||The study clarified the
usefulness of using recognized CBA methods of contingent valuation as a basis for
calculating a dollar estimate for all five cities. The contingent-valuation methodology
works well in a large public library setting. The study demonstrated that cost benefit
methodology is a tool well adapted to measuring the direct benefits of library services.
||Recognizable methods of cost
benefit analysis used in many other kinds of CBA studies were used to measure the direct
benefits of library services to each class of patrons. The project team calculated direct
benefits for general users, teachers, and business users. A team of market researchers and
economists designed the survey instrument. The survey was branched and tailored by a
process of self-selection on the part of the survey respondent: general user (household),
teacher, or business. This branching included both categorical and open-ended questions.
An average interview took 25 minutes.
||When subjected to standard
statistical tests for reliability, the study proved to be valid and reliable. The tests
indicated that the survey produced an accurate measurement of services based on accurate
Reponses by those surveyed.
||Based upon their answers to
similar questions, the study demonstrated that different user groups receive different
levels of benefits from library expenditures. The general user was asked consumer-surplus
(CS), willingness-to-accept (WTA) and willingness-to-pay (WTP) questions. Teachers were
asked about their professional use of the library with consumer-surplus and
willingness-to-accept questions. Business users were also asked consumer-surplus and
willingness-to- accept questions. Initially, the team attempted to query caregivers
(professionals at senior centers, nursing centers or retirement homes) as a separate user
group. The number of respondents in the latter category in all libraries was too small to
treat the results as a separate sub-sample. The direct-user benefits to the various groups
varied considerably from city to city, as outlined in Appendix
||The outcome of the study is
defensibly conservative as the research team intended at the outset.
||They are conservative because the study
captures benefits to cardholders only. No benefit estimation was attempted for walk-in or
virtual visitors who did not hold cards.
||Neither were there estimates of benefits to
third party beneficiaries.
||The consumer-surplus estimates are
conservative because they are based on very conservative pricing of library services and,
direct benefits are calculated only if those surveyed expressed them as substitutes for
||Finally, capital benefits exclude
depreciation. Thus, estimated returns to capital compared with annual benefits with an
overstated capital stock, yielding a conservative estimate of the annual return.
||Annual local taxes spent for
library operations yield substantial direct benefits. Each library returns more than $1 of
benefits for each $1 of annual taxes. Baltimore County Public Library returns $3-$6 in
benefits per tax dollar. Birmingham Public Library returns $1.30-$2.70 in benefits per tax
dollar. King County Library System returns $5-$10 in benefits per tax dollar. Phoenix
Public Library returns over $10 in benefits per tax dollar. SLPL returns $2.50-$5 in
benefits per tax dollar.
||Each library studied yields a
good return on invested capital. Baltimore County Public Library returns a minimum of 72%.
Birmingham Public Library returns a minimum of 5%. King County Library System returns a
minimum of 94%. Phoenix Public Library returns over $150%. SLPL returns a minimum of 22%.
||Shortly after completing the IMLS CBA study
and before publicizing its results, Phoenix Public Library participated in a city-wide
bond referendum that will expand its capital assets by 20% over 5 years. The referendum
passes more than 75% of voter support. The overwhelming strength of this majority confirms
the public's (and cardholders') perception of the high social rate of return to the
public's investment in library assets, consistent with the results of the CBA study.
||The return on invested capital measurement and
that for return on annual taxpayer investment are both summarized in the seminar casebook,
Libraries Are Valuable
Prove It! (Appendix A)
||The methodology detected
differences in benefit streams flowing from different levels of investment. The CBA
methodology is sufficiently fine-grained to detect differences in levels of benefits that
flow from different levels of support for various areas of library activity. St. Louis
Public, for example, had higher levels of benefits from childrens services than did
King County which invests a lower percentage of its annual taxpayer investment in youth
services. Not surprisingly, the difference in cardholder categories in different systems
also affects CBA benefits-stream outcomes.
||Consistency, however, proved to
be the theme of the various studies, especially when calculations were made for categories
of library benefits. In the case of all five libraries, when benefits were calculated,
they did so in the following order: 1) Materials for adults, on average 35% 2) staff
interactions, on average 30% 3) materials for children, on average 20% and 4) library
technology, on average 15%. Of these, the most problematical was technology, because
comments that those surveyed made during their exchanges with interviewers often indicted
that they were placing technology benefits implicitly into other categories (e.g.
electronic newspaper and magazine databases were thought of as adult materials, not
||CBA has considerable value as a
communications tool. Not unexpectedly, the first persons to utilize the CBA findings were
the directors of the systems in which the economic analysis was accomplished. They
addressed the CBA findings to diverse audiences.
||The director of Birmingham Public states that
his system is using the CBA analysis because it A) "provides a good marketing
tool," B) "demonstrates library effectiveness," C) is useful "in
planning and decision making," and D),"helps place a dollar value on
||Using the CBA findings, the director of
Baltimore County developed a presentation for staff and the public entitled "The
Baltimore County Public Library: A Great Investment Any Way You Measure It." The
Baltimore County presentation concludes with these phrases: "The Bottom Line Formula:
Effectiveness + Cost Effectiveness = A Really Good Deal for the Public. That system also
melded the statistical findings of the CBA study into findings from a customer service
estimate the extent to which benefits streams were flowing from service investment
||The director of King County used his
institutions CBA findings to develop a presentation for library employees entitled
"Inside Story: Letting Staff Know How Great they Are." This program oriented
staff to the significance to their work in the system and helped stress the continuing
importance of taking in-service training to provide quality service.
||The director of St. Louis Public Library
provided programs to staff and board demonstrating how the system provided higher benefits
streams than a dollar-for-dollar payback. More significantly, SLPL has been using its CBA
results as an effective fund-raising tool in communicating with the communitys
conservative private-donor community.
The director of Phoenix
Public Library and Professor Elliott, the project consultant, made presentations of the
study's results to members of the Phoenix City Council, and, in a second presentation, to
the Library's Advisory Board, staff, state librarian, and mayor's aide. Copies of these
presentations can be found in Sections 2 and 4 of Libraries Are Valuable
It!, (Appendix A), which is submitted with this
report. Copies of the Phoeniz presentations are provided in Appendix D.
||Quality of library databases critical for
successful completion of survey. The most problematical element in this study was the
statistical character of library-user databases. No library that has not taken
considerable care in creating or maintaining its user database should undertake a CBA
study of the type described in this report. Databases have to be relatively accurate to
guarantee the appropriate rate of completion of telephone surveys. In several of the study
sites, missing telephone numbers in cardholder fields lowered the completion rates, and
the researchers had to ask that the participating library systems obtain missing data on
cardholders before the telephone surveys could be started.
||Population demographics can effect survey
outcome. Phoenix, known for its seasonable residents and diverse ethnicity, presented this
study's most serious challenge in implementing the survey design.
||In two independent samples of the Phoenix
database in surveys taken in two different seasons (April and September/October),
approximately 30 percent of the cardholders who were active at some time during the
previous 12 months had moved or changed phone numbers.
||The response rate to both surveys of general
users in Phoenix were about 18%. Data for the general user surveys were weighted in
proportion to the frequencies of cardholders by library branch to correct for any possible
||To obtain a sufficient number of educator
responses, a list of Phoenix public school teachers was matched against a sample of
||For additional information on the Phoenix
study, See Appendix D.
||The study team cautions against comparing the
benefit estimates across the five libraries studied. The benefit measures are designed
conservatively to provide a defensible lower bound to the annual benefits of each library,
not as unbiased estimates of each library's annual benefits. For this reason, comparisons
across libraries are fraught with problems. Nevertheless, some observations are apparent.
For example, average or median family disposable income is correlated with benefits per
household across cities: King County and Baltimore County households reported higher
benefits per household than the central cities of Birmingham, Phoenix, and St. Louis.
||Value of service/user matrix. It is possible
to measure the nature and extent of economic benefits received by each class of patron for
each type of service used. Classes of patrons can be identified by cardholder type and/or
by self-identification. No matter what are the means of differentiation, care has to be
taken because user types tend to overlap. An example of the calculation of benefits for
general users is illustrated in Appendix E (not available in
||Some CBA measures more useful than others. As
the CBA literature predicts for the whole range of activities, consumer-surplus and
willingness-to-pay benefits estimates of library services were more accurate than
willingness-to-accept measurements. The researchers also found that the cost-of-time
measure that had been considered at the beginning of the project was less useful than
other CBA study methods. This methodology, therefore, was not reported in the study
||CBA measured the benefits from both public and
private dollars. Return on taxpayer investment calculations, in addition to tax-dollar
benefits, can assess the benefits of private contributions, foundation grants, and grants
from different levels of government.
||The study produced a replicable methodology,
but one that is not without high expense. The biggest expense was the cost of surveys, and
this expense was based on the amount of detail that the research team was attempting to
capture. Based upon the experience in this project, the researchers recognize that they
need less detail to produce reliable results. The costs of future CBA studies therefore
can be lower than this one.
||The study reports the distribution of benefits
by category of user: general users, business users, and educators.
||The central city libraries place higher
priority on business users in implementing their missions than do the suburban library
systems, and this priority is reflected in the distribution of benefits. Business users
received 18-22% of all benefits in Birmingham, Phoenix, and St. Louis verses only 12% of
all benefits in Baltimore County and 6% in King County.
||Similar differences in mission emerged for
educational use. The central city libraries strive to be stronger partners to urban
schools than the suburban systems to be stronger partners to urban schools that the
suburban schools to their school systems. St. Louis educators received 14% of all
benefits: Phoenix educators, 11%; and Birmingham educators, about 10%. In the suburban
systems, Baltimore County Educators, about 9%.
||Thus, in each case, the benefits streams
reflected the relative emphasis and financial effort that each system made to support