SUPPORTS ITEM NO. 3
CS&B COMMITTEE AGENDA
MAY 8, 1997
ADMINISTRATIVE REPORT
Date: March 27, 1997
H:WORK:REP:retent (hl)
C.C. File No. 4004-1
TO: Vancouver City Council
FROM: Director of the Vancouver Public Library
SUBJECT: Retention of Revenues
RECOMMENDATIONS
A. THAT revenues from fines and photocopying, etc. continue to be
included in the annual budget estimates for the Vancouver
Public Library in order to offset the City's support of annual
operating costs.
B. THAT the Vancouver Public Library be allowed to retain 100% of
all net revenues other than those previously identified
(fines, photocopy, etc.) to be used at the discretion of the
Library but within the Guidelines regarding service increases
and new positions.
C. THAT Council formally approve the Vancouver Public Library
retain 100% net revenues received by fundraising in various
forms for expenditure at its discretion, so long as those
expenditures do not commit the City to ongoing operating costs
without Council's express permission.
CITY MANAGER s COMMENTS
The City Manager notes that the report of the Director of the
Vancouver Public Library identifies three classes of income --
those traditionally allocated to the City, referred to in
Recommendation A, earned net revenues related to Library operations
(Recommendation B), and fund raising (Recommendation C).
Recommendation A maintains past practice. These amounts are built
into the City s based budgets, and parallel a number of similar
practices in other departments.
With respect to Recommendation B, the City Manager is concerned
that incremental revenue generation may become a moderately
significant source of revenue for the City. All departments have
been directed to identify potential fee for service areas in order
to reduce budget pressures. It has been suggested that the City
could earn revenues through sponsorship arrangements that may be
sufficient to justify some effort in developing sponsorship
agreements. There will be a report back on this subject later in
the year, following Council direction last year. Many of these
sponsorship agreements could be applicable in several parts of the
City s operations. Accepting the Library recommendations for these
revenues would simply favour those departments where the
sponsorship generates revenue relative to those where it does not.
It makes little sense from the City Manager s perspective to
increase services in some areas because operating revenues or
sponsorships can be arranged if core services in other areas are
being reduced for fiscal reasons.
To the extent that Recommendation C is intended to cover
unconditional donations or donations requiring only limited donor
recognition, the City Manager supports this. Donors are usually
not enthusiastic about donating funds to cover operating costs to
maintain existing levels of operation. The policy suggested by the
Library will maximize their opportunity to obtain donations.
However, if Recommendation C is intended to cover sponsorships in
which a private sector organization will contribute funding in
exchange for significant recognition a form of advertising the
City Manager does not support it as written.
Accordingly, the City Manager RECOMMENDS approval of an alternate
set of recommendations, as follows:
. THAT revenues from fines and photocopying, etc. continue to be
included in the annual budget estimates for the Vancouver
Public Library in order to offset the City s support of annual
operating costs. (Library Board Recommendation A)
. THAT the Vancouver Public Library apply net revenues earned
from City funded operations to the base operations of the
Library, reducing the cost of those operations.
. THAT the Vancouver Public Library be allowed to retain two
thirds of net revenues earned from operations which are fully
funded by revenues.
. THAT the Vancouver Public Library be allowed to retain two
thirds of sponsorship funds arranged by the Library (those
contributions established on a multi-year basis involving
identification of a commercial supplier as a sponsor) to be used
at the discretion of the Library but within the Guidelines
regarding service increases and new positions.
. THAT sponsorship funds arranged by the City on a global basis be
directed to general revenue.
. THAT the Vancouver Public Library retain 100% of donations from
individuals and unconditional donations or donations requiring
minimal sponsor identification from commercial organizations.
BACKGROUND
Since 1995, two things have come together to necessitate a review of the
Guidelines between the City and Vancouver Public Library vis a vis
revenues generated by the Library: 1) a requirement on the part of the
City to actively pursue revenue generation; and 2) the revenue
possibilities opened to the Library by the new Central Library.
The Vancouver Public Library Board currently operates under two separate
mandates, the first being the Library Act (revised 1994), and the
second, a set of Guidelines agreed to by City Council and the Library
Board in 1985. (copy attached)
The Act states, with regard to revenues:
CLAUSE 11 (1) The library board has, subject to the approved budget,
exclusive control over the expenditure of
(a) all money provided by the municipal council for
library purposes,
(b) all money given to the library board,
(c) the revenue derived from any source, including
(i) fees,
(ii) fines and
(iii) money recovered by the library board for
detention, damage or loss of library
materials, and
(d) all money received by the library board under an
agreement to provide library service.
The Guidelines between the Board and Council are now sadly dated, but
reflected a need of the day to agree on how the Library would relate to
the City, particularly in the area of fiscal responsibility. While the
guidelines do not specify what happens to revenues generated by the
Library, the practice has been that additional income (except donation
and gifts) is used to offset the City's contribution to the cost of
operating the Library. The Library unlike the Park Board (which has an
agreement of 66/33) does not have a specific agreement re revenue. Until
1996, the Library has had only two major sources of revenue - fines, and
fees for photocopiers. Some income is received for charges for lost
books, booksale, sale of photos and other items.
Further to the above, all "gifts" of cash or kind to the Library have
traditionally NOT been treated as line revenue. These funds have been
expended as the donors have requested, usually on books for the system
or for a specific branch or department.
Since 1995, the Library has also been in receipt of funds donated by the
Friends of the Library (formed at the time of opening of the new Central
Library) - again these donations are not being used to offset operating
expenses, but rather to purchase books in specific areas or equipment
needed by the Library and not funded through recent capital funds.
With the Library about to enter into an annual fundraising campaign, and
with the potential for revenue generation at the Central Library
growing, through Facilities and partnerships the Board needs to clarify
with Council how those revenues will be handled in the future.
Traditional Sources of Revenue:
The Library Board does not wish to change the current arrangement
regarding those revenues which are currently used by the City to offset
the operating cost of the Library. These include fines, photocopying,
10% of net revenue from Promenade rental to the PEF, lost cards, lost
books, etc.
Recommendation: THAT revenues from fines and photocopying, etc.
continue to be included in the annual budget estimates for the Vancouver
Public Library in order to offset the City's support of the annual
operating costs.
Facilities and New Fee for Service Opportunities:
The Library Board believes that other than fines, photocopiers, and
facilities rentals, the Board's ability to generate revenues is quite
limited. The Library does have a unique opportunity with the Promenade
area of the new Central Library for rental and currently contributes 10%
of these net revenues to the Property Endowment Fund.
Through pilot projects such as fees for enhanced reference service and
some insourcing of binding from other libraries, the Board is exploring
its ability to charge fees for certain services. The Board is also
exploring ways of making sophisticated services pay for basic services
as we are doing with Internet Training courses: the more intensive
course is charged for, and pays for the basic course which is offered
free of charge (and for which donations are accepted but not required).
The Library charges users of the computer lab on an hourly basis, and
the revenue pays for the cost of the staff member, maintaining the
Community Organization Directory, supplies, paper, software, and enough
to provide a reserve for equipment and software replacement and/or
upgrades with some profit.
The Library however, may not charge for its basic services -the
circulation of materials and the provision of reference materials -
under the Library Act. What the Library HAS done is to provide as much
self-service to users as possible in order to minimize the impact of
user needs on the staff available. We are continually exploring ways to
become more efficient and still provide good public service to our
users.
Because our potential is limited, the Vancouver Public Library proposes
that it be able to retain 100% of all revenues generated from all
sources other than those specified in the preceding recommendation. The
Board would still be required to bring to Council for approval any
upgrading in services that required ongoing staffing or other financial
support, and to identify the funding which would be provided by the
Library for such services.
Recommendation: THAT the Vancouver Public Library be allowed to retain
100% of all net revenues other than those previously identified (fines,
photocopy, etc.) to be used at the discretion of the Library but within
the Guidelines regarding service increases and new positions.
Fundraising:
The Library Board believes that donors to the Vancouver Public Library
will give because they believe in the Library and wish to support and
enhance its services and collections. The Board believes that donors
will not give if their gift will be used to offset the cost of operating
the Library. The practice has been to allow the Library to keep
donations and gifts.
The Library will be keeping the Council informed of its plans for its
first annual fundraising campaign, and of the vehicle designed to
generate a lasting endowment for the Library.
Recommendation: THAT Council formally approve Vancouver Public Library
retain 100% of net revenues received by fundraising in various forms for
expenditure at its discretion, so long as those expenditures do not
commit the City to ongoing operating costs without Council's express
permission.
CONCLUSION
The Board believes that permitting the library to retain 100% of new
revenues and fundraising revenues would reflect the recognition that the
Library has relatively limited access to such revenues, and would
provide a strong incentive for the Library to generate new revenue
alternatives.
* * * * *