Correspondence - Greater Victoria Public Library RE: 2020 Budget and Five-Year Financial Plan

2020 Budget and 2020-2024 Five-Year Financial Plan

Review / Approval Dates

• Review - Finance Committee: August 27, 2019
• Approved - Finance Committee: October 1, 2019
• Approved - Board of Trustees: October 22, 2019

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Budget at a Glance (2020)

Notes:

• Note 1 - Operating budget consists of operating expenses only
• Note 2 - Net of Amortization (5.1% including amortization)
• Note 3 - Total budget funded is equal to Expenses (Operating budget) less amortization (non-funded expense) + capital budget
• Note 4 - Municipal Contribution Total divided by Population, decrease from prior year due to higher population stats over prior year (5.86% increase in estimate per BC Stats)
• Note 5 - Municipal Contribution Increase divided by Population
• Note 6 - As per BCStats, 2018 Sub-Provincial Population Estimates

Note to Budget Increase:
The operating budget increase is slightly higher than the municipal contribution increase as there are specific one-time costs within the 2020 budget that are being offset through the use of accumulated surplus. Therefore there are no direct impacts related to these costs to the municipal contribution total. These one-time costs include items such as a pilot project to add a centralized scheduling department to realize operational scheduling efficiencies, and first year operating costs related to the planned replacement of the events booking software.

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Consolidated Financials (2019 - 2024)

Revenues and Expenses (Operating Budget)

Municipal Contributions - Operating Increase rates (by year): 2019: 2.25% | 2020: 3.90% | 2021: 2.84% | 2022: 1.86% | 2023: 1.77% | 2024: 1.72%

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Capital Expenses & Transfers (2019 - 2024)

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2020 Municipal Contributions

^The Rent Adjustment is calculated in accordance with Section 8.12 (a), (b) and (c) of the Library Operating Agreement and relates to portions of buildings used to benefit all member municipalities: the Collection and Technical Services section of the Juan de Fuca Branch building and the Administrative portion of the Central Branch building. Municipalities which did not contribute to the initial acquisition of such building or who did not subsequently purchase a portion of such building pays reasonable rent to those Municipalities that did.

Building Maintenance Costs for jointly owned buildings are additional municipal budget amounts that are over-and-above the requisition for the library operating budget. The two branches that are jointly owned are the Central Branch and the Juan de Fuca Branch. Similar costs at other branches do not flow through GVPL and are paid by the municipalities directly.

Other than the contributions to the Juan de Fuca Major Asset Maintenance Trust fund ("JF MAM"), building costs are estimates. In 2018 the City of Victoria took over administration of building maintenance costs for the Central Branch. GVPL no longer invoices for these costs separately. As such, those costs are not included in the budget.

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2020 Municipal Per Capita Contributions

^Source of population figures - BC Stats website; http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/PopulationEstimates.aspx, 2018 population estimates, accessed on May 2019.

General note: Percentage share of costs by municipality are determined based on 50% property assessment value and 50% population estimate. More detailed information on assessment values and population are available on request.

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Notes to the 2020 Budget and Five-Year Financial Plan

Approximately 90% of the GVPL operating budget is funded by our ten municipal partners. Consequently, a key objective is to maintain municipal contribution increases within an acceptable range, typically based on rates of inflation and wage increases as negotiated through the Greater Victoria Labour Relations Association. "Acceptable" increases are ultimately determined by Councils upon consideration of our budget requisition.

Because needs and opportunities change over time as we strive to best serve our communities, GVPL's budget process allows reasonable flexibility for business areas to adapt and optimize their activities as events unfold, while still requiring system-wide financial planning and accountability.

For 2020, operational efficiencies and cost avoidance strategies will continue to be explored as the demand for new and expanding services continues to increase.

Modest revenue generation opportunities will continue to be explored in 2020, in conjunction with seeking out opportunities for additional grants and other sources of funding to offset expenses.

GVPL is committed to operating efficiently and effectively to deliver library service to our community. The library system leverages more than 100 active community partnerships to expand programs and lifelong learning opportunities for Greater Victoria residents.

Components of the 2020 budget include the following:

1. Municipal Contributions - Operating

Increase $678,605

Of the 3.90% increase in municipal contributions, the budget is allocated as illustrated below. The majority (75%) is attributed to salaries and benefits which are jointly negotiated through the GVLRA. Salaries and benefits are the key cost driver for GVPL.

2. Municipal Contributions - Start-up

No Change

In 2020 there is no change in the amounts for new and relocated branch start-up costs (furnishing and equipping the branch, as well as a collection inventory for new branches). As with prior years these are funded by the individual municipalities providing the facilities.

For 2020 the following has been identified for branch start-up funds:

• Esquimalt relocation - $355,280

The majority of these contributions are for capital expenditures, with a small percentage of start-up funding going towards non capital costs, such as moving and some supplies below the asset threshold.

3. Provincial Grants

No change

Provincial funding for public libraries in British Columbia has remained frozen since the province's budget cuts of 2009. While advocacy efforts such as the '20 by 20' campaign and related initiatives have gained momentum, it is too soon to tell whether these will result in any adjustments to the province's allocations to public libraries in 2020. Therefore we are not projecting any change to the previous year's amount granted to GVPL of $642,339.

4. Federal Grants

No Change

Federal grants are cyclical in nature and are dependent on specific programs planned during the operating budget year.

5. Fines, Fees and Printing

Increase $46,584

Over the course of the past few years, revenue from fines, fees and printing have experienced a slight decline. This trend has stabilized and as such, the revenue forecast for these line items is projected to increase modestly in 2020. Fees (e.g. meeting room rentals) are under ongoing review and additional opportunities for revenue generation will continue to be explored in 2020.

6. Contracts for Service

No Change

This is an annual payment of $28,450 from the Capital Regional District. Contract for service for the Juan de Fuca electoral area (EA) (Willis Point, East Sooke and Malahat)

7. Investment Income

No Change

Investment revenue is conservatively estimated to reflect projected continuation of modest earnings in the Municipal Finance Authority bond fund and slight increases in returns for secured GIC's.

8. Donations and Other Grants

Increase $35,500

Donations and grants are cyclical in nature and are dependent on specific programs planned during the operating budget year. New funding opportunities will continue to be explored in 2020, in tandem with new donor engagement strategies.

9. Salaries and Benefits

Increase $667,588

Salaries and benefits account for 75% of the library's overall budget in 2020. The full-time equivalent (FTE) count for regular employees (including full and part time employees) has increased slightly to 158 FTE. This represents a net change of 8 FTE's from the last budget reporting period.

The FTE adjustments were a result of two comprehensive reviews that were designed to enhance organizational efficiency and effectiveness and strengthen staff capacity:

• Senior leadership structure, and
• Organizational staffing levels.

These reviews resulted in:

• Organizational realignment of senior leadership positions;
• A robust leadership and management support structure that creates opportunities for staff development and succession planning throughout the organization.
• Operational alignment of staffing hours (standardized schedules);

This budget includes employee benefit costs and payroll withholding costs such as EI and CPP. A detailed benefit review occurs prior to the annual budget cycle and budget development. As a result of this years analysis we have determined that the rate of benefits and withholding costs will remain at the prior year figure of 23.75% of total salaries and wages.

10. Library Materials (Expensed and Capital)

No Change

The library materials budget is split between Expenses for periodicals and eResources and Capital Expenses for books audio visual and electronic materials which are capitalized as assets and amortized over 7 years. This status quo budget is being offset by an additional $239,000 in surplus funds; $39,000 in 2019 and $200,000 in 2020.

11. Amortization

Increase $275,800

This is the estimated amortization expense for tangible capital assets, in accordance with the Board's Tangible Capital Asset policy. Since this is an unfunded expense, it is added back to the budgeted annual surplus, and does vary year over year pending capital asset purchases and disposals.

12. Supplies and Services

Increase $59,785

Supplies and services include such items as telephone, networks, printer paper and other supplies and shuttle fuel. These items have all increased slightly, but through effective negotiation of service contracts, cost reduction in other areas the increase is moderate.

13. Building Occupancy

Decrease $66,123

Building occupancy includes maintenance contracts, security, garbage and utilities. The primary drivers for the reduction in 2020 is related to a change in service provider for contracted cleaning services in 2019, reduction in hydro in some branches due to the conversion of lighting over to LED and ongoing efficiencies relating to the lease of server space at UVIC.

14. Other Expenses

Increase $4,938

Other expenses include such items as insurance and employee recruitment costs, marketing costs, and business travel expenses.

15. Other Capital Expenditures (Hardware, Furniture and Equipment, Building Improvement)

Increase $80,000

Increase of $80,000 due to the planned replacement of one of two shuttle vehicles. The GMC van has reached the end of its lifespan and will be replaced in 2020. This expense is being offset by the use of surplus funds from the Replacement Reserve as approved at the May 2019 Year End Board meeting as part of the recommendations on the use of the 2018 surplus funds.

• Furniture and Equipment - No Change
• Building Improvement - No Change

16. Transfer to/(from) Reserves

Change in Net Transfer From Reserves $6,500

Change to Reserve transfers are as follows:

• Transfer to/ from Replacement Reserve - ($130,000)
• Transfer from Personnel Contingency Reserve - $35,000
• Transfer from Library Materials Reserve - $39,000
• Transfer to/from Contingency Reserve - $62,500

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