth in Action, with offsetting revenue. This initiative builds capacity in youth and enables them to make positive change for their neighbourhoods. The Esquimalt Youth in Action team approached GVPL to work with them to create a youth-centered arts space in the spirit of accessibility and artistic exploration.
The following variances explain the total increase, net of transfers, of 2.49%:
Salaries and benefits (increase of $336,102) – increase per collective agreement (2% increase) and a 1.23 net increase in regularized FTE’s due to addition of Langford branch, potentially to be reduced to nil in the final budget.
Library materials (increase of $59,894) – 1.98% increase to maintain current collection. The fall of the Canadian dollar will negatively impact the library’s ability to maintain current collections. The full impact will be known by the time the final budget is submitted.
Supplies and services (increase of $26,863) – 1.22% net increase ($11k), including costs funded by United Way for the DigiLab project, a network upgrade, and net of reductions in various budgets; plus a further increase of 1.67% ($16k) for operating costs for the Langford branch.
Building occupancy (increase of $10,186) – Continues to be an area under pressure due to increases in utilities and maintenance costs due to wear and tear. The total increase consists of:
- 2.03% ($17k) increase for Langford Branch operating costs;
- 2.37% ($20k) increase for office lease sublet term end (funded with janitorial savings)
- 2.43% ($21k) increase for utilities and maintenance costs;
- Net of a 5.64% ($48k) reduction reflecting Central Branch one-time project savings in 2015 for major asset maintenance and janitorial savings at all branches.
Other expenses (increase of $9,398) – consists of a 1.78% increase ($6k) for increases in insurance, employee recruitment and vehicle parking, and a 0.90% ($3k) increase for the Langford branch operating costs.
Capital expenditures (decrease of $25,350) – consists of a reduction to Hardware ($25k) to fund a network upgrade under Supplies and Services.
Contribution to reserve funds (increase of $5,000/+5.26%) – The Replacement Reserve is used for tenant improvements and replacements, and minor renovations to improve or enhance services within the branches; an increase is requested due to aging infrastructure and the addition of a new branch in Langford.
Revenue
Overall, revenues, not including transfers, are budgeted to decline by $7,354. Fortunately, a continued decline in fine and fee revenues is offset by a projected increase on investment earnings on reserve funds.
Provincial grants (decrease of $1,484 / -0.23%) – reduction in Resource Sharing Grant, based on 2015 funding.
Fines, fees and printing (decrease of $39,200 / -6.30%) – 6.5% decrease ($30k) in fine revenue due to increasing use of e-formats; 2% reduction in discard book sales ($13k); removal of budget for replacement library card fees (negligible actual revenue); offset by projected increases in printing, meeting room rentals and non-resident fees.
Contracts for service (Increase of $541 / +2.00%) – annual increase for services provided to the CRD Juan de Fuca Electoral Area.
Investment income (increase of $23,400 / +37.99%) – conservatively estimated to include compounded earnings on funds invested with Nesbitt Burns, and in the Municipal Finance Authority bond fund.
Donations and other grants (increase of $9,389 / +46.94%) – donations include stable funding from Friends of the Library for the Summer Reading Club. The 2016 increase consists of funding from the United Way for the DigiLab initiative ($19k) and removal of budget for Victoria Foundation annual endowment grants, as grant expenditure is to be determined and is not included in the budget (-$10k). While the library has initiated a Development Plan, the program is in its infancy and revenue cannot be reliably projected at this time.
Transfers from reserves (decrease $80,415 / -21.55%) – includes a $117k decrease in one-time capital asset funding related to the new integrated library system, tenant improvements, an outreach vehicle and library materials; a reduction of one-time funding from unrestricted donations of $33k for a temporary development position; a reduction in one-time operating reserve funding for lease of office space and strategic planning (-$14k); offset by an increase of $84k for approved major asset maintenance building projects at the Juan de Fuca branch, funded from the JF MAM reserve fund.
Transfer for start-up – 2016 includes one-time funding of $765k for start-up costs for the new branch located in and funded by Langford.
