Page 128 - DLIS003_LIBRARY ADMINISTRATION AND MANAGEMENT

Unit 7: Budgeting

2. Formula Budgeting: Based on financial norms and standards this method tries to relate Notes
some inputs like users served, academic programmes supported and ratio of book stock to
total funds of parent body. The formulae are used for financial estimation as well as
budget justification. This appears to be a broad and quick method and hence saves a lot of
time. But it does not account for firer variations in respect of each library and its customers
and services.
3. Programme Budgeting: This method propounded originally in the Hoover Commission
Report (1949) has three steps. They are: (i) statement of agency (i.e., library) objectives,
(ii) full consideration of alternative ways and (iii) logical selection of the best based on
effectiveness and efficiency. Extended from the line-item method, this method tries to
answer the questions for “what purpose the money is being spent?” and “how have the
resources to be deployed for each programme?” and more suitable for a contracting
economy. Accordingly, the financial plan is presented as programmes and subprograms
built upon work units or workloads. Work units are assumed to be measurable and the
work unit costs are the building blocks of the programme budget.
The focus in this method of budgeting is on the library’s activities and the funds are to be
earmarked for programmes or services that the library plans to provide. For instance, if a
library decides to provide a Current Awareness Service, the cost of that service (like
staffing, materials, publication, overheads, etc.) is calculated and the expenditure estimated.
The budget is thus prepared on the basis of the cost of programmes and whether a
programme has to continue, get modified or deleted.

A library may also group its major programmes or functions, which may correspond to
the organizational structure of the library like administrative services, technical services,
reader services, etc., Each of these services may be organized through departments such as
acquisition, classification and cataloguing, reference and bibliographical services,
documentation and information services, together with summary descriptions of these
functions or programmes and comparative figures of current and proposed expenditure.
In this type of budget, provision is made for various activities of each department to
gauge their requirements and watch their expenditures.
4. Performance Budgeting: This budgeting method is similar to programme budgeting but
the emphasis shifts from programmes to performance. The expenditure is based on the
performance of activities and the stress is laid upon operational efficiency. This method
requires careful accumulation of quantitative data on all the activities over a period of
time. Management techniques such as cost-benefit analysis are used to measure the
performance and establish norms. For example, data on the number of books acquired,
classified and catalogued, actual man-hours for doing the entire processing work, etc. are
collected to determine the manpower and materials needed to perform the tasks.

It emphasises the performance and operational efficiency of the programmes. Like
programme budgeting starting with a statement of agency objectives, full consideration
to alternate ways of achieving the objectives and a logical selection of the best is made
based on effectiveness, efficiency and cost-benefit analysis. The unit cost for specific
operations multiplied by the volume of operations anticipated would give the budget.

The advantage of the method is the emphasis on the service mission of the library. However,
it is difficult to quantity service quality and activities. In other words, this method measures
only quantity not quality which is rather difficult to measure in terms of money. In fact,
the budget allocation for a service institution like a library has little direct relationship to
the degree of satisfaction users receive from library services. Measuring benefits of libraries
in rupees, the complex interrelationship of costs of different operations and the non-linear
variation of cost for every unit output (marginal/incremental cost) are some of the
problems. It may look too humble and begging for a review of each operation by authority.

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