Page 58 - DLIS104_MANAGEMENT OF LIBRARIES AND INFORMATION CENTRES

Unit 8: Library Finance

with budgeted amounts. Each department is tasked to operate within its individual budget. If Notes
during the budget year, a determination is made that budgeted funds within a department are not
sufficient to fulfill the mission/program of the department, a request can be made for additional
budget funds through the completion of a “Request for Additional Budget Funds”.

Did u know? If approved by the President, the controller’s office will make the necessary
budget adjustments.

Reporting

The following monthly reports are distributed to department chairs by the 15th day of the month
following the month for which reports are generated. These reports are also available on-line to
authorized viewers as well:
Summary Expenditure Budget Report: This report presents actual expenditures for the
current month, and compares total expenditures for the year with annual budgeted amounts
along with any encumbered expenses. A percentage of the remaining budget is also pro-
vided.
General Ledger Report: This report reflects actual expenses incurred by general ledger
code for each department.
Monthly Departmental Budget Review: This report is circulated to any and all departments
who have exceeded their departmental budgets. Department chairs are responsible for
documenting explanations for overall departmental deficits, as well as, detailed explana-
tions for individual line items exceeding $100.00 over budget. The explanations are
discussed with and approved by the appropriate Vice Presidents and forwarded to the
President for his review. The reports are then kept on file in the Controller’s office for use
with the next year’s budget planning.

8.3 Cost Effectiveness Analysis
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs
and outcomes (effects) of two or more courses of action. Cost-effectiveness analysis is distinct from
cost-benefit analysis, which assigns a monetary value to the measure of effect. Cost-effectiveness
analysis is often used in the field of health services, where it may be inappropriate to monetize
health effect. Typically the CEA is expressed in terms of a ratio where the denominator is a gain in
health from a measure and the numerator is the cost associated with the health gain. The most
commonly used outcome measure is quality-adjusted life years (QALY). Cost-utility analysis is
similar to cost-effectiveness analysis.

General application

The concept of cost effectiveness is applied to the planning and management of many types of
organized activity. In the acquisition of military tanks, for example, competing designs are compared
not only for purchase price, but also for such factors as their operating radius, top speed, rate of
fire, armor protection, and caliber and armor penetration of their guns. If a tank’s performance in
these areas is equal or even slightly inferior to its competitor, but substantially less expensive and
easier to produce, military planners may select it as more cost effective than the competitor.
Conversely, if the difference in price is near zero, but the more costly competitor would convey an
enormous battlefield advantage through special ammunition, radar fire control and laser range
finding, enabling it to destroy enemy tanks accurately at extreme ranges, military planners may
choose it instead based on the same cost effectiveness principle. Cost effectiveness analysis is also
applied to many other areas of human activity, including the economics of automobile usage.

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