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Budgets and Control

  • Need for controls in how money is spent in order to engender public trust
  • You are using other people’s money. It must be used wisely and efficiently
  • Use of approvals to ensure money is spent within priorities of institution, expressed in the budget
  • Monitor to assure spending in accordance with budgeted amounts

Productivity and Personnel

  • Usually largest expenditure
  • Approach varies from laissez faire to extreme militaristic approach
  • Often constrained by civil service systems and union contracts that have rigid classification schemes that are difficult to circumvent
  • Need to ensure that pay is for work completed, not just for showing up

Labor law and Personnel

  • Several labor laws govern how personnel are treated and paid
  • These must be observed for the good of the personnel involved and the institution
  • Fair Labor Standards Act is most directly related to expenditure of money, e.g. minimum wage, etc.

Types of Employees

  1. Salaried employees – hired at an annual rate of pay
  2. Wage earners who are permanent employees
  3. Wage earners who are not permanent employees

Salaried Employees

  • Hired at annual rate of pay that is prorated monthly or biweekly.
  • Often managers who have minimum amount of hours, but not a maximum
  • Specific job descriptions
  • Hours worked as source of ambiguity and “professional discretion”
  • In a contractual relationship with Library
  • Cancellation of employment contract subject to terms of the contract and possibly other federal and state laws
  • Usually not subject to Fair Labor Standards Act because they are management

Wage Earners – Permanent

  • Subject to Fair Labor Standards Act
  • Includes provision that workers will work a normal 40 hour week (or less) and if they exceed this limit they must be reimbursed at 1 ½ times the rate of pay they receive during their normal 40 hours
  • Can take compensatory time in lieu of overtime pay, subject to state civil service regs
  • Employees usually have a contractual relationship with library, either individually or via a negotiated labor contract with a union

Wage Earners – Not permanent

  • Usually hired on an hourly basis.
  • Usually at will employees, not covered by union contract, or individual employment contract
  • Usually do not receive benefits

Personnel Costs

Direct personnel costs

  1. salary or earned wage
  2. social security and medicare paid by employer
  3. Workers compensation (form of insurance for injury on job
  4. Unemployment insurance

Indirect personnel costs

  • Fringe benefits such as medical, dental, and vision insurance
  • Eligibility often dependent on working 50% time
  • Amount paid by employer for employee varies
  • Vacation and sick leave and accrued liability for same
  • Retirement/Pension contributions
  • Disability and life insurance
  • Cafeteria type benefits (employee chooses from a “cafeteria of benefits)

Allied Costs – costs affiliated with work that an employee performs

  • Examples are office equipment and supplies, computers, tools, supplies, uniforms
  • While these are often classified in the chart of accounts under separate categories they should be figured in when hiring new personnel or when consolidating the workforce


  • One of the most attractive benefits for many public employees
  • Payment of pension is secured by the ability of the government to levy taxes to pay for pensions
  • Pension funds are separately administered, called fiduciary funds
  • Usually a separate entity set up by state or municipal government for purpose of collecting pension contributions, investing these contributions and paying pensions to employees who have retired
  • Many governmental pension plans exclude their employees from social security, but not medicare. In these plans the employee contributes a percentage of their salary to the pension system each month.
  • This amount is not taxed until retirement when that amount contributed is received by the employee as a pension benefit.
  • Two major types of pension plans are defined benefit plans and defined contribution plans
  • Defined Benefit
    • Employee contributes a set percentage of salary each month
    • Employer also contributes a percentage of employees salary each month
    • Pension benefit typically consists of an amount determined by number of years person has worked, the average salary of the employee over the last 36-48 months of employment, and a percentage of that average multiplied by the number of years of service.
  • Defined Contribution Plans
    • Employee contributes a set percentage of salary each month
    • Employer also contributes a percentage of the employees salary each month
    • Proceeds are invested
    • Pension benefit depends on the investment success of the success of the investors and not on the parameters used in a defined benefit plan

Summary of Personnel Costs

  • Total personnel costs then can consist of the following
  • direct personnel costs (salary, wages)
  • unused sick leave and vacation (essentially overtime of a sort)
  • employer’s contribution to social security and medicare
  • employer’s contribution to health benefits
  • contribution to workman’s compensation
  • unemployment benefits (under certain conditions)
  • life insurance
  • disability insurance
  • contribution to pension plan
  • allied costs

Salary and Wage Administration

The process of monitoring salary obligations for the purposes of equality, fairness, application of merit and equity raises and determining fair compensation amounts for hired employees

Negotiating Salaries and Other Compensation

  • When dealing with salaried employees there is a process for settling on terms of the employment contract
  • Salary offer – made after determining the level of employee, comparable salaries in that range, length of time in profession and other factors
  • Other items in salary offer
    • Moving expenses – sometimes offered to a new salaried employee on a regular basis, or when a salary offer cannot go as high as the prospective employee would like and the moving expense is seen as a secondary means of compensation for the first year.
    • Remodeling of offices
    • Other perquisites (cell phones, parking)

Pay Raises

Almost as many schemes as there are libraries
Two major methods of implementing
1. across the board increases, regardless of performance
2. merit pay, based on performance
3. equity pay, based on correcting inequalities within the system (gender, race, length of service, etc.), or salary compression

Wage Earner pay raises

  • May be across the board
  • If unionized, then wages are negotiated for a class of employees
    • Base salary defined by classification
    • Step increases, often driven by seniority
    • Non-step increases, the other negotiated element, applied separately from step increases

Appeals for salary review

  • Occasionally an employee will feel that he or she is not being paid fairly
  • Often occurs when employee salaries are part of the public record, so everyone’s salary is potentially known to everyone else
  • Employee will appeal salary level
  • The appeal board or administrator will review and analyze appellant’s salary and other factors to determine if inequity exists

Other costs

  • Search costs for hiring new personnel
  • Costs of discipline (in terms of productivity)
  • Training
  • Professional Development
  • Travel
  • Appreciation, recognition, awards, etc.


  • Benefits
    • Free
    • Often dedicated and skilled
    • Fills in gaps that library cannot afford to cover
  • Hidden Costs
    • Supervision
    • Allied costs
    • Quality questions and reliability
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