The summer is at an end. This means that eyes that may have been averted from organizational finances may have turned once more to the law library’s budget. To some extent, all law library funding is discretionary and volatile. Courthouse law libraries can be particularly volatile. When the funder asks for a mid-year budget cut, it can be hard to square with our actual spending.
Law firms, law schools, and membership law libraries probably have the most certain funding. While there can be volatility, it is usually year to year rather than mid-year. For example, our library is funded by involuntary dues so at the beginning of each year, there is a fixed amount. We can do a budget cut within a year if necessary, to meet anticipated drops in following years, but that creates a surplus in the year the cuts are made.
Some law libraries are funded based on court filing fees and traffic fines. These will fluctuate far more than law student tuition or law firm billings. If, as happened once in Ohio when I was there, the state troopers stop giving tickets for a month, there goes one twelfth of your budget.
Athens County (OH) is facing a similar dilemma this year. Filing fees are down and there is now a $10,000 budget shortfall. A prospective budget cut is bad enough. An immediate one can be almost impossible in a law library.
The Budget Year
One reason is that law library budgets fluctuate differently from other typical corporate budgets. I’m sure other budgets also fluctuate but it means you need to have a conversation with your finance people to explain your context. I hadn’t considered this until I was working with a finance person who was flummoxed with our budget variances.
The variance is the difference between what you are expected to spend and what you actually spend. If you have positive variances each month, it means you are underspending your budget. Accrued positive variances suggest that you will have money left at year end.
Our finance department was using a pretty standard formula for our budget. They were calculating that the budget would be spent equally each month. You can replicate this in a spreadsheet by putting your budget at the top and dividing it by 12.
When charted out, you get a nice straight line. Any month that the spending is below the line is a positive variance. Any month that the spending is above is a negative variance.
This is great if that’s actually what your budget spending is like. But my experience in law libraries is that this variance isn’t accurate. Salaries and staff costs do tend to work out flat, because we pay people the same thing each month. But collection costs are a whole different animal.
If you still purchase a lot of print format content that is not subject to a license, you may have the same experience. The last quarter of the year tends to absorb much more of the budget than 1/12 per month. There were times that so many subscription updates came in December that we were still processing them – and waiting for funds from our government sources – in January.
This may be slightly exaggerated, but I think this better represents a print-heavy law library budget. As the legal publishers churn out additional print in the last quarter – probably to meet their own budget targets – there is a spike in print costs.
If you’ve had your talk with your finance folks, they may have already adjusted your budget planning documents to reflect the correct variances. If you haven’t, then when you get to September, you may appear to have a lot of money left over. You can understand why they might earmark the savings – shown in red in the chart below – as a potential clawback.
One reason that library maintenance agreements can be useful is that they flatten that year end spike. Like an electronic license agreement that is paid monthly, the cost is spread across the year. The benefit is the certainty of what you will owe.
The downside, of course, is that an LMA may not allow you to break out mid-year. If you can, see if you can insert a breakout clause if you’re in a courthouse law library. Because the LMA may no longer show individual costs, you lose connection with the actual cost impact of each title. And, because it’s a lump sum, it may force you to cut things outside the agreement, which is fine with the legal publisher because it’s likely to be a competitor’s print formats.
A mid-year budget cut is harder. As Athens County found, there aren’t a lot of good options if there’s no money in the bank. Like all Ohio county law libraries, it’s governed by statute. Funding relies in part on municipal court filings, which fluctuate with the economy.
Ideally, a law library will have some funds on hand – savings, if you will – to offset these fluctuations. Ohio’s county law libraries are governed by county law library resources boards and their funding and spending is also prescribed by statute. The existence of additional monies may be a quirk of history.
Some law libraries have endowments that allow them to weather budget storms. San Mateo County (CA) just received $1 million. Other, older law libraries are likely to have savings as well, built up from donations. In some jurisdictions, the funder allows the law library to retain a portion of the funds at year end. Say, for example, you were given $100,000 and still had $8,000 at year end but the clawback will leave $5,000 untouched. You’d only return $3,000 that year. The savings will never acrrue over $5,000 but it gives you a cushion from year to year.
My library is facing a prospective budget cut in 2021. We have been told to eliminate about $150,000 in salaries (all our vacant positions) and $300,000 in operations. This is roughly 15% of our budget. Our situation is less dire than Athens County – where the only option may be for the librarian to be furloughed – but we’re making similar choices.
If you have a license that ends in the last quarter, that may be a simple way to make a cut. Ours tend to go from January 1 to December 31, to match our fiscal year. This is useful when you have to make budget cuts for the following year. We’ll be looking at whether we can cancel any of our electronic content. The benefit of a license cut is that it tends to represent a large savings with one decision.
The alternative is to dig into your print collection and cancel tens or hundreds of titles to bring you within your spending. Funders sometimes think that there are other sources of funding but there aren’t. Service-based fees are unlikely to ever represent more than 1% or 2% of a law library’s budget.
If there is a silver lining to having to make a budget reduction decision – whether it is implemented in the fourth quarter or the first of the next year – is that the timing may help. The last quarter of the year is where a lot of your expenses lie. You can see the titles as they come in and cancel them now (September) to achieve some savings before year end. If you do not restart them, then that savings will accrue in the next year as well.
But it’s not easy. Cuts you make now may right a sinking boat but next year will be different. If funding returns to historic levels, then you will need to be conscientious about rebuilding your collection or else unwittingly create positive variances that encourage a more permanent cut.
Budgeting and spending is easy until it’s not. I don’t believe in spending everything we’re budgeted but if your organization doesn’t reward that sort of fiscal care, then you need to hew your spending as close to your funding as possible. Otherwise your care will penalize your law library in the future.
This has been a particularly hard year all round. As individuals lose their jobs and law library funders close, the financial impact in 2021 is likely to be widespread. Whether we will see funding return to 2018-2019 levels is unclear. That assumes that people return to the same patterns – of speeding on highways, and filing legal cases, and using law libraries – as before. I think that remains a big question.