nonprofit governance, leadership, performance

be responsible…provoke performance

14 June 2009 – 15:12

Cincinnati Public Library Board dips deep into

“emergency sources of income”; places tax
levy on November ballot
The continuing financial crisis and its “second-order consequences” on
non-profits are leaving many boards in a corner.

Short-term options to maintain operations and program integrity are

often limited and high-risk. Exercising such options can invite public
scrutiny, funder alarm, and board defections. Articulating longer-term
options to guide the organization forward to stability and sustainability
can be just as difficult and dangerous.

The Board of Trustees of the Public Library of Cincinnati and Hamilton

County (PLCHC) has been persevering in addressing dramatic short-
term and long-term challenges.

PLCHC, which serves at the public library for Cincinnati, Ohio, depends
largely on funding from the state’s general fund, and has seen declines
of 10% in that funding from 2000 to 2008. Another 15% reduction so
far this year will result in an annual funding shortfall of over $10 million
by 2010. PLCHC is the only metropolitan library in Ohio which receives
no local tax support.

Since 2000, “public hours have been reduced by 10%, staffing has
been cut by 18.5%, capital expenditures have been postponed, and
materials purchases reduced. At the same time, Library usage has
increased by 17%, reaching a record high 15.6 million circulation in
2008 with more than 5.6 million visits to a Library location,” PLCHC
said.

In addressing the shortfall, the board has taken aggressive action,

perhaps even raising questions about its governance performance.

PLCHC notes that “…this year the library has hit a wall, budgeting or
spending $7 million from unrestricted gift and trust funds, and
spending $1.8 million in capital funds.” Further, the library said the
current fiscal year shortfall “may lead to a request next month for an
emergency transfer from the capital fund, which retains $2.5 million.”

Board actions which dip into unrestricted gift and trust funds – as well
as depleting capital funds – to maintain operations raise what we
would term “red flags.”

We have written a good deal about the importance of “reasonable

transparency” on the part of nonprofit boards when they take strategic
decisions that represent a material change in its prospects for viability
and sustainability.

This Board certainly meets that test given its structure and practice.

The website notes that “The Library is under the control and
management of a Board of Trustees consisting of seven members. Four
of the Board members are appointed by the County Commissioners
and three by the judges of the Court of Common Pleas. Board members
are appointed for a term of seven years, the term of one trustee
expiring each year. http://www.cincinnatilibrary.org/info/trustees.asp

So the Board is balanced and politically hard-wired. Board meetings are

public and can be watched on the Waycross Community Media website.
So these decisions are (painfully) public and immediately so.

Moreover, the Board’s May meeting included a new provision to post

the minutes of all meetings online going forward beginning with that
meeting.

We found those minutes to address, in part, the “red flags” noted

above”

From the posted Board of Trustees Meeting Minutes of May 11, 2009
meeting:
Fiscal Review
The status report received on May 1 has been updated by the Fiscal
Officer’s report just presented. However, it remains true that since we
already are using gift and special revenue funds as operating revenue
this year, additional sources of emergency income are limited. A total
of $2.5 million remains in the St. Bernard and Reading capital funds,
about $566,000 is set aside for the Pleasant Ridge ADA project,
another $400,000 may be available in the Gift Fund, and the
Armstrong Fund (for the general use and benefit of the library) has
about $750,000 outside the restricted principal.

The Committee acknowledged that they are open to using capital

funds to offset operating revenue shortfalls, as needed.

Open indeed. Dangerous, as we are sure the board is aware, insofar as

“emergency income” is obviously running dry, fast.

While earlier board minutes do not seem to be posted, we presume

from media reports that the long term strategy of shifting funding to
include a meaningful, local millage was vigorously engaged.

On June 9, 2009, the PLCHC Board of Trustees voted to place a 5-year,

1-mill levy on the ballot for the Hamilton County election on November
3, 2009.

If approved by voters, the 1-mill levy would raise approximately $20

million per year allowing the library to “…keep branches open, keep
the collection up-to-date, continue much-needed services to children,
teens, and seniors available and meet the growing demand for Library
service.”

Board President Elizabeth LaMacchia said the Library is seeking the

levy “because it must have a source of stable, adequate funding…
Failure of this levy will be devastating. We are now in survival mode.
Without the additional funds a levy would provide, we will be forced to
severely reduce our services including closure of 15 to 20 branches.
We cannot allow reductions on this scale to take place at a time when
Library services are needed more than ever. We must save our
Library.”

So one applauds the courage of Board leadership in making this

courageous, if high-risk decision. But we know that even long-
established millage funding for public libraries can be a significant
challenge to renew, so establishing a new levy will certainly test the
board, staff and community. We wish them well.

We will monitor this situation and have invited the library to comment
on our observations. We will also monitor the blog of library director
Kimber L. Fender who will find much to communicate about in support
of the levy.
With only three Board meetings scheduled before the November ballot,
perhaps we will even tune in to meetings on the web. We will be
interested in just how deep the board may dip into emergency sources
of income, and how it will manage the ballot measure whose outcome
will largely define the future of public library services in Cincinnati and
its immediate region.

David R. Curry

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