Jones Library may tap into endowment to avoid layoffs

  • Jones Library trustees are recommending the library tap into its endowment to pay for an increased budget as a result of rising health care costs. Gazette File photo

Staff Writer
Wednesday, January 24, 2018

AMHERST — Rising health care costs for employees is prompting Jones Library trustees to recommend using more of the Jones Inc. endowment, and to anticipate an increase in fundraising, to avoid staff layoffs and reduced services next fiscal year.

But in supporting the $2.68 million budget for fiscal 2019 developed by Library Director Sharon Sharry, which is $107,054, or 4.2 percent higher than the current year’s $2.58 million budget, trustees are recognizing that they may need to tap more of the endowment at a later time in what they are calling a “special assessment.”

At Tuesday’s meeting, trustee Christopher Hoffmann said the unexpected, one-time circumstance, is caused by employee benefits rising from $327,289 to $403,385, a 23.3 percent, or $76,096, jump, primarily driven by rising insurance premiums.

Like town and school employees, library workers have seen an increase in their premiums as the town tries to keep the Amherst-Pelham Health Claims Trust Fund solvent.

Hoffmann said the special assessment from the endowment should be seen as the worst-case scenario that will only be needed if fundraising falls short and personnel cuts are looming.

“Let’s do the realistic thing and do it once,” Hoffmann said.

Earlier in the budget season, trustees agreed to increase the so-called “draw rate” of the endowment, which stood at $8.13 million as of Dec. 31, from 4 percent to 5 percent. This would allow the library to appropriate $371,862 from the endowment toward the budget — $71,751 more than the $300,111 from the endowment used in the current year’s budget.

Trustees President Austin Sarat said while trustees have been aiming to keep the draw rate at 4 percent or below, as a way to preserve the endowment forever, it’s worth making an exception in a year when the stock market is performing well, and aligns with what other institutions, such as Amherst College, set as policies for using their endowments.

Town officials previously agreed to increase tax support to the library by 3.5 percent, or $67,412, from $1.93 million to $1.99 million, because of the health insurance increases.

Sharry said using a special assessment is akin to kicking the can down the road. She suggested trustees set the draw rate even higher, up to 5.4 percent. “I feel we’re going to need more money eventually,” Sharry said, adding that she’s not confident the library can meet the hoped-for $36,088 jump in gifts and donations, from $116,675 to $152,763.

Sarat, though, said it is a trustees policy decision to not go above the 5 percent draw rate and that he preferred to take a wait-and-see approach as to whether a special assessment would be needed.

Trustees likely won’t know until midway through the fiscal 2019 budget, around December, whether it will need to spend more money from the endowment.

Trustee Alex Lefebvre said the public should understand that money the Jones gets through events, fundraising and donations goes to books, materials and programs, not salaries or benefits.

Scott Merzbach can be reached at smerzbach@gazettenet.com.