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A brief presented by CUPE Local 1594 to the Regina Public Library Board about the problems associated with privatizing cataloguing and processing functions

TABLE OF CONTENTS

INTRODUCTION

CONSULTANT’S STUDY OF IN-HOUSE COSTS

NEW IN-HOUSE ESTIMATES

PRIVATIZATION COSTS MORE

PRIVATIZATION MEANS LESS CONTROL

PRIVATIZATION HURTS THE COMMUNITY

ORGANIZATIONAL COSTS OF PRIVATIZATION

CONCLUSION


INTRODUCTION

Regina Public Library has been studying the feasibility of contracting out its cataloguing and processing functions for over one year. These deliberations have reached the stage when vendors are being approached for quotes on providing this service to the Library. As library workers and CUPE members we have a valuable perspective on the issue of privatizing library services. We appreciate this opportunity to express our views.

We would like to state at the outset that by opposing contracting out we are not supporting inefficiency or irresponsible spending. On the contrary, we take great pride in the services we provide the Regina public and have made substantial contributions over the years to maintaining and improving those services with fewer and fewer employees. We are here because we believe that the contracting out of the cataloguing and processing of library materials will not realize any substantial savings or quality improvements for Regina Public Library.

CONSULTANT’S STUDY OF IN-HOUSE COSTS

As you are aware, Regina Public Library hired an expert consultant from Ontario to help us determine the in-house costs of cataloguing and processing. The consultant produced at least three known versions of a final report. Each report manipulates the data to produce very different results.

As well, the two versions of the report provided to the Union are riddled with conflicting, incomplete, and selective information. In our view, the statistics and comparisons presented are misleading and give the false impression that in-house cataloguing and processing is more costly than it is. The reports also contain several mathematical errors that coincidentally inflate in-house costs.

For example, on page eight of the December 2000 version, the consultant concludes that 24.2% or 4,685 staff hours in Technical Support Services are spent processing and 27.5% or 6,375 hours of staff time are spent cataloguing. These figures should work in ratio to one another but this is not the case. If 24.2% of Technical Support Services staff time were equal to 4,685 hours, then 27.5% of staff time would be equal to 5,324 hours not 6,375 hours. If the percentages are correct then this error in calculations inflates in-house cataloguing costs by 1,051 hours or approximately $17,000.

In another example the consultant’s calculation of the percentage of RPL staff time devoted to cataloguing and processing is flawed and gives the false impression that RPL is inefficient in comparison to other libraries. He states on page three that technical services comprises 6.5% of overall staff time at RPL. On page seven he states that processing accounts for 3.0% of overall staff time and cataloguing for 3.5%. Next, on page eight he states that processing accounts for 24.2% of technical services time and cataloguing for 27.3% – a total of 51.7% of technical services time.

However, if cataloguing and processing account for 51.7% of technical services time and technical services accounts for 6.5% of RPL staff time, then cataloguing and processing cannot possibly account for more than 3.4% of overall staff time. At 3.4% of overall staff time, cataloguing and processing at RPL looks very efficient in comparison to figures for Barrie, Burlington and Gloucester Public Libraries.

We are also concerned about what we regard as a bias for privatization in the consultant’s reports. This is evident in the way that certain figures – however irrelevant to the real costs – are bolded in the report for emphasis.

The consultant has never provided the Union with an explanation for the errors. Fortunately, the Employer has acknowledged some of problems and, as a result, has corrected some of the math. Regardless, the consultant and his findings lose all credibility due to the errors and the lack of any explanation as to why they occurred. We have no confidence in his report of the data – given the severe problems and manipulations detected to date.

NEW IN-HOUSE ESTIMATES

The Employer has since produced some in-house figures that try to address some of the problems we raised. The most recent estimated unit costs are: Hardcovers - $2.62-$2.90; Paperbacks - $1.02-$1.37; AV Materials - $4.28. For obvious reasons, we are still uncomfortable with the use of the consultant’s report of the data as the basis for determining these costs.

Apart from that, we question some of the tasks that have been included in the calculations. For example, re-cataloguing costs of $.08 are added to the per-unit costs of books and videos. These costs should be excluded. Re-cataloguing tasks are performed primarily on materials that are being withdrawn from a location. Sometimes re-cataloguing involves a minor adjustment to a catalogue record. These adjustments would still be made in-house if we contracted out.

We also disagree with the Employer’s claim that labour costs for hardcovers are higher than for paperbacks because, although the tasks are different, the time required to complete both is very similar. This means that the employer’s estimate of $0.71 for in-house processing of hardcovers is too high.

The benefit costs, which the Employer has not factored into his in-house estimates, would have a minimal effect in terms of savings in the Library’s overall budget should the Board decide to contract out. This is because the Library is currently not paying benefits (except for CPP and E.I.) on a number of term positions established by the hiring freeze. If there are lay-offs and permanent employees move into these positions, their benefit costs will move with them and the library will be paying nearly the same benefit costs as it does now.

PRIVATIZATION COSTS MORE

Even if we accept the recent figures as “in the ballpark,” we still believe that contracting out will inevitably cost more. Comparisons to outsourcing libraries confirm this. For example, the Employer’s new figures for cataloguing and processing as a percentage of overall staff time reveal that we are already doing a better job than other libraries referred to in the consultant’s reports. The example below shows that we are spending less of our staff time on cataloguing and processing combined than Burlington Public Library, which already outsources.

Tech Services TaskRegina Burlington Gloucester
Processing 1.8% 1.6% 5.5%
Cataloguing 1.6% 2.6% 5.0%
C & P as % of Overall Staff time 3.4% 4.2% 10.5%

As well, in the consultant’s October 2000 version of his report he stated that the average or mean unit cost of cataloguing and processing for the Ontario libraries he has studied is $4.87. The consultant confirmed, when we asked, that the majority of libraries included in this average of $4.87 already outsource. Regina Public Library’s unit costs for hardcovers and paperbacks are well below the mean of $4.87 and AV materials are equal to it. Evidently the widespread outsourcing activity in Ontario public libraries is not paying off. Vendors are obviously making a killing.

These examples from other libraries suggest that outsourcing cataloguing and processing has cost them much more than the per unit estimates we have received from vendors. There a few reasons why this may be the case.

First, as the past few months have demonstrated, it is very difficult to accurately determine in-house costs. It is especially difficult to isolate the cataloguing and processing costs of specific materials. However, it makes sense that the vendor’s least expensive items will also be among the least expensive to catalogue and process in-house. This is the case with popular titles in hardcover. When you contract out your hardcover books (as the RPL intends), you hand over the most popular, mainstream materials, which are also the cheapest and easiest materials to catalogue in-house. This is because catalogue records for popular materials can be copied quickly and cheaply from a database. These are also among the lowest priced items offered by a vendor because the vendor achieves economies of scale by selling multiple copies to many clients.

Vendors charge much more for the less mainstream, less conventional, one-shot items. That’s why items such as government documents, music, microfiche, toys, art catalogues and multi-media will probably remain in-house. These items are also expensive to RPL and once the popular items are removed from the mix, our average per unit costs will increase.

Another important factor is that vendors’ estimates give a false impression of outsourcing costs because they do not factor in the new in-house costs associated with outsourcing. If the RPL contracts out cataloguing and processing, its employees will need to spend time at preparation, inventory control, problem management, liaison, follow-up and periodic re-tendering. Employees may have to add genre stickers or location stamps because the vendor charges too much for these user-friendly details, which patrons and staff have come to expect. Ignoring or underestimating these hidden in-house costs is a common mistake made by managers who often discover too late that outsourcing saves them less than they thought.

If we conservatively estimate that the combined annual in-house staff time associated with outsourcing is equal to one full-time equivalent at a cost of $40,000 for wages and benefits, the per unit cost for outsourcing 50,000 hardcovers would increase by $0.80 per book. In the case of RPL’s lowest estimate from S & B Books, this would adjust the per-unit cost from $2.35 to $3.15.

GST as well as the PST on the cataloguing (computer-related) services must also be paid on the service contract and must be considered in the per-unit cost. We estimate that after the GST rebate, the taxes will amount to approximately $0.10 an item and bring the per-unit cost from the cheapest vendor to $3.25.

Processing materials such a barcodes and security tape will probably be supplied by the library in an outsourcing arrangement. For example, the lowest estimate of $2.35 from S & B Books does not include these material costs. Barcodes are $.05 per book and security tape is $0.16 per book, adding another $0.21 to the per-unit cost.

When you factor in all of these costs (conveniently not mentioned in the consultant’s report), the per-unit cost of contracting out cataloguing and processing is increased by $1.11. This means that the lowest outsourcing estimate of $2.35 from S & B Books will in reality cost the RPL $3.46 per book. This figure is considerably higher than the current estimated in-house costs of $2.62 to $2.90 per hardcover book.

PRIVATIZATION MEANS LESS CONTROL

Apart from the financial factors, there are important issues with respect to control and accountability that should be considered in a decision about whether to privatize library functions.

In a contracting out arrangement, Regina Public Library has no control over the technology the vendor uses to process and catalogue. The Library cannot assume that a vendor will stay up to date with the latest technology. The fact is that vendors are business people intent on making a profit and are therefore motivated to run older technology as long as possible. Vendors can achieve better profit margins by lagging behind the technology curve. The vendor may have technology similar to RPL now but there are no guarantees that this will always be the case.

Once the Regina Public Library enters into a contract with a particular vendor it runs the risk of becoming too dependent on that vendor. The more heavily the Library relies on a vendor, the more difficult it will be to break away. When a contract is up, the RPL may be reluctant to switch to a better or cheaper vendor because the process of moving the contract is complicated and expensive. It’s even more difficult to reverse the decision and return to in-house cataloguing and processing. Vendors recognize this and it gives them an upper hand with their clients.

Vendors are not necessarily interested in providing a consistently high quality product. Quality, safety and reliability are usually the first casualties of contracted work. A vendor will submit the lowest bid possible in an effort get the RPL’s business. If it gets the contract the vendor will protect its profit margin by cutting corners wherever possible. Problems may occur that are not immediately evident. For example, incomplete, poor-quality records may enter the RPL’s database and go un-noticed until months later, when they frustrate a library patron.

If the Board decides to outsource it places public library functions in the hands of an out-of-province business whose short-term interests and long-term values are much different from those of Regina Public Library. After all, a vendor is in business for profit and not for the sake of our library and its patrons. A vendor’s goal is to make a profit, not cut Regina Public Library’s costs or improve the quality of our cataloguing and processing. By handing over these functions we give up some of our ability to improve and adapt to the changing needs of our patrons and control our own costs.

If cataloguing and processing is outsourced with the same requirements we had in-house, are we really accomplishing anything? The staff deployment study has failed to establish that outsourcing would save money. Even if outsourced cataloguing and processing were marginally cheaper, would it be better? Would it continue to improve, developing and enhancing opportunities for information access? Is there more to gain through technology besides lowering costs? At present the Regina Public Library’s Cataloguing and Processing Unit has the ability to develop unique solutions for our local patrons. With outsourcing we forgo these opportunities.

We expect that Management will argue that RPL stands to achieve better discounts on its acquisitions if it outsources. The Library Director also has stated that we must outsource cataloguing and processing in order to take advantage of automatic release plans and best seller leasing. This is complete nonsense. The RPL already receives discounts of up to 42% on the majority of its acquisitions and can access automatic release and bestseller leasing plans without outsourcing cataloguing and processing.

PRIVATIZATION HURTS THE COMMUNITY

A decision to privatize would be a significant departure for the Library and may alienate the public and local business. To date, the Regina Public Library has been a good corporate citizen in this community. For example, the RPL continues to purchase most of its paperbacks from a local bookseller, the Book and Brier Patch. The Regina Public Library also purchases $12,000 in processing supplies from Supreme Office Products annually. Local businesses like Supreme will suffer if the Library contracts out cataloguing and processing to an out-of-province business. Will the Book and Brier Patch be the next casualty?

A decision to outsource will negatively affect our community because Regina tax dollars currently spent here will be redirected to Ontario or some other province (there are no vendors in Saskatchewan). Apart from evaluating the financial pros and cons of outsourcing, the Library Board must decide between keeping public sector jobs in our community and creating low-paid private sector jobs elsewhere.

ORGANIZATIONAL COSTS OF PRIVATIZATION

Library Management will also tell you that contracting out is the best way to save its workers from Repetitive Strain Injury. We regard this ‘solution’ to RSI amoral because it simply shifts the responsibility and expense for these injuries to a contractor. This reasoning is also insincere – while Library Management argues outsourcing as a solution for reducing RSIs, it authorizes the installation at some branch locations of security systems, which are a major cause of RSIs.

A decision to contract out will damage the workplace in other ways. For example, when Regina Public Library eliminated its Audio Visual Services Unit, nearly forty employees were directly affected by the closure. That’s one of every five workers. Those of you who were Library Board members at the time will recall that the closure severely traumatized the workplace causing poor morale, communication breakdowns, high staff turnover, and training and service delivery problems for well over a year. The staff displacement associated with contracting out cataloguing and processing will have a similar effect.

The Library Director likes to suggest that cataloguing and processing employees will move into the positions currently designated as term positions because of the hiring freeze. This assumption is incorrect. Permanent employees at Regina Public Library who are laid off have the right to bump any employee they are senior to, provided they are qualified to do the work.

The majority of cataloguing and processing employees have many years of seniority: one employee is in the top ten of the seniority list, one is eleventh, one is fifteenth, and six are among the forty most senior employees at Regina Public Library. They will not move into the positions currently filled as terms because these positions are mostly lower paid and part-time. Cataloguing and processing employees, if laid off, could trigger bumping chains greater than those created by the AV lay-offs. For example, the lay-off of five employees could displace more than 30 employees once bumping is complete.

For several years, the out-of-scope manager of the Cataloguing and Processing Unit has treated her employees as if outsourcing was a fait accompli. Little effort has been made to examine and improve job design or workflow, or address periodic work shortages. Software purchased years ago sits idle because the Technical Support Services manager will not initiate the training necessary to get new services up and running. The unit has the same flexibility as other library units to adjust part-time hours to address fluctuating work levels, yet this approach is never taken. It is as if Management wants the Cataloguing and Processing Unit to look as expensive as possible while it is undertaking its comparisons with contractors.

Even so, through attrition the Cataloguing and Processing Unit has become progressively more cost effective. In 2001, fewer employees than was possible a few years ago catalogue and process the Library’s acquisitions. As early as 2002, three of the unit’s employees will be eligible for early retirement, creating further opportunities to reorganize cataloguing and processing without demoralizing and disrupting the entire RPL staff complement. With strong leadership and support, as well as input from employees and CUPE, this unit could also implement other strategies for achieving greater efficiencies.

CONCLUSION

In closing, we would like to thank you for listening to our views on an issue that significantly affects our members. We believe we have made a solid case for keeping cataloguing and processing where it belongs – in our Library and in our community. We hope that the Regina Public Library Board will agree.