Correspondence: Greater Victoria Public Library - 2019 Budget and Five-Year Financial Plan

2019 Final Budget and 2019-2023 Five Year Financial Plan

Approval Dates

• Finance Committee – August 21, 2018
• Finance Committee – September 18, 2018
• GVPL Board – October 16, 2018

Budget at a Glance

Notes:
1 – Operating budget consists of operating expenses only
2 – Total budget funded is equal to Expenses (Operating budget) less amortization (non-funded expense) + capital budget

Note to Budget Increase:
The operating budget increase is higher than the municipal contribution increase as there are specific one-time costs within the 2019 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 project related ITS Hardware replacement costs, organizational leadership training, and organizational restructuring costs.

Revenues and Expenses (2018–2023)

Municipal Contributions - Operating Increase (annual): 2018 = 2.9% ; 2019 = 2.25% ; 2020 = 2.67% ; 2021 = 1.83% ; 2022 = 1.88% ; 2023 = 1.71%

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Capital Expenses and Transfers (2018–2023)

Financial Plan Balance: -

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2019 Municipal Contributions

Summary by Municipality (2018 → 2019)

Notes: 2 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. Once actual costs are known, GVPL invoices the municipalities. Budgeted building costs for the branch portion of the jointly-owned buildings, excluding administrative area costs that are included in the library operating budget, are as follows: (table continues in source)

1 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.

2019 Municipal Per Capita Contributions

1 Source of population figures - BC Stats website: http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/PopulationEstimates.aspx, 2017 population estimates, accessed on July 2018.

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 2019 Budget and Five-Year Financial Plan

Budget allocations are also determined by our operational decisions and actions, which are based on our organizational values, policies and external mandates and legislation.

Approximately 90% of the GVPL operating budget is funded by our ten municipal partners. Consequently, a key objective is to keep municipal contribution increases within an acceptable range, typically based on rates of inflation and wage increases as negotiated through GVLRA. “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 within the Greater Victoria area, 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 2019, operational efficiencies and cost avoidance strategies will continue to be explored as the demand for new and expanding services continues to increase. After the successful opening of the sxʷeŋxʷəŋ təŋəxʷ James Bay Branch, the library is looking to 2019 to leverage the lessons learned and opportunities to align to the move of the Esquimalt branch.

Modest revenue generation opportunities will continue to be explored in 2019 in addition to the new passive revenue source of the coin donations boxes now installed at all branches.

GVPL is committed to operating efficiently and effectively to deliver library service to 10 municipalities. The library system leverages more than 100 active community partnerships to expand programs and lifelong learning opportunities for Greater Victoria residents.

Components of the 2019 budget include the following:

1. Municipal Contributions – Operating

Increase $382,783

Of the 2.25% increase in municipal contributions, 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. The remainder is allocated by the following:

2. Municipal Contributions – Start-up

Decrease $105,320

In 2019 there is a decrease 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 2018 the following was identified for branch start-up funds:

• sxʷeŋxʷəŋ təŋəxʷ James Bay Branch - $75,000
• Esquimalt relocation - $385,600

For 2019 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

For 2019 there is no expected change to the grant levels of the prior year of $642,339.

Provincial funding has been frozen since approximately 2009, had this funding increased with CPI (annualized at 1.5%) as with other expenses to the present budget year, there would have been an increase to this funding by approximately $120,000. This shortfall continues to be made up by individual municipalities in order to maintain status quo on ongoing programming and services.

4. Federal Grants

Decrease $7,379

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

5. Fines, Fees and Printing

Decrease $25,375

Revenue from fines, fees and printing is estimated to continue to decline modestly. Fees (e.g. meeting room rentals) are under review and additional opportunities for revenue generation will continue to be explored in 2019. GVPL is currently investigating potential revenue sources such as fees for overdue holds not picked up.

6. Contracts for Service

No Change

This is an annual payment of $28,450 from the Capital Regional District.

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

No Change

New funding opportunities will continue to be explored in 2019, in tandem with new donor engagement strategies.

9. Salaries and Benefits

Increase $514,894

The library’s CUPE Collective Agreement expired on December 31, 2016.

The full-time equivalent (FTE) count for regular employees (including full and part time employees) remains at 150 FTE. Salaries and benefits account for 75% of the library’s overall budget in 2019.

This budget includes employee benefit costs and payroll withholding costs such as EI and CPP. A detailed benefit review took place as part of the 2019 budget development and it was determined that the rate of benefits and withholding costs will be adjusted down from 24.5% to 23.75% of total salaries and wages, this is despite the anticipated increase associated with the newly implemented British Columbia Employer Health Tax.

10. Library Materials (Expensed and Capital)

Decrease $41,000

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. The reduction year over year is being offset by an additional $135,000 in surplus funds, $96,000 in 2018, and $39,000 in 2019.

11. Amortization

Decrease $166,100

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 (see explanation below), 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 $11,413

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 efficient negotiation of service contracts, cost reduction in other areas the increase is below the Vancouver CPI (Consumer Price Index of 2%).

13. Building Occupancy

Increase $131,218

Building occupancy includes maintenance contracts, security, garbage and utilities. The primary driver for the increase is a significant increase in budgeted janitorial costs, and higher security costs (Central). Janitorial costs have increased significantly in the market due to such items as increased environmental fees, and higher labour costs. Security costs have increased due higher contract costs due to increases in minimum wage, contract renewal and additional services requested from our service provider.

14. Other Expenses

Decrease $7,863

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