Institutional Arrangements for Public Library Funding and Spending

Abstract

Wide variation in institutional structure and funding patterns in public libraries make this government function useful for exploring the effect of these differences on expenditures. Based on literature related to willingness to pay, special districts, and fiscal illusion, we hypothesize that libraries with taxing authority and more revenues from nonlocal sources will have higher levels of spending. We use data from an Annual Public Library Survey, and U.S. Census data, in ordinary least squares (OLS) regressions for 2007 and 2010. We find that taxing authority leads to increased spending, as expected. However, the results of funding sources are contrary to expectations; relative reliance on nonlocal sources is generally associated with lower levels of spending. This may be due to “crowding-out” of local sources, and there may also be some effect from reduced state aid following the Great Recession.