A contract to operate Jackson County’s 15 libraries came under fire Thursday over charges that a private equity firm’s control has created excessive employee oversight and could stunt workers' already low wages.
“I’m not only embarrassed that we pay $10 an hour, I am ashamed,” said Cathy Shaw, a library district budget committee member.
Shaw and other library officials expressed unease over the contract with Library Systems and Services, formerly known as LSSI, which manages all 15 branches and came under control of Argosy Private Equity in 2015.
“LS&S seems to be an animal of a different stripe,” said Shaw, a former Ashland mayor who helped orchestrate voter approval of the library district in 2014. “Thirty cents of every dollar goes to the profits of the corporation that wants to get as much out of the county and taxpayers as possible.”
Shaw criticized LS&S’s new president as being more interested in generating profits for the equity firm than in providing library services. LS&S officials said that LSSI was also operated by a private equity firm. Shaw said she had a good working relationship with LSSI when the library district was formed in 2014.
Shaw conceded workers may have received similar pay under LSSI but said it’s time the library district insisted on a living wage so employees don’t have to fall back on government-run programs to pay for housing and food.
Budget committee member Edwin Budge said libraries often turn to companies such as LS&S when they get in trouble financially. Jackson County signed a contract with LSSI in 2007 after it shut down all 15 branches and then reopened them six months later.
Most well-run library systems wouldn’t consider a contract with LS&S, Budge said.
“There are 9,000 communities that say they wouldn’t touch LS&S with a 10-foot pole,” he said. “We need to move away from the LS&S contract and back to the way it is run in most jurisdictions in the country.”
The committee also recommended a $15.7 million 2016-17 budget, which has an ending fund balance of close to $5 million. The LS&S contract is for almost $5 million. Part of the budget calls for increased spending on maintenance for the branches, which includes painting, a roof and carpeting.
A five-year capital improvement budget is almost $1.2 million, with the biggest single expense being $250,000 for replacement of the heating and air-conditioning system at the Ashland branch. The library district wants to make sure the branches are in top condition when they are turned over to the district from the county in 2020.
The committee recommended keeping the district’s property tax rate at 52 cents per $1,000 of assessed property value. The committee’s recommendations will be sent to the library district board for adoption.
Shaw recommended using part of the district revenues to augment LS&S employee wages to ensure workers are getting a living wage. Shaw said that even if the library district managed to break free of LS&S, current employees of that company couldn't be hired back because of noncompeting agreements.
Library board members have looked at ways to get out of the five-year contract, but they said it would be difficult. “We looked at terminating it, but they (LS&S) turned it down,” said Maureen Swift, a board member.
She said the new library district was under pressure by Jackson County to sign a contract with LS&S, unaware at the time that it was a five-year contract instead of a year-to-year contract. The library district formed in 2014 but still operated under an arrangement with the county for about a year. To this day, the county provides some services, including routine maintenance of the buildings.
“The county was threatening a shutdown of the libraries if we didn’t sign the contract,” Swift said.
Board member Carol Doty said she is concerned that LS&S employees are being “shadowed” by upper management since the takeover by Argosy.
“We get this message that our employees can’t be trusted,” she said.
Cindy Delanty, regional support manager for LS&S, said her company has hired more administrative support to help employees.
“Where did you get the impression that we’re shadowing our employees?” she said.
Chris Ourand, LS&S marketing and communications director, said the company has developed a methodology to come up with effective management plans for the library systems under its operations.
“One person’s shadowing is another person’s training,” Ourand said.
He provided surveys that indicate a high-level of customer satisfaction with the library system in Jackson County. He noted that in 2007 the library system had 50,000 cardholders and today that number is 133,000.
LSSI and now LS&S has had an almost 10-year relationship with Jackson County libraries, Paul Colangelo, president and chief operations officer for LS&S, said in a phone interview.
He said the company was previously owned by another private equity firm, so there always has been a private equity firm in the mix. He said Argosy has improved services and streamlined operations so that employees can spend more time with customers.
Earlier this year, LS&S received “glowing” remarks from library district board members Swift and Monica Weyhe, Colangelo said
“I’m kind of puzzled as to why they want to get out of the contract,” he said. “We’re open to ongoing communications on how to expand what we’ve done.”
He declined to divulge the average wage paid at libraries in Jackson County, though he did say some part-time workers get minimum wage. In Oregon, the minimum wage is $9.25 an hour.
He said wages depend on the position and experience of the individual employee.
Colangelo also declined to disclose LS&S profit margins on its library operations.
The existing contract with the library district could be modified to give employees wage increases, if that’s what the library board wants to do, Colangelo said.
“It’s a simple contract modification,” he said. “We could simply say, 'Allocate 'X' dollars to wages.' ”