Creative Accounting

Creative Accounting: the funding of electronic resources

The title given to this paper by the conference organisers is "Creative Accounting: the funding of electronic resources". That has a slight touch of the sleazy to it, an impression that there is something faintly fraudulent about funding electronic resources, something to be hidden and concealed, where sleight of hand rather than logical argument is the appropriate course to take. Well, although I want to have a look at how one can do that, how one can solve the problem which Errol Flynn described as matching his net income to his gross habits, I do believe that the real answer is not to marginalise and trivialise the problem, but to drag it to centre stage and force one's organisation to think through the implications of a new information age. Therefore I also want to look at what we can do within our organisations to persuade them that the funding of information is not exclusively a library problem and to look at how a proper articulation of the issues may confront organisations with the choice of intelligent investment rather than creative accounting.

Libraries are resourced in a whole series of ways. The items which are fairly routinely under library control such as books, periodicals and binding, form fairly conventional budget heads which the library often manages; staffing may also come under library control. But there are a whole series of other resource costs such as space, cleaning, telephones, portering, personnel management, security, buildings maintenance, minor works, heating and lighting, which very often come within the purview of one or more other budget holders. In most organisations budget responsibility, once assigned, tends to be demarcated in fairly rigid vertical divisions. It is in breaking down some of these barriers to allow a fluid and dynamic horizontal distribution of funding that the solution to funding new electronic media lies.

Even within the 'classic' and traditional budget heads the librarian does not always have full budgetary control. It may be useful to look at three models of how library budgets are organised. In practice there are almost as many ways of managing funds as there are libraries and so the three models are more accurately points on a spectrum. Nevertheless, they should show that while we may face a common set of problems, there may not be a simple set of answers. A whole nexus of historical, personal, professional and organisational issues will determine how the library is treated within the organisation and it is therefore dangerous to push generalisations too far.

At one end of the spectrum is what I call the feudal model, which equates to what is sometimes called the mushroom style of management. In this type of library, typically a small library run by someone in perhaps a second professional post, the budget is considered the business of the organisation not the librarian. The function of the library staff is to manage professional concerns and to leave the administrative ones to others. Typically there is no fixed budget. The library has a fixed staff establishment, an agreed list of journals and it buys books at a rate monitored by the institution's finance department. The Library Committee is often quite powerful and its Chairman may well negotiate with the administration over increases in the number of journal subscriptions. Any revenue raised, perhaps from services such as photocopying, is simply retained by the administration. Central and overhead costs are ignored.

In the middle of the spectrum is what I call the colonial model, where the library is moving towards independence, but there is still some external administrative control. Here the library has control of all but staff costs. The administration reserves the staff establishment and staff budget to itself, but concedes control and management of the rest of the money to the library. Even here it is not too untypical to find that the budget is allocated to subjects by formula and that the librarian has very little chance to practice virement between the budget heads. Revenue generation may be encouraged, but there is no common practice of whether it is retained centrally, offset, or retained by the library. Each year the Library will have to negotiate what it is to receive in funding and will be told what staff establishment is to be allowed and what staff savings may have to be made. Every so often the staff budget will be frozen or reduced in order to meet a crisis elsewhere in the organisation. Central costs are again normally ignored with the possible exception of telephone charges.

At the other extreme of the spectrum is what I call the imperial model. Those in higher education libraries will recognise it as a post-Jarratt model. It has some elements of the cost centre to it. The library may be on a fixed percentage of institutional income or it may negotiate each year, but however the figure is arrived at, it then comes under control of the Librarian who manages the sum as a package, balancing the needs of staff, materials and activity. It is assumed that budgetary control is a professional and managerial responsibility. Revenue generation is positively encouraged and the library is allowed 100% retention. Central costs are increasingly attributed to such cost centres, but not funding for major equipment purchases.

The first two models are tied to fairly traditional views of the library and fairly traditional management practice. The third model is gaining favour, at least in higher education, as managerial concepts and practices take hold. Cost centres are created, budget holders designated and they are then left to get on with things. In some cases there is a set of agreed management goals, in other cases these are implicit, but the general practice is to give a total resource envelope to a manager and then leave the manager to define how the service goals are to be achieved.

With that background I'd like to turn next to the elements which have to be funded when looking at electronic resources. These are any combination of hardware, software, data, telecommunications, consumables, staff training, user instruction. For the moment I exclude major capital provision for large library housekeeping systems. Well the first rule of creative accounting is the Humpty Dumpty rule. You remember that in Alice Through the Looking Glass he said "When I use a word, it means just what I want it to mean, - neither more nor less". Well one of the advantages of new media is that they don't fall into the traditional budgetary divisions of books, journals, binding, staff and equipment with any ease. Just for the sake of argument I have created a little matrix to show how each of these items can be charged against a number of budget heads. The case may, of course, have to be made that, say, access to a database which replaces a journal subscription be charged to the traditional periodicals heading, but a glib tongue and economy with the truth have always been professional assets.

BOOKS PERIODICALS BINDING STAFF EQUIPMENT

Hardware + + + - +

Software + + - + +

Data + + + - +

Telecoms - + - - +

Consumables + + + - +

Staff training + - - + +

User training + + - + +

Now the point about this tabulation is not whether one agrees or disagrees with it. A case can be made for assigning charges in whole or in part as shown; the important point is that the traditional divisions simply break down in the face of new media. You can buy the Oxford English Dictionary on a pc, so the pc which you require for it can be part of the book purchase. The same argument applies to say Current Contents. Since buying some databases saves on binding costs, the charge for data can be lodged there; or the whole cost may be chargeable there. Finally, if you are really clever, you might swing the whole lot onto an equipment grant.

I've spoken on other occasions about the difficulties of major capital investment and of my belief that large sums of money are only difficult to raise because we think they are (1). Those of you old enough to remember Childrens' Favourites on radio will undoubtedly remember the song about the little engine which never climbed the hill because it didn't think it could. As soon as it acquired self-belief it climbed the hill "I think I can, I think I can, in fact I'm almost sure I can" went the refrain. I am sure that one of the besetting sins of librarians is our tendency to think small and that affects our ability to fund new information sources and major capital projects, although they are a tiny fraction of the cash flow of most organisations. There is I think an interesting and instructive comparison with computer centres. It is taken for granted that computer systems cost money, so that it comes as no real surprise to an organisation to receive a request for several hundreds of thousands of pounds for a new computer system for the Computer Centre. The answer may well be "no", but the request is not seen as unrealistic. Our normal library bids are for much smaller sums and their is no climate of expectation that the library will in future require to conduct large and expensive procurement exercises every few years.

Now if that is true of hardware, it is even more true of data. Again, thinking big can be part of the solution. For some time King's College London had been trying without success to find a way to afford the tapes of Science Citation Index to mount on-line on the campus network. Effort was then switched to attempting a deal for the whole of the University of London. That looked as though it might prove practical, and indeed the University got to the stage of agreement with another major university library to ensure financial viability. However, in the end, partly through a series of fortunate coincidences, it proved simplest to arrange a deal for the whole higher education community of the UK. The Computer Board was persuaded that the provision of data was a good thing and within a matter of weeks found an extremely large sum to allow every academic in the UK to access every major ISI product, apparently free of charge. We had broken out of the vicious circle of doing only what we could afford, to a world where the logic of the argument determined what to do. If the argument is convincing the money is found.

Some libraries have responded to the problem of funding electronic media by charging for services. This is not, of course a new activity or indeed a new debate. I have always sided with those who oppose charges, although I know this to be a rather irrational response. In practice libraries have charged for services for years. Consider this partial list, which could readily be expanded. Note too that many of these are "old" services and not the sunrise services of the new technologies and media:

- Reservation postal costs

- Photocopying

- Borrowing by outside readers

- Evening/weekend opening

- Inter Library Loans

- Hiring equipment e.g. typewriters

- Hiring space e.g. study carrels

- On-line searching

- CD-Rom printing

Charges are not simply designed to raise revenue and make services self-financing, they may also, of course, be a means of depressing levels of use (2). I have always opposed such charges for two reasons. Firstly we tend to charge for services which we can easily identify and cost, rather than those which represent added value. Secondly, there tends to be a heavy administrative overhead in recovering charges and we often finish up with a marginal net gain in revenue and a hidden but substantial loss of opportunity costs. However, there is another side to the debate and De Gennaro (3) has, as usual, provided an illuminating overview of the topic. Most librarians tend to have a knee-jerk reaction in favour of freedom of information and of publicly funded services providing information freely to all as a right. The information industry, publishers, government and even some authors tend to view information as a commodity with a value and therefore a price. However the striking of postures is not really helpful and in practice there should be no real villains in the argument. No library is free; they are simply paid for in different ways and most libraries do raise money in some way - if only because copyright legislation requires publicly funded libraries to charge for photocopies. In truth the only valid debate is on how library services are to be paid for, not whether

The Green Paper (4) on public library funding opened up an illuminating debate on the notion of core and value added services, for which charges would be levied. This has also spread to the British Library (5) where the latest five year plan looks at the notion of charging for non-core services. Its approach is particularly interesting, for, rather than just settle for levying charges on areas where costs are readily attributable, it attempts to define core and value added areas then goes on to propose charges for the latter even where, as with reference enquiries, charging mechanisms may be very hard to devise. Now it should not be thought that the raising of revenue is a substitute for adequate core funding, but it does allow a redefinition of the boundaries. We have tended to charge for new services such as on-line because they are easily definable. We have tended to impose charges for activities such as genealogical searches because we consider them outside our core activity and a distraction from our 'real' duties; and we apply a sort of inverse charging when we refuse to compile a bibliography from the printed sources for academic staff, who we feel should do their own research; this preserves staff time for other, more central, activities. Rather than this gallimaufry of postures and attitudes, it makes more sense to look at the issue from scratch and decide which services are basic - and on-line might be basic in some organisations - and which are value added - and reference work might be so defined in other cases. Having done that we can then look at effective charging mechanisms.

I certainly find this a much more comfortable and rational approach. For example, in my own Library I can argue that my core services are defined in terms of the constituency we are funded to serve, but that everyone else will have to pay. Or it can be argued that there are services - typically rush or urgent services - where a premium is charged to all users, irrespective of origin. It also allows the creation of services for outside users on a full cost recovery basis, but which are provided free to the funded constituency. In parenthesis I might add that many universities are due for a re-run of this debate, since the ending of the dual support system for research contracts seems to leave a degree of chaos in its wake. In short, the information remains free, thus satisfying my conscience, but the user pays for the packaging.

One aspect of this debate which we have to come to terms with is the use of staff resources. My thinking is beginning to shift on this. In line with my view of charges, I have felt that staff allocated to online searching should be treated as a sort of overhead cost. If one doesn't charge the search costs one can hardly charge the staff time. In many libraries where a charge is levied it deliberately excludes the staff cost, although I have never understood the logic of that compromise position. One of the great disappointments to me of the arrival of CD is how labour intensive it is. In King's College we have found that most users require some kind of individual tuition and my impression from anecdotal evidence is that this experience is mirrored elsewhere. Earlier I mentioned the deal with ISI to make their databases available to higher education. It has been a common view for some time that we are on the brink of a revolution in end user searching and I suspect that this massive investment by the Computer Board may well be the catalyst which finally brings mass end user searching. Now we are not talking of a limited number of skilled researchers in special libraries who I know already in some cases are given access to files, but the mass training of cohorts of students and staff on a constantly and annually renewing basis. Now I'm not questioning the need for some kind of basic instruction in searching. That can be accommodated either through the development of user friendly systems or through formal instruction within the organisation - not necessarily undertaken by library staff. What I am less and less sure of is whether we should not move to considering an information literate population as the norm, in which case to charge in some way for additional or special training by library staff becomes an appropriate stance. As mass end user searching really does begin to affect us I am sure that this topic will warrant a much fuller exposition and debate.

Although I've spent a little bit of time on the issue of revenue generation and the debate on charges for services, I think it a spurious debate in terms of the subject we are really addressing. What is really required is a culture shift. Bob Hayes, Dean of the Library School at UCLA, has estimated that 10-15% of the institutional budget in a university goes on information in the broad sense (6). Until now, organisations have tended to treat the library and information as some kind of synonym and assume that the 3.5%-4% of the budget going to a typical university library is an acceptable overhead. When all the bits and pieces are added up, it comes as a salutary shock to institutions to discover the truth of Hayes' calculations. The next realisation is that while 4% can safely be left to the Librarian, 15% of budget demands an institutional response. I'm sure that equally frightening figures could be found for other types of organisation, most of which find 10-15% a literally incredible figure when presented with it. However in the higher education sector at least, there is a dawning realisation that Hayes' argument is just and that such levels of resource require new institutional policies and management. The responses to a recent survey by SCONUL and IUCC (7) addressed to University Vice-Chancellors demonstrated a genuine desire for initiatives in this area. It seems to me quite possible that the so-called MAC initiative to force the pace of automation in university administrations may be followed by another in the area of information management and this can only be to the good. A number of institutions have, of course, begun to act in this area already, and the debate is one strand of the logic which has brought a number of university library and computer centres together in various types of administrative structure. Now that provision of information is no longer synonymous with its possession, we have to nail the myth that all libraries are only about book collecting, great prairies of information where academic herbivores come slowly to chew the intellectual cud of their predecessors. We need to create a climate which is receptive to the notion that we are a dynamic link in the information chain.

Another element I would like to introduce is developments in library management, certainly in higher education, but probably more widely, which have begun to look at total library costs and at managing libraries as cost centres. Libraries and their funding agencies begin to look at all the resources required to run the library and decision making is made within the context of a total resource envelope. One critical element comes when the institution begins to attribute space costs to departments including the library.

Work has been done at Newcastle University and the British Library (8) on life-time costs. In summary this looks at the costs associated not just with buying a journal but in binding and storing it for large numbers of years or of acquiring, processing and cataloguing a monograph. Various institutions have begun to follow through some of the cost- benefit options and logic which flow from this modelling. It requires little wit to see, for example, that storing long runs of journals in Central London, where space costs are the highest in the country, is a very inefficient method of resource management. We can then begin to address a whole new series of questions and present users with a new and different agenda. To retain journals increases space costs and therefore reduces the number of subscriptions. To bind or preserve monographs both increases space charges and reduces the bookfund, but limits interlending costs. To buy a cd-rom increases equipment and maintenance costs but may reduce space costs; on-line increases telecommunications charges and staff costs but holds down space costs while retaining the information in a different medium.

The problem I identified at the very start of this talk was the fairly rigid vertical division between different budget heads, not all of which were 'owned' by the library. If that can be broken down so that horizontal movement of resource becomes possible between budget divisions, then the option of funding electronic media is seen simply in the context of appropriateness and not as a sort of incubus. The solution is not necessarily to seek additional resource but to redistribute existing resource.

Such total resource management seems to me the model that we must seek in looking at the introduction of new electronic services. There is, after all, little point in such services unless they are better or cheaper or quicker than the traditional ones. The problem then to be addressed is whether control of the total resource is achieved through a series of turf wars with the other budget holders - a bruising, but to some enjoyable process - or whether one addresses the underlying issues as part of the more general institutional process of reconsidering resource issues. Make no mistake that in higher education the combination of the removal of polytechnics from local authority control, the end of the dual support system and the universities move from grants to fees will lead to fundamental reappraisal of resource management. In short the climate is ripe for change. There are therefore two keys to developing an adequate model for the funding of electronic media. Firstly there is, I think, no satisfactory alternative to opening up and prosecuting debate within one's organisation on the need for an information policy which is almost certainly going to cover a wider area than the library and that over a much larger set of institutional costs. But once information is seen as something of value which is not always and necessarily stored in printed form in the library, it becomes possible to look at managing its costs. Once this is seen as not purely a library issue, the second key is to ensure that all resources are managed and brought to bear on problems and issues. This need not imply that they are managed by a single budget-holder, but most librarians would, I imagine, aspire to this. Resource management rarely forms part of library school training any more than creative accounting does, but of the two it will be resource management that allows new electronic media and services to take their proper place in the range of services which all libraries should offer.

As I conclude I'm a little conscious of sounding a little like David Steel in his famous speech to the Liberal Party Conference when he sent the delegates away with the rallying cry "Go out and prepare to govern". But I believe it to be true that the solution to the funding of electronic media does lie in our hands. It is not a solution to argue over whether the next CD should be a charge on the bookfund or the equipment fund. H.L. Mencken said that for every human problem there is a solution that is neat, plausible and wrong. So we should not try to solve our problem by the plausible avenue, by creative accounting; we need to look at ideas, the philosophical base. There will always be good and bad institutions, but what we lack at the moment is the intellectual infrastructure to carry the good people forward. In truth that is where we need the creativity and not in the accounting.

REFERENCES

1. Law, Derek Push, shove and the gift of the gab: the hidden techniques of equipment procurement (CLSI Annual Lectures on Library Automation, No 5) London, CLSI Publications,1989

2. Winship, Ian R. The use of online information services in UK higher education libraries British Journal of Academic Librarianship pp191-206 (1986)

3. De Gennaro, Richard Pay libraries and user charges in Libraries, Technology and the information marketplace Boston,G.K.Hall,1987

4. Financing our public library service: four subjects for debate. A consultative paper (Cm 324) London,HMSO,1988

5. Gateway to knowledge: the British Library Strategic Plan 1989-1994 London,British Library Board,1989

6. Hayes, Robert M. Libraries and Information Resources in Research Universities in the United States [unpublished paper contributed to the British Library Research and Development Department Information UK 2000 project]

7. Shields, D.B. Unpublished report submitted to the Committee of Vice Chancellors and Principals by SCONUL and IUCC (1990)

8. Stephens, Andy The application of life cycle costing in libraries British Journal of Academic Librarianship Vol 3 pp82-88 (1988)