09.30.09
Posted in Uncategorized at 10:30 am by Leonard Kniffel
ALA Executive Director Keith Michael Fiels met with staff last week for a frank assessment of the financial outlook for the Association. On everyone’s mind was what the recession means to libraries and how it will affect our work at ALA.
Fiels indicated that information on ALA’s year-end performance for 2009 and updated 2010 projections will not be available until October, when final close adjustments have been made and following the fall meetings of the Budget Analysis and Review Committee and the Executive Board. With regard to the FY2010 budget (which began September 1), Fiels said that expense reductions would be made as needed if revenue projections must be lowered. Among the reductions that are already planned for FY2010 is the elimination of a planned 1% compensation increase. If those cuts are not enough, Fiels said, management will need to look at further expense reductions that may include furloughs.
Not only has ALA management been reducing expenses, Fiels said, it has also been watching how other associations are faring through what is becoming known as the Great Recession. “We’re doing better than many,” he said. “We are not talking about salary reductions,” as others have, he pointed out. The Chicago Annual Conference in July was a real success, and ALA membership is “holding strong” with a drop of only 2.5% this last year, far smaller than many other associations.
While the final close of the FY2009 budget has not yet occurred, Fiels noted that he expects it to be “very close” (despite the $3 million shortfall projected in February) because of the expense reductions undertaken in March. The fact that they had to be implemented half-way through the year is a testimony, he said, to the feverish pace and enthusiasm demonstrated by ALA staff. “I think that this is good news,” he said, “given that the economy was in free fall.”
The only really bad news in Fiels’s report was the fact that, while the nation’s economy is showing signs of recovery, libraries will lag by a year or two or more. ALA is monitoring the situation across the country (he cited Ohio, California, Pennsylvania, and Michigan as examples of states where major budget cuts had been proposed and/or implemented). “The main reason we are here,” he told staff, “is to help our members and libraries with the challenges they face.”
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03.25.09
Posted in Uncategorized at 1:01 pm by Leonard Kniffel
Unit Managers heard it this morning for the first time as a group, when ALA Executive Director Keith Michael Fiels announced that the Association would attempt to close a projected $1.6 million shortfall in the $27 million FY2009 general-fund budget by, among other things, eliminating 10 staff positions and imposing a three-day payless furlough and other vacation rules on remaining staff to save a targeted $500,000 by the end of the fiscal year, August 31. Fiels hopes the Association can fill the remaining gap by tapping into ALA reserves.
Upper management and the Executive Board began intense and frequent discussions about revenue almost immediately after the national economic crisis hit, knowing that it would inevitably trickle down to libraries and to ALA. Fiels pointed out that the drop was precipitous; the financial picture this month looks totally different from the way it looked last September. He said it was essential that management move quickly if the ‘09 budget is to be balanced. A 3% across-the-board expense cut had already been implemented earlier this year.
An hour and a half after the managers meeting, Fiels explained the situation at an all-staff meeting, noting that in addition to the three unpaid days, Memorial Day and the Fourth of July would be unpaid holidays in 2009. In addition, any vacation days not used by the end of August will automatically convert to sick days; the practice of carrying vacation days over into the next fiscal year will be temporarily suspended. The vacation days and unpaid furlough days will be scheduled in consultation with the supervisors of individual units in order to spread them out over the remainder of the fiscal year. In addition to the 10 positions to be eliminated, an additional six will be unfunded in 2010.
The need for these drastic measures was not questioned at the unit managers meeting or the staff meeting. Foremost on everyone’s mind, of course, was the question of what positions will be cut, and that information has not been made public, both out of respect for the employees’ privacy and the desire of ALA as an employer to handle each affected individual in a caring and humane fashion. The staff cuts are expected to be made within the next two weeks.
We all knew it was coming, especially those of us in Publishing who have been watching the economic debacle unfold at newspapers and publishing houses across the country. ALA Publishing has been hardest hit of all ALA revenue-generating units, with advertising down 30%. Although ACRL had a successful division conference this month and registration is strong for the ALA Annual Conference in Chicago this summer, they cannot make up for the decline. Membership loyalty is also a big factor, but the fastest growing membership category (student), although a great sign for the future, also does not generate enough revenue to address the current situation. Print publication of the ALA Handbook of Organization will also be suspended.
The text of the Fiels’ all-staff memo:
Over the last month, we have been updating our budget projections for the fiscal year that ends on August 31, 2009.
The good news is that registration for Annual conference is strong, and even ahead of registration for last year at this point, and we expect a very exciting and successful conference in Chicago in July. Membership also remains strong and steadily growing, and every dollar in member dues is matched by revenue from publishing, conferences, grants, overhead recovery and income from the endowment.
Everyone is aware, however, of the current economic situation and its impact on libraries, businesses, and other non-profit organizations. Given the state of the economy and library budgets nationwide, it will not come as a surprise to everyone that we are now projecting a net revenue shortfall in the ALA general fund of over $1.6 million.
Because the financial picture has changed so quickly since the beginning of the fiscal year, and because we must reduce expenditures in anticipation of this shortfall, we are going to have to take some unusual measures to reduce salary-related expenditures for the remainder of the year. Specifically:
1. Any vacation days not taken as of the end of August will automatically convert to sick days. No vacation days will be carried over in to 2010.
2. Memorial Day and the Fourth of July will be unpaid holidays in 2009.
3. Each employee will be required to take three additional unpaid furlough days between now and August 31st. These days need to be scheduled in consultation with your Unit Manager so that we can 1) spread out the impact of the reduction on employee income and 2) reduce the impact on member services and unit operations.
Implementation of these three measures will result in general fund savings of approximately $500,000. Our current plan calls for the remainder of the shortfall to be made up through other cost cutting measures, adjustments and use of ALA general fund reserves.
Please note that these measures apply to all ALA staff and all ALA units, including grant funded employees and full-time contract staff.
In anticipation of our lowered revenue estimates, the Association will also be eliminating approximately ten positions between now and the beginning of FY 2010, and will also be leaving an additional half dozen positions unfunded in 2010. In each instance, we will be making every effort to minimize the impact of any cost-cutting measures on staff as well as services to members, libraries and the public. By preparing a 2010 budget that reflects a balance between expenditures and our adjusted revenue expectations, we should hopefully provide for a more stable environment in the coming year.
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01.27.09
Posted in Uncategorized at 11:04 am by Leonard Kniffel
ALA is a pretty big organization, with a $58-million annual budget, ALA Treasurer Rod Hersberger said at the second Midwinter session of the ALA Council. He’s concerned about ALA’s “mature businesses” that are not yielding annual revenue growth and the need to develop new businesses. Echoing what he said at the Planning and Budget Assembly, Hersberger talked about the need to develop new products for new markets. Among his ideas are capitalizing internationally on the ALA brand and turning more units into revenue generating centers.
Hersberger concentrated his report on the work of the Washington Office, urging that a larger portion (the current level is about 25%) of programmatic resources be devoted to the office.
ALA Executive Director Keith Michael Fiels said we are introducing a more formal method for developing new businesses, especially for their capitalization. As a member of the ALA Publishing staff, I can attest to the fact that ideas for new businesses have been easy to imagine over the past few years but capitalizing them has been another matter altogether in an organization that is a 10 on the risk averse scale. New businesses mean new risks, and I wonder if the Association is going to be willing to take them, especially in a climate where financial security seems ever less attainable.
We’re not a the bottom of the slump yet, and there is always a lag in ALA feeling the pinch, said Hersberger. Units that aren’t performing as well as they should “may need some attention,” he added. Fiels said expenditures will undoubtedly need to be reduced in accord with revenue reduction, but he noted that there is no magic place where I have eight people sitting in a room doing nothing and can just eliminate the positions with no impact on the operation.”
Councilor Marilyn Hinshaw observed that ”the federal government can’t do it all,” and we will have to help ourselves through this national financial crisis.
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01.25.09
Posted in Uncategorized at 11:11 pm by Leonard Kniffel
During today’s Planning and Budget Assembly, ALA Executive Director Keith Michael Fiels and President-elect Camila Alire fielded questions from members. One ALAer representing ACRL brought up an issue that has been much commented on in Inside Scoop: What’s the future of print journals? And she wanted to know what ALA was doing about the issue of print vs. electronic association-wide, especially given the current budget climate.
ALA Executive Director Keith Michael Fiels said we are making decisions on an individual basis, based on the economics of the operation. American Libraries has been working with Membership to respond to the demand from some members for an opt-out choice in the personalized membership communication preferences. That is coming.
It was also clear to me that most people in the room had not noticed that American Libraries published its first-ever digital supplement this month, focused on CE and library education. We are planning another for spring around library architecture, interior design, and furnishings. We need to see how readers respond and advertisers as well.
ALA Treasurer Rod Hersberger talked about the three major areas of revenue for ALA: conferences, publication, and dues, calling them “mature businesses.” That’s not a problem, he said, until you consider the amount of new money ALA needs each year. Current products are for current markets, he said, and we have to take a look at cost-cutting that could be achieved by, for example, bundling the journals. Are we going to look at new products for current markets, he asked, or current products for new markets? Do we have services and products that could appeal to other associations?
Jim Neal, chair of the Budget Analysis and Review Committee, asked if ALA had a global strategy for its brand. “It’s going to require some freer thinking than we have done,” he said, adding that this involves recognizing our assets, capitalizing new ventures, and building a competitive sense.
There was a good deal of complaining about the ALA website, mostly centering around the Collage CMS. “We’re not looking very nimble and agile,” said one person. Others suggested that ALA simply has to put more emphasis on IT, maybe even by outsourcing it. Collage has been a nightmare, said representatives from round tables who noted that it was a lot to expect that volunteers had to take extensive training to be able to post and then find the site down far too frequently.
As an ALA insider, I can tell you that Collage has been equally frustrating for staff, especially with IT responsibility spread all over the building, involving people with varying degrees of skill. Part of the solution is no doubt to get all the Web workers on staff to talk to each other regularly and set out the week’s goals in a coordinated fashion. We are working on that in a marketing working group that is setting out goals for cross-unit collaboration under the leadership of ALA Associate Executive Director for Communications Cathleen Bourdon.
Everyone is concerned about the financial outlook, that goes without saying, but while the Planning and Budget Assembly provided good guidance for staff, the future seems to be anyone’s guess. ALA Associate Executive Director for Finance Greg Calloway told me at the meeting that we will look at preregistration numbers for Annual Conference on March 1, “and that will be a key indicator of potential fiscal issues we may have to face.” Spring numbers will indicate if further cuts are necessary, he said, in addition to the 3% cut across the board (10% in Publishing) that is already being implemented. Our investment income is down” said Calloway, but fortunately we are not dependent on long-term investments for operating expenses, so the impact right now is not as great as it’s been for other organizations. “Our membership is steady at the personal dues level, and in a strained economic time,” he said, “that loyalty is a very positive note.”
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