The Library Board of Trustees is responding to the following letter from county staff to correct areas of misinformation. Text from the orignial county letter appear in italics.

Respectfully,
Keith Grebe, Chair
On behalf of the Library Board of Trustees

Library District - What's Best for the People of Jefferson County?
Prepared by Jim Moore, Jefferson County administrator, and Ellen Wakeman, Jefferson County acting attorney

The Jefferson County Board of Commissioner's meeting on June 17 concerning the library system's request for the formation of a library district is quickly approaching. We thought it would be helpful to the Jefferson County citizens, taxpayers and library users to hear the concerns of the county regarding the library's proposed separation from the county government and the financial and service implications. The concerns focus primarily on cost and disruption.

Library Response:
The request by the Library Board of Trustees to form a library district in Jefferson County focuses primarily on:

- Fulfilling the Trustees' fiduciary and stewardship responsibilities,

- Changing the way Jefferson County Public Library operates to ensure its financial viability, and

- Safeguarding the Library's future for Jefferson County residents.

Unlike other county/city departments, Colorado State Statute provides for the formation of separate library districts.

County residents continue to use their libraries in ever-increasing numbers and there is every reason to assume this trend will continue.

In 2007, residents:

- Checked out nearly 6 million items - an 86.7 percent increase since 2000.

- Visited our libraries more than 2.8 million times - a 40 percent increase since 2000.

- Used our Online Library more than 3 million times - a 354 percent increase since 2000.

- Attended more than 118,000 free programs - an 87 percent increase since 2000.

As a consequence of the significant increase in use of our services, Jefferson County Public Library is in danger of exhausting its available financial resources (see charts 1a and 1b below).

From the Trustees' perspective, the decision to form a library district must be based on:

- Who is in the better position to manage both the significant increases in use and the changing needs for library services that must and will occur, and

- What is the better organizational model to facilitate these changes?

Comparison of County Library Systems and Library Districts in Colorado

· 51 of the 114 Colorado public libraries are districts, including some of the largest libraries, such as Arapahoe, Douglas, Fort Collins, Pueblo, Weld and Pikes Peak located in El Paso County. These library districts are some of the most effective and efficiently managed libraries in the state. There is every reason to assume that a library district will succeed in Jefferson County, as well.

Jefferson County Public Library's Long-range Financial Forecast:

As charts 1a and 1b illustrate (located in the photo box to the right), Jefferson County Public Library's current business models are not sustainable in light of residents' increasing use of its service.

Change is not an option; it is a requirement.

Jefferson County Public Library's long-range financial forecast if it remains a county library system, the levy is reduced to 3 mills*; auto ownership tax revenue is eliminated†, and county overhead (administrative) service charges are assessed‡:

* The county has discussed reducing the Library levy to 3 mills.

† As a component unit of Jefferson County government, auto ownership tax revenue is discretionary and based on the approval of the Board of County Commissioners (BCC).

‡ The county's charges for all overhead (administrative) services, including payroll, accounting, human resources, etc. continue to exceed charges proposed by outside vendors for similar services. The Library continues to be assessed for services it does not need or use, such as Information Technology (IT). With approximately 650 public and employee computers and a seven-day-per-week operating schedule, the Library maintains its own IT staff.

As charts 2a and 2b illustrate (located in the photo box to the right), the county Library will exhaust its financial resources by 2011 if these options are implemented.

Long-Range Financial Forecast as a library district:

As charts 3a and 3b illustrate (located in photo box to the right), formation of a district enables Jefferson County Public Library to restructure its business models to reduce its expenses, stabilize its revenues and operate within its voter-approved, maximum levy of 3.5 mills. The charts assume the levy is 3.425 mills.

The Library Board of Trustees has an obligation to ensure the long-term financial viability of the Library.

Based on the financial analyses presented above, it is clear that a library district is the better organizational model to accomplish these goals.

More Cost to Employees

The library has indicated a projected annual savings of $540,000 if the library were to become a separate library district. However, approximately $340,000 of the estimated savings are achieved through operational changes that could be implemented just as readily while as a part of the county, and are not savings inherent to the formation of a district. Much of the other cost-saving measures come from cuts in salary and benefits to employees.

Library Response:

Only recently has the county stated that it would allow the Library to purchase overhead (administrative) services from outside vendors and/or make the other changes that would lead to the considerable cost savings achieved as a district. Prior to this, it was not discussed as an option.

The Library has never proposed nor does it intend to cut employees' salaries if a district is formed.

As indicated in charts 1a and 1b, the existing models for operating the Library are not sustainable and must change. This may necessitate changes in the level of employee contributions for health insurance in the future. Changes in employee contributions for the county also may occur.

More Cost to the Jefferson County Taxpayer

If the library were to leave the county system and form a separate district, approximately $510,000 in administrative expense and infrastructure costs will have to be redistributed to all other county elected offices and departments. These include the Sheriff's Office, District Attorney, Human Services, Road & Bridge, Planning & Zoning, etc. The consequences would be that these departments may then have to cut their services to make up for that added cost, or request additional funding to meet the current service demands.

At first blush, one naturally assumes that by having fewer employees, those administrative costs should go down. They will, but not by the magnitude that would be required to make the move cost neutral. It's simply a matter of economies of scale. We see this phenomenon in other areas of county government. For example, it's marginally cheaper to run the jail when housing fewer prisoners than capacity, but the reductions are not in direct correlation to the number of inmates. Keeping the jail staffed and the lights on is necessary even if the inmate population fluctuates. A similar problem would exist if the library leaves county government with regard to support services like Information Technology, Payroll, Human Resources, etc.; the county will continue to own, operate and maintain a large financial system capable of providing those services to the library even if the library is no longer using those services. Therefore, the taxpayers will be asked to pay again for some of the same services.

Library Response:

The Library represents approximately 10 percent of county operations. The analysis by Jefferson County staff assumes that the county can never reorganize its operations or restructure its costs to adjust to changes in the organization.

This letter addresses the $510,000 in ongoing charges that the county believes it cannot eliminate if a library district is formed. It does not address the ongoing overhead (administrative) charges to the Library for services that it does not need or use. For example, as mentioned earlier, with approximately 650 public and employee computers and a seven-day-per-week operating schedule, the Library maintains its own, separate Information Technology (IT) Department. Should the Library remain a component unit of Jefferson County government taxpayers will continue to be double taxed for IT services, which in 2008 totals $111,944.

It is common for organizations to restructure costs when departments and functions are eliminated.

The Library recognizes that it may take time for county government to adjust its operations. That is why the Library stands by its offer to provide financial compensation to the county during a transition period.

Library Funds Possibly not Used for Library in Current IGA

In the event of a formation of a separate district, the library would be required to enter into a contract, or Intergovernmental Agreement (IGA), with the City of Westminster. An IGA is a contract between governmental entities that lays out the foundation and details of an agreement between two or more entities. Since Westminster straddles the two counties of Adams and Jefferson and is the only municipality in Jefferson County that offers its own library service, the library is required to enter into an IGA to provide services to that municipality once the district is formed. There are several points within the draft IGA that are of concern to the county in making sure that the interest of the taxpayers of Jefferson County are protected:

• The draft IGA states that the separate Library District will be required to make annual revenue sharing payments of $500,000 to Westminster that may be used only for library purposes.

• • However, it does not require that those funds be used only for library services in Jefferson County. They could instead go to Westminster libraries in Adams County. Nor does it require that Westminster use the $500,000 in addition to existing funds already spent by the city on library services.
• Westminster's documents associated with the IGA reflect Westminster's intent to use the $500,000 payment to offset its current costs to provide municipal library services rather than to provide additional library services.
• The IGA will continue in perpetuity as long as there is a Library District, even if Westminster no longer provides library service in Jefferson County, and can only be cancelled by Westminster.

Library Response:

The City of Westminster operates a fine municipal library. According to the city, approximately 22,000 Jefferson County residents who live outside the Westminster city limits use its libraries and would benefit from the service enhancements that the IGA provides.

If the City of Westminster exercises its legal option to exclude from the library district (allowable by state statute only at the time of district formation), the library district would lose approximately $2 million annually in property tax revenue paid by Westminster residents who live in Jefferson County.

The IGA provides for an annual review of library service enhancement to ensure revenues shared by the library district are only used for library purposes, as required by state statute.

Under the terms of the IGA, the library district is only obligated to share revenue from its fund to enhance library services provided by Westminster. If Westminster eliminates library service, revenue sharing is eliminated.

The analysis of the IGA by county staff represents a misunderstanding of its terms, conditions and intent. The parties who negotiated the IGA will review its terms at the June 17 library district formation public hearing.

District Would Hurt Jeffco's Ability to Respond to Emergencies or Crises

Proponents for the formation of a Library District worry that the library's funds could be diverted by the county for non-library purposes if it remains part of the county. We understand the library's concern from that limited perspective. However, we are also of the opinion that maintaining that funding flexibility is in the best overall interests of all of Jefferson County's citizens. For example, in the unfortunate event of a man-made or natural disaster, the county may need temporarily to divert funds from wherever necessary to address more pressing public safety needs.

Library Response:

The proposal to divert monies from the Library fund is unlawful and unnecessary.

According to the state constitution, every government agency must retain an emergency reserve fund equal to 3 percent of its operating budget. With an operating budget of more than $167 million, the county general fund already has an emergency reserve of more than $5 million that it may use in the unfortunate event of a man-made or natural disaster, or other pressing public safety needs.

According to state statute, disbursements from the Library fund may only be made by the Library Board of Trustees and monies may only be used for library purposes.

It is important to note that in the event of a natural or man-made disaster, the Library Board of Trustees would support the county.

Already Operating Successfully

The Jefferson County Library System has operated very successfully as a relatively independent unit of Jefferson County government for the past 56 years. The county library system currently is governed by a Library Board of Trustees, and under this arrangement has excelled to the point where it is one of the best in the nation. With more than 2.7 million visitors last year to the 10 libraries, bookmobile and traveling children's library, it has won nearly 20 awards for service and outstanding achievement.

Library Response:

The decision to form a district addresses Jefferson County Public Library's future and its long-term financial viability.

As charts 1a and 1b indicate, as more and more people use library services, the Library's costs, but not revenues, increase and the Library will exhaust its available financial resources. For this reason, Jefferson County Public Library must change the way it operates.

As charts 3a and 3b indicate, operating as a library district enables the Library to continue to serve its patrons and operate within its means for the foreseeable future.

Forming a library district does not diminish past participation by the county in the Library's success; it enhances it by ensuring the long-term viability of this well-used agency.

There are currently 51 library districts successfully operating in Colorado, and there is no reason to assume that a library district in Jefferson County will not succeed, as well.

Library Autonomy - a Liability to Jefferson County

Proponents of the library district believe that separation from the county government will free it from the uncertainty of the general county government funding and allow it to save money and operate more efficiently. In reality, being part of the larger county government has been a financial boon to the library, enabling it to build libraries through contributions from the county's general fund, which were above and beyond the library mill levy that is dedicated to library services.

Two examples are the $1.2 million in county general fund revenues that were given by the Board of County Commissioners in 1995 to help finance the remodel of the former Golden Recreation Center into the Golden Library; and more recently, in 2004, the $1 million contribution in general county funds by the County Commissioners that enabled the building of a new library in Olde Town Arvada.

Further, by statute, the Board of Trustees of the Jefferson County Public Library enjoys unbridled authority to manage and control the library, and has exclusive control over spending of all library funds. Nothing prohibits the Board of Trustees of the County Library from making any improvements to libraries or library services that it sees fit. A library district would have no additional operational authority or flexibility.

Library Response:

The Library appreciates the past support for the capital projects described above.

Colorado law does not prohibit the county from entering into a partnership with the library district to facilitate library capital projects in the future should the county choose to do so. However, the savings in district operating costs and the assurance of a reliable and predictable revenue stream achieved as a library district may make it unnecessary for the county to do so.

Under current conditions (legal and practical), the Library does not have "unbridled authority" to manage and control the Library. As a county library system, the county exercises significant control over the Library's revenues and expenditures. Examples of this control include:

- The level and cost of the overhead (administrative) services the county provides to the library,

- Whether or not auto ownership tax revenue is allocated to the Library, and

- Setting the Library's levy so that the total for all agencies does not exceed the county's TABOR cap. Reduction in the levies of county departments does not have to be distributed uniformly.

Conclusion

In closing, while we understand the library's desire for independence and autonomy, creating another government to provide library services, when the services already provided are second to none, just doesn't make sense. And while we appreciate the position of our friends and colleagues at the library, we believe they are wrong in their assertion that services will be enhanced and overall costs to taxpayers reduced if a district is formed. In fact, we believe just the opposite is true. But perhaps the most compelling reason for letting the library remain in its current governance structure is just this simple, "if it ain't broke, don't fix it." We are proud of the library services provided to our citizens. Let's not mess with success.

Library Response:

Jefferson County Public Library is a successful agency thanks in part to the support it has received in the past from the county; however, the request to form a library district is about the Library's future.

As charts 1a and 1b illustrate, the existing model of a county library system is broken, because in the very near future, the Library will no longer be able to sustain vital services to community.

The county justifiably views its overhead (administrative) services as second to none. Yet, the Library does not need, want, or use some of these services; regardless, the Library continues to be charged.

The Library Trustees have a fiduciary and stewardship responsibility to represent Jefferson County residents and to effectuate their will for high-quality library service that can be sustained.

On Dec. 19, 2006, the BCC authorized formation of a steering committee comprised of county and library staff to research formation of a library district in Jefferson County. The Committee's final report concluded that formation of a library district would result in a cost savings.

The Trustees and Library staff spent three years analyzing the operations of other Colorado library districts and have determined the following:

- The library district model provides a better mechanism for effective planning, decision-making and financial control and,

- The Trustees and Library staff (who possess significant knowledge of library operations) are best suited to be the architects of the Library's necessary transition.

If you would like to make a comment about any of these points, please join us at the Library District Public Hearing on June 17 at 5:30 p.m. in Hearing Room One at the Jefferson County Administration and Courts Facility. Comments also may be made to the BCC through email at commish@jeffco.us or mailed to 100 Jefferson Parkway, Golden, CO 80401.

Respectfully,

Jim Moore, Jefferson County Administrator,

Ellen Wakeman, Jefferson County Acting Attorney