American Library Association’s $2 Million Shortfall Prompts Demands for Transparency, Reform | ALA Midwinter 2020

By far the biggest and most contentious issue dominating the American Library Association Midwinter Meeting Council sessions was not the organization’s governance, but its finances: specifically, how and why a shortfall of approximately two million dollars in operating funds occurred.

UPDATE: On February 14, ALA President Wanda K. Brown and the ALA Executive Board released a statement in response to financial shortfalls in the current fiscal year operating budget that were first brought to light at the Association’s recent Midwinter Meeting, available here.

ALA Council bannerUPDATE: On February 14, ALA President Wanda K. Brown and the ALA Executive Board released a statement in response to financial shortfalls in the current fiscal year operating budget that were first brought to light at the Association’s recent Midwinter Meeting, available here.

Going into the American Library Association (ALA) Midwinter Meeting, held January 24–28 in Philadelphia, the big news anticipated from ALA Council’s three official sessions was to be steps towards the long-planned major revamp of the association’s internal structure, Forward Together. But that’s not how it worked out. With little discussion, ALA Council postponed the first vote on Forward Together, originally scheduled for June 2020 at the Annual conference, until at least January 2021. Council acknowledged that the vote could move even later due to the necessity to run further pilot tests and give the new ALA Executive Director (and 2004 LJ Mover & Shaker) Tracie D. Hall—who starts February 24 and was greeted with a standing ovation—an opportunity to weigh in.

In practice, by far the biggest and most contentious issue dominating the latter two Council sessions was not the organization’s governance, but its finances: specifically, how and why a shortfall of approximately two million dollars in operating funds occurred; why this information had come as a surprise to councilors and other members; how the organization—and its divisions—can continue to operate without sufficient cash to cover the assets in their names on paper; why assets from the sale of the headquarters building were placed into the endowment despite the shortfall; what increased transparency measures will be instituted going forward; and how the association intends to close the gap in its budget going forward.

 

“OFF THE RAILS”

Traditionally addressed in the third and final Council session when the ALA treasurer presents a report, the association’s finances were added as new business to the second owing to urgency; current Executive Director Mary Ghikas and ALA President Wanda Brown collected questions from the floor in the second session and returned to address them in the third. Brown acknowledged “significant unplanned deficits” and “significant missteps,” and committed to “better communication” and “repairing trust.” From the floor, councilors called for five years of line item budgets versus actual spends, savings numbers on staff reorganization, division balance sheets, a disclosure of how much was spent on the Steering Committee for Organizational Effectiveness (SCOE, architect of the Forward Together plan) and other initiatives, and an internal investigation. Rivkah Sass, director of the Sacramento Public Library, called for five years of audits, and Nick Buron of Queens Public Library noted that there is “a lot of anger.” Divisions are required to maintain a minimum balance in ALA’s account; division representatives were particularly concerned that the missing money would imperil their standing, but Ghikas reassured that ALA had always paid the bills from its “one checkbook” and would continue to do so—only asking that divisions that want to spend large portions of their assets at once alert the organization to talk about timing.

“Several things went off the rails,” explained Ghikas at the third Council session. “None was individually catastrophic, but they add up.” Brown and Ghikas offered preliminary answers to councilors, to be followed with more documentation in the coming weeks through the online ALA Connect Forum.

Online platforms, ironically, were the crux of much of the problem, according to Ghikas. While ALA’s General Fund has not been positive since 2015, what’s new in the last few years is that ALA’s old e-commerce platforms were no longer supported; as a matter of urgency, the organization had to switch. After a difficult hunt for software to meet the organization’s requirements, including robust accessibility as well as a complex dues structure, ALA adopted software that did not reliably meet its needs. Pressure from leadership to get it stabilized in the short run, and to seek better alternatives in the long run, led to an IT overspend of 87 percent.

To compound the issue, the extent of the overspend was masked by a depreciation schedule, with underspends in 2016–17, and by bookkeeping which did not break out IT from the general organizational books—an omission which has since been rectified. “Finance is looking at how they report, looking at how other associations handle it,” said Ghikas, adding that staff had been having “painful internal discussions” that she was not going to speak further about from the podium.d

Added to the IT costs were overspends on conference AV in Seattle—raising questions from the floor because such costs are predictable to planners, especially when venues are finalized years in advance—and roughly a half million dollar shortfall in publishing revenue driven in part, said Ghikas, by delayed titles whose revenue will be realized in 2020 instead of 2019 as planned. Unspecified personnel issues led to some items being omitted from the budget that had to be added later. In answer to why $5 million of the $6.75 million realized from the sale of the headquarters was put into the endowment, Ghikas explained that ALA had committed to do so when the sale was agreed on, lest it be spent down, and that the $250,000 earned in interest on that money more than makes up for what ALA is currently spending on its loan. While $250,000 will not close the budget gap, she said, “the solution is going to be a lot of little things, not one big one.” ALA has to bring down the gap in FY20 through internal cuts, she said, making this a “very painful period” of holding and delaying expenses wherever possible.

 

BARRIERS TO GROWTH

Ultimately, said Ghikas, all three strands of the Association’s revenue need to be reexamined: conference, publishing, and membership revenue. ALA “gets a little growth from publishing,” she noted, but only enough to be a replacement for normal depreciation. “Membership is not bad, but not growing the way we need it to grow,” she added. Long term solutions, she said, are structural, and tied up in the work of SCOE.

None of ALA’s revenue streams offer an easy path to improvement. The Midwinter meeting has seen diminishing returns for some time—total attendance this year was 8,089, down from 9,211 last year; the exhibit floor was small, and some exhibitors reported slower traffic than they’d like. While Ghikas said the final assessment of whether the conference turned a profit or ran at a loss won’t be known till the final expenses are reconciled in several weeks, revenue is expected to be down. According to ALA, efforts to revamp Midwinter into a new format are still in their infancy, but will be in full swing by 2022 when the association meets in San Antonio. The new Midwinter will feature education, networking, and engagement activities and include issue forums focused on advocacy; information policy; professional and leadership development; and equity, diversity and inclusion (EDI).

Ghikas urged Council to focus on increasing membership, but as councilmembers pointed out from the floor, that’s hard to do when association missteps such as these reduce library workers’ trust in the organization—as did the attempt ahead of Midwinter, hastily rolled back after negative feedback, to restrict protest at ALA conferences to a designated area called “The Square.” (In response, at its first session Council decided with little discussion to require that any policy which restricts free speech at ALA events be reviewed by Council before going into effect. The following day, debate occurred belatedly around a motion to suspend implementation of that decision until the end of the year, which was ultimately defeated, leaving the review requirement in force.)

“The struggles ALA is going through in terms of declining membership and member engagement have everything to do with ill-defined and evasive communication and goals,” Council member Lindsay Cronk told LJ after the conference. “The financial reporting episode in Council is simply a recent example of this ongoing fallout in regards to the organization’s financial reality. Years of emphasis being placed on ALA’s 'strong foundation,' rather than its declining cash balance, verge on misinformation and gaslighting. I have taken issue with the lack of culpability and oversight—and in my volunteer roles within the organization I will continue to advocate for greater transparency to ensure the organization is applying its budget to member priorities."

ALA Councilor at Large Emily Clasper concurred. “With membership in decline, ALA is struggling to attract and engage with newer professionals. People just don't have the money to join or participate in professional activities that don't give them something concrete in return. ALA has a lot to offer members, but it is hard to communicate the value of membership to folks when we keep breaking trust with them. I find it incredibly frustrating, because it feels like every relevant, meaningful thing we do in the name of our values gets overshadowed when another scandal erupts.”

Councilors asked ALA to help them make the case for membership using the kind of return on investment metrics that individual libraries often use to make the case to their communities; in response, some library workers on Twitter said that instead, they would find value in a professional organization that would represent their interests as library workers rather than the greater institution of libraries—such as a national union. In the current structure, the ALA Allied Professional Association (APA) represents those interests, and shares the same governing Council as ALA. Its major outputs are salary surveys and other research; its Council meeting was limited to 15 minutes, primarily focused on having paid off its loan.

 

ONLINE VOTING

While online commerce platforms had their issues, online governance seems to be proceeding apace, testing platforms for online meeting and voting such as Zoom and WebEx. Survey research presented to Council indicated that five percent more Councilors are comfortable meeting online than they are face to face. While further Council online voting decisions have been rolled into the larger restructuring work of SCOE (whose current proposed model would eliminate Council altogether), other online meetings are still taking place. The virtual chapter leaders’ forum in the fall and new EDI members’ assembly will take place via an annual webinar on February 13. A special virtual session for councilors in March is also under consideration.

 

OTHER BUSINESS

Unlike SCOE, the work to merge several divisions—the Association for Library Collections and Technical Services (ALCTS), Library and Information Technology Association (LITA), and Library Leadership & Management Association (LLAMA)—into Core: Leadership, Infrastructure, Futures, is proceeding as scheduled. Later this spring, a retreat will be held to consider the ways that freedom to read intersects with social justice. The award previously named the Melvil Dewey Medal was unanimously changed to the ALA Medal of Excellence, and the Resolution in Opposition to Charging Prisoners to Read also passed unanimously. After a contentious debate, the resolution in support of free speech of supporters of the movement for Palestinian rights, first introduced from the membership at Annual, was defeated by a large margin.

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Meredith Schwartz

mschwartz@mediasourceinc.com

Meredith Schwartz (mschwartz@mediasourceinc.com) is Editor-in-Chief of Library Journal.

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