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THE PUBLIC LIBRARY FINANCE PROBLEM IN PERSPECTIVE 9

Finally, the distribution of income may be altered. The price of a good or service may prevent low income people from consuming as much as they might wish or even prevent them from consuming any of it. One way to increase the real income of the poor is to sell goods and services to them at below cost or at no cost. Examples are food stamps, medicaid, and education at all levels. Sale of particular goods and services at below cost is chosen in preference to grants in cash because society wishes to encourage the consumption of particular goods and services rather than to leave consumer choices up to the beneficiaries. In practice, all four of these reasons tend to be intermingled. Society wants to accomplish all of these goals simultaneously.

Public Goods Theory

Applied to Higher Education Finance

In higher education, lowering tuition below full cost in public and private colleges and universities of all types has been the response to the above-mentioned societal goals. The costs of higher education have been divided between students or their families and "society" as represented by government and philanthropy. Behind this allocation of costs is the idea that this division should be related to the benefits from higher education. But there are two versions of the benefit theory and these are not necessarily congruent: One is concerned with justice in the allocation of costs among different persons and groups. The assumption is made that the beneficiaries should pay and that the costs should be divided among them in proportion to total benefits received.

The other version of the theory is concerned with efficiency in allocation of resources. The assumption is made that when a good or service yields both individual and social benefits, its production should be increased beyond the amount that would be called for by individual demand alone. This idea applied to higher education means that tuition should be lowered below cost per student until the combined marginal benefits to both individuals and society are equal to the marginal cost. The deficit should be made up from taxes or gifts.

Application of the Efficiency of

Allocation of Resources Line of Reasoning

to Public Libraries

A strict application to economic principles of efficient allocation of resources would indicate that libraries should not be devoting much of their resources to supplying the informational needs of business or to leisure time activities, which are viewed in economic analysis as private goods and therefore not to be provided for out of public funds. On the other hand, educational functions and direct services to govern

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ment are viewed as providing public goods. However, no clearcut blueprint for fiscal support of public libraries can be derived from this sort of analysis. Difficult definitional problems arise, for example, in classifying reading as an educational, informational, or leisure time activity. It can be argued that virtually all reading conveys some benefit to society beyond those benefits accruing to the individual engaging in the reading activity. Hence, the appropriate allocation of fiscal responsibility as between private and public sectors cannot be given by any simplistic calculus of internal versus external effects. Also, even if we assume that the proportion of a particular type of public library activity that redounds to the benefit of the general public could be clearly identified, it is not at all clear what proportions of fiscal support for this activity should be forthcoming from Federal, state, and local levels of government.

A difficulty in the above type of allocation is given by the following example. If "x" percent of a school child's reading of a book borrowed from a public library results in a societal benefit in the form of an improved family and community member and a more enlightened citizen, what proportions of this enhancement accrue to society at the national, state, and local levels? In view of the mobility of our population, the school child who reads a book in a public library of one community may very well live most of his adult life in others. Hence, his contributions will be made in communities other than the one in which he received public library services. Although such an example probably provides a basis of argument for increased fiscal support for public libraries from state and Federal levels of government, the allocation difficulties are manifest.

Use of Public Goods Theory

in Developing Alternative Methods of Funding Public Libraries

Despite all of the aforementioned problems, public goods theory can assist in providing a framework for analyses and for casting up normative models against which practical options in public library financing may be measured. Although, as indicated earlier, it may not be very practical to construct a quantitative calculus for the toting up of benefits for individuals and groups, public funds analysis can help to structure ideas about the relationship between the functions and purposes of public library services and the methods of financing these services. However, considerations of justice and social values are clearly important as well as economic efficiency principles. For example, let us consider a problem of allocation of funds for public libraries among public library systems. Suppose that, since public library service is considered to be socially beneficial, financial support were to be

THE PUBLIC LIBRARY FINANCE PROBLEM IN PERSPECTIVE 11

allocated on the principle of maximization of library use. Most of the funds would be distributed to library systems that serve relatively well educated and affluent communities, and relatively little resources would be devoted to communities containing disadvantaged populations.

The question of appropriate fiscal support for public libraries cuts across problems of differential needs for library services, equalization of resources, and consideration of fiscal autonomy and control of libraries. Practical political constraints of Federal, state, and local governmental relationships, the structure of social values, and matters of economic equity and efficiency must all be given due consideration in choices among alternative options for fiscal support of public libraries.

Summary of Conclusions

The economist's "public goods theory" can be helpful in providing a general conceptual framework for the development and analysis of alternative methods for the financing of public libraries. However, because of the embryonic nature of the theory, it cannot at this time provide specific and detailed guidelines concerning the normative or proper allocation of fiscal support for a complicated public sector activity such as the public library. An optimal or equitable allocation of the costs of public library services involves matters of political philosophy and social values as well as factors of economic efficiency. Hence, any feasible solution to the problem of the appropriate method of fiscal support of the public library institution must be a broad-gauged one that takes into account the whole range of factors and environmental forces which impinge upon that institution. In this context, the following conclusions may be drawn.

1. In view of the multifaceted research, informational, and recreational services provided by public libraries and the widespread public and private benefits derived from these services, public goods theory would support a multilevel system of financing involving Federal, state, local, and private sources of revenue. 2. Although public goods theory provides reasonable guidance on the distinction between services that should be financed from public versus private funds, the theory provides relatively little counsel on the appropriate allocation of fiscal support among the Federal, state and local governmental hierarchy.

3. Because virtually every activity of public libraries may be viewed as having societal effects, even the delineation between services that produce private rather than public benefits cannot be precisely drawn.

4. The development of equitable and feasible solutions to the problem of public library financing properly must involve a general

12. ALTERNATIVES FOR FINANCING THE PUBLIC LIBRARY

consideration of economic principles and effective compromises among a large number of often conflicting political, social, and economic factors.

FOOTNOTES

1. Michael Harris, "The Purpose of the American Public Library: A Revisionist Interpretation of History," Library Journal, Vol. 98, No. 16, September 15, 1973, p. 2512.

2. Jesse H. Shera, "The Public Library in Perspective," The Metropolitan Library, edited by Ralph W. Conant and Kathleen Molz, The MIT Press, Cambridge, Massachusetts, 1972, p. 110.

3. Jesse H. Shera, "The Public Library in Perspective," The Metropolitan Library, edited by Ralph W. Conant and Kathleen Molz, The MIT Press, Cambridge, Massachusetts, 1972, p. 106.

CHAPTER 2

Role and Functions
Served by the Public Library:
Reaffirmation, Revision

and Projection

Introduction and Purpose

The preceding review and appraisal of the origins, growth, present status of the public libraries, and a theoretical basis for their support provides a developmental and economic perspective for formulating alternative funding systems. However, any substantial effort focussed on public service funding problems and mechanisms must include analysis and definition of role and functions. This is particularly true in the case of public libraries where, as previously indicated, questions about role and changing patterns of service are current.

What follows is the result of such an in-depth analysis and is presented in terms of the broad categories of functions and services public libraries should provide-now and in the future. The intent is not to document, assess or justify past failures and present service deficiencies, although judgments in these areas are reflected. The analysis is intended to answer two basic questions which, stated bluntly, are:

1. What is the role, today and in the future, for the public library in meeting defined needs of a modern society? and

2. What is the general form and nature of the functions and services which the public library should provide?

The answers to both of these questions are relevant to the design of alternative funding systems for providing adequate fiscal support. The public library, as it has evolved in the United States, must be seen as a multi-purpose agency. Its clientele varies from the most advanced of researchers to children engaging in their first reading experiences. To one person, the "public library" is the unique collection of the New York Public Library at Fifth Avenue and 42nd Street; to another, it is the miscellany of donated books in an upstairs room of the local village hall. Thus, consideration of public library financing

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