Exercise: Belt-Tightening--More Budget Adjustments Answer the following questions using the Health Information Department Budget furnished below, specifically the data included in Table 83: 1. What would be the dollar impact if the 5 percent increase planned for January 1 were reduced to 3.5 percent and postponed until April 1? 2. As an alternate cost-saving strategy, determine the annual savings if all hourly staff were reduced from 40 to 37.5 hours as their standard workweek. Consider the top three staffdirector, compliance specialist, and registries coordinatoras salaried and thus unaffected by the workweek change. 3. Determine the total dollar impact if both of the foregoing strategies were implemented together. Remember that the pay increase affects everyone but that the 37.5-hour week affects just hourly staff. Sample Health Information Department Budget This budget is based on the following premises: 1. Fiscal year: July 1 through June 30 2. Workweek: 40 hours/week; 2,080 hours/year per FTE 3. Cost of living increase: 5 percent of current base rate (see Table 83 for detailed cost of living calculations by position title) 4. Effective date of cost of living increase: January 1 5. Overtime rate: time and a half, based on current base for employee 6. Holiday pay: regular base rate (for employees who work on a scheduled holiday: double time, calculated on current base for each employee) 7. Temporary agency rate: average rate is $13/hr. for clerical worker, no fringe benefits given 8. Sick pay: calculated on each employees current base 9. Fringe benefits: 29 percent of total wages and salaries for the department; 29 percent for each individual employee 10. Wage and salary calculations are displayed to show these details: Factor Example Current annual base $58,000 JulyDecember of current calendar yeartotal earnings 29,000 January 1 cost of living increase (5%) 2,900 New annual base effective January 1 60,900 JanuaryJune of coming calendar yeartotal earnings 30,450 Total needed for full 12-month period of the fiscal year 29,000 +30,450 $59,450 Health Information Department Budget Personnel Costs Object Code 01 Wages and Salaries $461,724.00 02 Fringe Benefits 133,900.00 03 Vacation Relief Coverage 2,000.00 04 Sign- on Bonuses 10,000,00 Subtotal A $607,624.00