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Carnegie Library system audit marked with asteriks
Predicts less red ink if funding is realized
Wednesday, March 31, 2010

The Carnegie Library of Pittsburgh's books aren't as soaked in red ink as they were last year, according to an independent report released Tuesday. But library leaders promptly offered a slew of footnotes suggesting that they can't permanently shelve last year's proposed branch reductions unless long-term funding solutions are found.

The report by accounting firm ParenteBeard found no basis for occasional accusations of bloat in the library administration, indicating that expenses were similar to comparable systems and salaries are in line. But it tweaked the library system's financial assumptions and worked in new developments, trimming a projected 2014 deficit of $4.39 million to just $300,074 -- a potentially important change in the landscape in which officials seek a long-term financial fix.

"Things change every year," said library Director Barbara Mistick. "But a number of the things that I think are in this audit, we don't control, and have no guarantee" backing up rosier projections.

"We definitely are still in need of a sustainable long-term solution."

The accountants -- hired by the Allegheny Regional Asset District with Mayor Luke Ravenstahl's backing -- didn't dispute the need for more money.

They found that the libraries could finish this year with a $235,071 surplus, but face six-figure deficits the next four years. That's better than the library administration's past projections of deficits of $1.46 million next year, rising by around $1 million each year thereafter.

Mr. Ravenstahl issued a statement saying he's "pleased that the audit was conducted and that a clear and objective financial picture has been presented to the public." He pledged to continue working with library administrators to find more money for the system.

The report offers several reasons for the less dire outlook, prominent among them a state law that's expected to steer $750,000 in revenue from Rivers Casino table games to the libraries. It also predicts a boost in funding from the 1 percent RAD sales tax.

Ms. Mistick said she has received no promise of a higher RAD allocation, and her board isn't sure whether it can count on table games as a stable source.

The report also assumes that the libraries will continue to get a waiver from state rules that would normally demand 65 hours of weekly operation at the main branch in Oakland. By operating that branch for 60 hours a week last year, the system saved $382,890, according to the report.

Ms. Mistick said the state waiver is in place until the end of this year, but might not be extended. The accountants calculated that if the waiver weren't renewed, deficits basically would double.

State Rep. Dan Frankel, D-Squirrel Hill, a member of the library's board, said there's no cause for complacency.

"The governor's budget incorporated a slight reduction in state [library] funding, which is not a good thing," he said. "There's no way to just say the future is secure."

"I'd like funding that's a little more stable, something that might not have the ebb and flow and flux of table-game funding," said city Councilman Bruce Kraus, another library board member. He's a member of a panel on future funding for libraries that first meets April 16 and is expected to report back by year's end.

Library administration last year proposed closing the Beechview, Hazelwood, Lawrenceville and West End branches, merging the Carrick and Knoxville locations, and moving the Mount Washington operation. A city promise of $600,000, which Ms. Mistick said hasn't been received yet, plus state pledges to try to help, allowed the system to postpone the changes for one year.

The RAD board commissioned the report because it is the system's biggest benefactor, providing $17.6 million this year toward the libraries' $24.2 million budget, and sought to evaluate the need for the proposed branch closings. Now that they are on hold, the board doesn't have to take any action related to the report.

The report reviewed salaries and benefits at the system, notably including Ms. Mistick's package of $190,000 in salary, insurance, a retirement plan, a $700-a-month car allowance, and Duquesne Club membership fees. The accountants found that was consistent with the past director's compensation, and with the earnings of other leaders of area tax-exempt institutions, and was "in the range, albeit the high end of the range" for leaders of similarly sized library systems.

ParenteBeard found that overall spending, and other executive salaries, were in line with norms. It also noted $3 million in cost savings from 2007 through 2009.

Rich Lord: rlord@post-gazette.com or 412-263-1542
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First published on March 31, 2010 at 12:00 am
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