FY27 BUDGET NARRATIVE
According to the Bureau of Labor Statistics July 2026 report issued on August 12th, inflation currently sits at 3.4% for the 12-month period ending on July 31st. This represents the maximum rate at which we could increase our Corporate Levy for the coming year, and this is the most important factor to consider in establishing expected revenues and thereby setting reasonable expenditure levels. This budget accomplishes living within those means for the library. In total, this year’s budget balances and accounts for necessary cost of living increases to staff salaries as well as all other financial needs of the library. It also accounts for $46,189.00 in needed capital expenses in 2027 along with $124,827.82 to be put in reserves for future capital needs.
EXPENDITURES:
#4310 (Operational Salaries): As has been our practice, I have calculated a COLA for staff salaries based on the 12-month rate of inflation (CPI-U) from July 2025 thru July 2026. We use the July figure each year (released mid-August) as it is the most current data that we have at the time of setting the budget. While this will inevitably not match up perfectly with the calendar year inflation figure, which is what will determine the statutory limitation, consistently using the July rate each year compensates for any differences. This year’s CPI-U for the month of July is 3.4%. I have adjusted the staff pay schedule for 2026 by this amount.
I have also added in an allowance for merit-based pay increases of up to an additional 0.5% for each employee. I typically like to do a 1% merit increase, but that’s hard to pull off when inflation is above 3%. The merit increase is what allows an employee to progress within a pay grade over time. In practice, not every employee will get the additional 0.5%. That is determined by performance review in December of each year. But I think it’s wise to budget as if everyone will get the full increase. Any unexpended funds at the end of the year due to actual spending being under budget would be used to top up the reserve fund in the following fiscal year, and we inevitably have some extra at the end of each fiscal year.
Also, due to staff turnover this year and hiring some very well-qualified new people, our base salaries are actually a bit higher than the 2026 budget. In total, this comes out to a 3.68% increase over the current fiscal year.
#4330 (Employee Benefits): IMRF and FICA costs are a set percentage of salaries, so we have little control over them. IMRF is projecting no increase in their employer contribution rate for FY25 of 9.82%. Our health insurance carrier has negotiated a surprisingly modest 1.79% increase in premium costs. Taken together, this adds up to an 2.66% increase in Employee Benefits over FY26.
#4350 (Professional Education): This grouping is left untouched from FY26 as these amounts are adequate to cover our needs in this area.
#4401 (Professional Services): Our audit, appraisal, and accounting fees are largely set for us. Legal and consultant fees are a little more within our control, although we tend to have some need for these every year. I’m budgeting for a modest 2.87% decrease in these lines.
#4402 (Outside Services): There isn’t much flexibility with these lines. The alarm system and SWAN membership fees are contractually set. Our building cleaning service is a significant expense. We seek out competing quotes for that work every few years, and we have never seen a quote that approaches what we have been paying for Cosmopolitan for many years now. We continue to boost our Technology spending incrementally as these needs are only continuing to grow, but I have left it flat for FY27. In total, I’m proposing no change from FY2026.
#4403 (Printing): This is our newsletter printing. Our print newsletter is still one of our most impactful marketing tools, and the current 12-page format is working well for us. Cost savings could be realized here by cutting back to an 8-page publication or eliminating the print newsletter altogether, but I highly recommend against going this route. I am budgeting for no increase to printing costs, since they have not raised their rates on us recently.
#4404 (Programming): We continue to have a strong reputation for having great programming, and I am proposing that we keep these lines steady for FY2027.
#4405 (PR): As with the newsletter, this is a line that can be cut pretty easily if necessary. However, I consider this to be money well-spent in continuing to connect with the community. This line pays for things like parade candy, monogrammed pens, various giveaways, and participation in some sponsorship activities in the community each year. I am proposing a bit of a reduction from FY2026 to make a bit more room for rebuilding our reserve fund.
#4406 (Maintenance): These costs are fairly consistent from one year to the next. We saw a substantial increase in our pest control service this year, but it’s a relatively small increase in terms of total dollars. I have kept our HVAC and Building Repairs lines flat as a lot of those repairs are accounted for in our current year’s reserves spending. Also, the new copier contract that we began late last year is a bit higher than the previous one, although this cost will be fixed for the next four years. In total, I am proposing a 0.15% increase across all of these lines.
#4440 (Corporate Insurance): The significant increase that we were expecting to see in our property insurance was much less than anticipated last year. We were told to expect a 10-12% increase, but we actually saw a 4% decrease in our corporate insurance. The Workers Comp policy did increase by about 10%, but the cost of that policy is small enough that its effects are minimal. I have budgeted for a 10% increase in our Building & Contents policy over the rate that we actually paid in 2026. This is still a 5% reduction from the FY26 budgeted amount. The total anticipated change in corporate insurance is -4.15%.
#4470 (Utilities): I view utilities like death and taxes: you just have to pay them when the bill comes due. I’m hoping that our lighting retrofit will continue to be reflected in some lower power bills going forward. We actually did get a gas bill in late 2025 for the first time in a number of years. I’ve never quite understood how that works, but I take it for what it is. I think it’s wise to leave something in that line just in case, because when we do get a gas bill it tends to be pretty substantial. The cost of our phone service is still well below what it used to cost back in the day, but it is increasing incrementally each year. Also, there is an added expense due to our final POTS line being phased out and the requirement that we have an uninterruptible line for the elevator emergency panel. I’m anticipating a 3.28% decrease from FY2026 mostly due to savings in electricity bills after the retrofit.
#4500 (Supplies): These costs are largely within our control, and we try to keep them stable from year to year. I’m proposing that we keep our departmental supply budgets flat, with the exception of Technical Services, which is planning to incorporate the added cost of in-house processing of items. This increase will be offset by a decrease in the book purchasing lines, reflecting the reduction in pre-processing costs since we’re bringing that in-house. Maintenance supplies are where we continue to see the greatest increases in cost. Bulk mailing cost, which is the postage for our newsletter, also continues to increase steadily, and I’m budgeting for another 2% increase to that line. In total, I’m proposing a 8.23% increase in supplies from FY2026.
#4600 (Contingency and Capital Services): This line is for any contingent expenses that would come up throughout the year, which is typically negligible. In practice, this is the amount that we hope will be unspent at the end of the year. We would then transfer it over to our Special Reserves Fund for future capital expenses. I’m proposing that we budget $124,827.82, which would be carried over into reserves in January of 2028. This is less than our annual target amount of approximately $200,000 as we rebuild our reserve fund after this year’s building envelope repair. Actual anticipated spending for capital needs in 2027 is accounted for in line #7001 below.
#4700 (Media): This section accounts for most of our collections spending. We control the spending in these lines, but they are also the cornerstone of our services as they constitute everything that we lend out to patrons, both physically and virtually. I’m expecting a decrease in databases thanks to the State’s recent database purchase on our behalf. We have decreased our main physical book lines to account for the in-house processing costs that we are shifting back to the Technical Services Supply line, as noted above. Finally, in anticipation of adding the frequently requested Hoopla service, we have added $3,000 to line #4727. In total, this would be a 1.47% decrease from FY2026.
#4900 (Reimbursables): As always, each of these lines are tied to a specific revenue line. If those revenues are not received, these lines do not get expended. We do not levy any funds related to these lines.
#7000 (Special Reserves Projects): This is where we account for actual capital expenses that we anticipate for next year. According to our Capital Needs Assessment spreadsheet, we should plan on a total of $46,189.00 of necessary capital expenses in FY2027. This includes replacing computers, replacing some furniture, and repainting a few spaces.
REVENUES:
#3100 (Tax Revenues): Making up the vast majority of our revenues, the goal is to keep our increase in the Corporate Levy at or below 3.4%. This proposed budget succeeds in that, which the City will appreciate. Other levy lines pull directly from their expenditure counterparts, above. We did see a lower PPRT again this year, and we have no way of effectively projecting that revenue source from one year to the next, so I have continued to keep it fairly low.
#3200 (Miscellaneous receipts): These lines remain quite stable. Friends book sales continue to be strong and reliable. The Miscellaneous and Restricted Donation lines offset spending in #4900, so they don’t really count for much. I’ve reduced our fundraising line back down to typical levels, since we are no longer actively pursuing major fundraising events. We also continue to work on developing planned giving relationships, so I put an optimistic number in that line. Finally, it’s worth mentioning that our copier income continues to be significantly higher this year than in the past. I have boosted that line over historical levels, although not all the way up to what I hope will be our grand total in that line in 2026.
#3300 (Interest): Interest income has been down significantly this year because our balances are so low with the chaos surrounding the County’s property tax collections. Hopefully, this situation is close to being resolved and we can expect to see a return to normalcy next year. As such, I’ve budgeted for a normal amount of interest income in FY27.
In summary, this is a balanced budget that I believe adequately accounts for the library’s needs while controlling costs, accounting for current and future capital expenses, and keeping the Corporate Levy at a 3.4% total increase.
Recommendation: I recommend that you approve the FY2027 budget as proposed.