Carnegie Library of Pittsburgh Has More of a Cushion, Audit Suggests

Alters assumptions about future funding and materials spending

Norman Oder -- Library Journal, 04/06/2010

• Audit requested by funding agency 
• Will be considered by task force
• Still, major funding needs for capital projects remain

The Carnegie Library of Pittsburgh (CLP) may be in better shape than it professes, according to an audit report conducted on behalf of Allegheny Regional Asset District (RAD) Board, the CLP’s major funder.

Testing different assumptions regarding revenue growth and spending on materials, the audit, from the firm ParenteBeard, suggests that, rather than reach a deficit of $4.4 million by 2014, the deficit instead would be about $300,074.

The audit was commissioned last December, after CLP planned branch closings and cuts in service hours in response to an anticipated operating deficit of some $5.5 million by the year 2015. Later, the CLP gained an emergency infusion of funds, staving off planned branch closures.

The report has been sent to the recently formed Task Force on Library Sustainability formed by the CLP.

Audit assumptions
While most of CLP’s financial assumptions were deemed reasonable by the auditors, they suggested that RAD funding would not remain flat but increase by three percent per year beginning in 2012.

Also, their projections were based on CLP keeping flat its 12.5 percent materials budget, rather than nudging it up five percent a year. They also assume a five percent draw from endowment income this year, rather than two percent, as CLP assumed. (State standards and CLP’s internal policy allow for a drawdown from two to five percent.)

The auditors assumed that the CLP will continue to receive waivers from the Commonwealth of Pennsylvania allowing it to operate the main branch at five hours per week below the state minimum of 65 hours per week.

Even under the rosier assumptions, CLP will need new resources for both operations and to meet the capital needs over the next five years. Capital needs could reach $3.9 million a year if no branches close or $2.4 million a year if some close, as was originally projected.

For the current year, CLP imposed additional fines and fees and saved half a million dollars by the early retirement of seven employees. 

Comparisons
The report also benchmarked CLP against comparable systems, finding that the CLP’s President/Director salary of $165,643 fell within the upper range of Director salaries, while its starting librarian salary of $32,000 is in the lower tier of comparables. Still, salaries and benefits as a percent of revenues are considered comparable.