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Resource allocation models

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Margaret Adolphus

The whole point of a library is to share resources. It costs me less to borrow a book from a library than it does to buy it from Amazon, and because I return it I don’t have to find shelf space for it. This is far more the case with research libraries, as is succinctly pointed out by Sudarsan (2006):

"University and college libraries are established with the belief that it is more efficient and effective to build a common intellectual resource than to have individual scholars purchase and manage their own information".

In recent years libraries have been hit hard by a general atmosphere of fiscal retrenchment following public spending cuts. At the same time, we are living in a culture in which more and more information, previously only available in reference libraries, is now freely available on the Internet, leading to the belief that "everything we need is on the Web" at the click of a mouse from our desktop (Henczel, 2006). Librarians clearly need to adapt to a new role.

The fact that much of the valuable web-based information has a cost to it which puts it beyond the grasp of the average person (take for example journals databases) puts an additional pressure on libraries who need to make sure that they equip themselves for today’s scholarly environment. Databases, the hardware to support them, user training and specialist staff are all costs which have to be absorbed along with the more traditional ones: libraries must adapt in a rapidly changing environment with shrinking budgets.

All this makes it very important to ensure that resources are allocated in such a way as to provide the best possible service. Hence the need for a decent resource allocation model, which can be described as a way of investing and allocating resources in such a way as to provide the best possible service both in the short and long term, and to produce measurable improvements (Stephens, 1995).

It is important, in order to make a judicious choice of resource allocation models, to understand the underlying fiscal and economic models. A good part of the skill of a manager lies in successfully arguing for funds, and then using them judiciously. To do this, it’s important to understand about the budgeting process.

Some budgeting systems used in allocating resources to libraries

Libraries are public institutions, existing to serve the public rather than maximize profit for the shareholder. As such, it is important to stay within the budget and to prioritize spending. Most academic libraries are cost centres, although occasionally, as with Harvard Business School’s Baker Library, the budget responsibility lies with the academic unit. Most of the time, however, decisions, or at least recommendations about budgets, will be down to the librarian, whose responsibility is also to ensure that his or her cost centre breaks even.

Linn (2007) describes a number of budget allocation systems commonly used in libraries, which are listed in the table below, along with their advantages and drawbacks:

Budget allocation systems
Pros and cons
Incremental line-item
Most widely used (at least in USA). Uses previous budget, automatically including all items, with any increase or decrease being equal across items Continues status quo so cannot accommodate strategic changes; non controversial and easy to implement
Formula created according to particular factors, e.g. numbers of student/postgrads/faculty (weighted according to library use)
Reduces complexity of the budgeting process, but can be rigid, unless the budget lines are widely defined
Budget created from scratch each year, with items ranked in order of importance. Time-consuming, but good for pointing out unnecessary expenditure
Time-consuming, but good for pointing out unnecessary expenditure
All spending is attached to a particular programme. Lists costs by (quantified) output (e.g. numbers who attended training)
Easy to see which programmes are successful. But admin costs must be spread throughout programmes, and may be difficult if programmes interdependent
Planning, programming and budgeting systems (PPBS)
Most common type of programme budgeting systems. Links the budget to the planning process and creates programmes to meet goals, on which budget is based. All costs aggregated to library outputs
Can identify how much programmes cost. May be disagreement on objectives
Focus on outcomes (e.g. skills learned) rather than outputs (number trained)
Can track cost of service and evaluate efficiency. Difficulty of agreeing what educational outcomes should be
Responsibility centre (RCB)
Individual units have fiscal responsibility, which means that each unit must break even – promotes entrepreneurial culture, and units can carry over surplus
Avoids inefficiency of having to spend budget by end of year. Can mean duplication of effort between units
Alternative to above; decentralized budgeting but controlled by central admin
Can move money between lines, e.g. overspend on electronic materials but underspend on books
Each unit gives back a percentage of budget which is used for special projects

These systems are not mutually exclusive, and can be combined. We shall look at some specific examples below.

Specific resource allocation models

A departmental model

One obvious way of determining library budgets is by their use in academic departments. However, there is a danger that he or she who shouts loudest gets the most, and for that reason many libraries have tried to move to a formula-based allocation system based on some aspect of performance, in order to provide a process which is fair and transparent.

Sudarsan (2006) describes a resource allocation model for libraries in India based on departmental performance which substitutes static departmental allocations that could be unfair on new departments. The new model has two components: a base component, which is a base amount which is the same for every department, and an incremental component, which is an additional amount based on a number of variables including student numbers and cost of resources. The variables are described as "push" and "pull" factors.

  • Pull factors include the number of students, faculty and research students, each group being weighted according to use of library, so that one research scholar will be equal to four students.
  • Push factors are the cost of materials, journals for some disciplines being considerably more expensive than in others.

Note that Sudarsan’s definition of performance-based accounting differs from that of Linn in that his factors are quantifiable, and can more properly be termed outputs rather than outcomes. He also uses a formula to determine the budget.

Sudarsan is clearly influenced by a model developed by the University of Leeds (2002). As with universities in India, Leeds wanted to move from a pattern where department related spending was historical, in this case ignoring the fact that some departments were more reliant on remote databases than on the library print holdings.

Like Sudarsan’s model, Leeds used a budgeting method which included a stable element as well as a calculated one. It had three components:

  1. A support budget which was not departmentally allocated and which included general resources such as newspapers, official publications and general reference material; a contingency fund, and collections of national and regional significance.
  2. A minimum necessary provision for each department of £7,000.
  3. A resource allocation formula based on:
    • Volume: how many people use the library, in terms of undergraduates, postgraduates and staff.
    • Use: how people use the library, measured by loans, physical access, use of electronic resources.
    • The price of resources.

Each term contained in the formula was calculated independently and then applied to the amount spent on that resource. The computation involved multiplying the elements in the formula, expressing them as a percentage of the total population, then multiplying by the amount budgeted for the resource.

An activity-based costing model

Using a formula based on departments is not always appropriate, particularly where the library structure is itself complicated. Oxford University Library Services was formed in 2000 out of over 30 libraries and services, as the largest university library system in the UK with a collection of over 8.5 million and an annual spend of around £22 million.

Heaney (2004) describes how in the process of integrating the service, consultants were called in to answer the question, how much does such and such an activity cost? The consultant proposed activity-based costing, which involved:

  • Pushing costs through to service point libraries, i.e. those libraries with specific users, and adding overhead costs in proportion to staff numbers.
  • Analysing staff activities, by asking staff to keep a diary.
  • Establishing how libraries were used.

The result of this process was that it was possible to obtain a clearer picture of what a particular activity cost in a particular library, and from that to plan for future staff requirements and determine which libraries were working in a cost effective manner.

Moving to an electronic library

One of the greatest changes that can occur in library management is the move to a digital information environment. Digital libraries require considerable set-up costs: hardware such as servers, software licences for database programmes, link resolvers, portals etc., and skilled staff to develop, operate and train in the systems. At the same time, paper collections need to be maintained.

Connaway and Lawrence (2003) conducted an exploratory study among ten academic and one public library on resource requirements of paper and digital libraries, looking at labour, space, materials and equipment across the library life cyle of select –> acquire –> catalogue –> maintain –> circulate –> warehouse –> store –> deselect.

Many participants thought that labour, space and material resource requirements would be less for a digital library, although there was less certainty as far as equipment was concerned, and the need for different and more skilled labour was acknowledged to cope with such issues as security, monitoring outsourcing, and training. Also that the digital library might give rise to new demands for services, for example, more printers, Internet reading rooms, training, information retrieval advice, etc.

One of the most interesting of their observations, though, was the cost of providing the solution that surely by far the majority of libraries will require: a hybrid solution with both print and digital resources:

"While an all-digital library may require fewer resources than an all-paper library, it is plausible that a mixed paper-digital library may be more costly to operate than either an all-paper or all-digital library since a mixed library requires most of the resources of both."

This is surely one of the biggest challenges in planning and allocating resources: providing services for a digital information environment while at the same time catering for existing needs – for books, and for physical space to provide a quiet study area; in other words, the disparate requirements of virtual users who want information to be sent to their desktops, and those who still want to access print resources, and somewhere quiet to study.

Some research has been done on metrics and measurement of digital resources (compare Barton, J. (2004); Poll, R. (2001)), but it would be interesting to see some resource allocation models that looked at competing demands of print and electronic.


Barton, J. (2004), "Measurement, management and the digital library", Library Review, Vol. 53 No. 3, pp. 138-141.

Connaway, L.S. and Lawrence, S.R. (2003), "Comparing library resource allocations for the paper and the digital library: an exploratory study", D-Lib Magazine, Vol. 9 No. 12 (downloaded from http://www.dlib.org/, August 2007).

Heaney, M. (2004), "Easy as ABC? Activity-based costing in Oxford University Library Services", The Bottom Line: Managing Library Finances, Vol. 17 No. 3, pp. 93-97.

Henczel, S. (2006), "Measuring and evaluating the library's contribution to organisational success: developing a strategic measurement model", Performance Measurement and Metrics, Vol. 7 No. 1, pp. 7-16.

Linn, M. (2007), "Budget systems used in allocating resources to libraries", The Bottom Line: Managing Library Finances, Vol. 20 No. 1, pp. 20-29.

Poll, R. (2001), "Performance measures for library networked services and resources", The Electronic Library, Vol. 19 No. 5, pp. 307-315.

Stephens, A. (1995), "Working towards the British Library's strategic objectives for the year 2000", Library Management, Vol. 16 No. 4, pp. 12-17.

Sudarsan, P.K. (2006), "A resource allocation model for university libraries in India", The Bottom Line: Managing Library Finances, Vol. 19 No. 3, pp. 103-110.

University of Leeds (2002), "Library materials fund: resource allocation", The Reporter, No. 479, 18 March (downloaded from http://reporter.leeds.ac.uk/479/library.htm, August 2007).