QUESTION
Is it allowed for public libraries to use their endowments to cover operating costs during budget cuts? If not, what options do they have to manage budget reductions?
0:53:26
·
5 min
The public library leaders explain that they are legally restricted from using their endowment funds to cover ongoing operating costs of branches and services during budget cuts.
- The endowments are built from private donations with restrictions on how the funds can be used
- Spending down the endowment principal would reduce future investment income to support operations
- The city is legally responsible for funding the ongoing operating costs of public library branches
- To manage budget cuts, libraries have limited options like reducing staff through attrition, cutting books/materials, reducing hours/services, deferring maintenance, and occasionally closing locations
- The leaders state they are already lean organizations with little flexibility when the city cuts their budgets
Justin Brannan
0:53:26
Well, that that that was my next question.
0:53:28
So the I mean, I think it's it's puzzling to me because there's no other agency where we say or if they're falling on tough times, just dip into your endowment to keep the lights on.
0:53:38
But is that even allowed?
Linda Johnson
0:53:42
Much of the funds in the endowment are restricted and it's not allowed.
0:53:46
And also the endowment itself generates up operating dollars that we take advantage of every year.
0:53:52
And if you start to spend down the corpus, you end up reducing the amount of money that the budget that the endowment will contribute to the budget.
0:54:01
And eventually, you'll be in a much worse situation than Yeah.
Justin Brannan
0:54:04
It's a spiral.
0:54:04
Okay.
Dennis Walcott
0:54:05
Thanks.
0:54:05
So, again, Queen's has a smaller dow.
0:54:07
And our endowment is restricted.
0:54:10
It's not legally permissible.
0:54:12
The people who provide their money on endowed a library restricted for a specific purpose.
0:54:19
I mean, it's not for general operating purposes.
David S. Pecoraro
0:54:22
Right.
Dennis Walcott
0:54:22
As Linda indicated, you know, Linda knows of, like, anything.
0:54:26
It's just not the way to do business and it's not legally permissible.
Tony Marx
0:54:31
My colleagues have have covered this.
0:54:34
Let me just add.
0:54:36
The New York Public Libraries Endowment has been built over the last 125 years.
0:54:43
It is perhaps the perfect example of a private public partnership.
0:54:49
That private funding together with the resources we raise record breaking every year despite the city's budget cuts.
0:54:58
Means that we can offer the city of New York, the greatest most used research library.
0:55:04
We can cover central administration costs privately.
0:55:10
We're proud of having built that capacity Let me be very clear.
0:55:18
The annual, ongoing, operating costs of the branches of our public libraries are the responsibility legally of the city.
0:55:32
And there is simply no way.
0:55:34
In addition to the issues of restriction, there is no way that our private giving our endowment could cover, could possibly cover the annual ongoing operating costs of the branches.
0:55:50
Or the capital requirements.
0:55:52
Let me give an example.
0:55:55
If the city said, we are cutting this agencies.
0:56:01
And they and they they said, oh, don't worry.
0:56:04
You can cover it.
0:56:06
By selling assets, why don't you sell the building that you operate the agency in?
0:56:15
That will give you cash, problem solved, resulting in a complete inability to provide services and destroying your future possibility of providing services.
0:56:31
That is what endowment question analogizes to.
Dennis Walcott
0:56:37
Chairman, just Yeah.
0:56:38
Follow-up on one other point that you raised.
0:56:42
With Sunday services, Linda indicated, obviously, it's time and a half.
0:56:46
But from a management point of view, our options are limited.
0:56:49
It's personnel.
0:56:52
We're not gonna lay all of staff.
0:56:54
So it's attrition and not hiring as many people.
0:56:57
It's hiring at all.
0:56:59
It's books, which we've already indicated we've cut into.
0:57:03
It's the various services that we offer and find to constrict it to a way that allows us to provide the services, but at the same time, may not be at the same level based on the budget cuts.
0:57:15
And there's sundry items that are small items.
0:57:17
I mean, those are the things that we have to focus on as managers.
0:57:22
And so the Sunday service is unfortunately and sadly a place to go.
0:57:28
The shrinking of staff unfortunately and sadly is a place to go.
0:57:33
We are lean organizations.
0:57:35
Plain and simple.
0:57:37
And so I just say that to you.
0:57:38
And then the other piece of this, again, it's been alluded to, but just to say it again in a more direct way, that a lot of the capital issues that surface will not be paid for through capital funds based on the emergency nature.
0:57:54
So that's money that comes out of the expense budget as well.
0:57:59
So we have to then hold back on some of those expense items for the capital needs of the libraries because we don't have enough money.
0:58:08
So you may see the closings that we talked about in our testimony.
0:58:12
Or the not opening or the air conditioning or the boiler is breaking down.
0:58:15
Those are the ways we've been able to manage the cuts that are in place.
0:58:19
So to say that, oh, we made a decision to Sunday.
0:58:22
Sunday, unfortunately, a satellite is one of the many ways we had to really deal with the cuts that we were facing.
0:58:29
Plain simple.
Tony Marx
0:58:30
There there is no choice of cuts that anyone wants to see.
0:58:35
If you reduce our budget, we have to cut services.
0:58:39
We don't have that kind of fat.
0:58:42
We are efficient.
0:58:44
So if the administration turns and says, why did you cut x?
0:58:48
The answer is, what would you have rather we cut Saturday or hours or branches in neighborhoods that are desperate for those services, cut those altogether.
0:59:03
It's disingenuous to say why, you know, why did you cut Sunday?
0:59:06
Something had to be cut.
0:59:08
We hate all those possible cuts.
0:59:11
We want all of that restored.
