Northville, a medium-sized city in the mid western part of the United States, has experienced a significant change in the composition of its municipal work force of 1,800 employees. Approximately thirty-five percent of the city employees are now female. In a recent survey of city employees, over forty percent have said that "affordable day care for children" was important to them. Meanwhile Director of the Office of Personnel Mary Lux has become increasingly convinced that the lack of affordable day care is one of the main reasons for absenteeism and lateness among city employees. Mayor Petula Spark, some of the members of the city council, and the leader of the major city employees' union, Denardo Legato, all agree that something should be done. The question they are trying to answer is, what should it be?

Mayor Spark is in favor of doing something, in principle, but she is not in favor of incurring a major new expense, given the many legitimate claims on the city's already strained budget. She has told Legato, who is negotiating the day care program on behalf of the city employees, "We’ll give you space and utilities for a year at no cost. It is up to you to come up with a suitable day care center that conforms to state and federal law." Several regulatory mandates and non-discrimination laws fall into this category. The only requirements specific to day care centers are that (a) they be licensed and inspected once a year, (b) all new day care workers take part in a three day state-certified training program and (c) the child/day care giver ratio be no greater than 8 to 1. The annual inspection fee is $500. The total cost of the three-day training program is estimated to be $200 per employee.

Mary Lux is responsible for planning the details of the day care program for the children of city employees. With Mr. Legato's approval, Ms. Lux has negotiated an arrangement with a local non-profit agency that is already providing day care services in the Northville metropolitan area.

Tiny Tots, Inc. has three locations; the contract with the City of Northville would be a fourth center. The Director of Tiny Tots, Klara Nemet, is enthusiastic about the prospects of a new center specifically for city employees. While discussing the proposed arrangements with Ms. Lux, Ms. Nemet said, "We will not need any additional administrative staff, since Ms. Perfekt, my administrative secretary, and I could certainly handle the additional administrative work."

Ms. Perfekt earns $2,300 a month. Ms. Nemet's salary is $3,400 a month. Tiny Tots, Inc.

also must pay 7.15 percent of their salaries in the form of a social security contribution, 8

percent for unemployment and disability benefits; 6 percent of salaries goes to a pension fund, and $60 per month for health benefits is paid for each of them. These fringe benefits apply to all employees of Tiny Tots, Inc.

The additional details of the contract are as follows:

The day care center will be open 20 days every month. Parents pay a monthly fee based on an 8-hour day (9:00 a.m. to 5:00 p.m.).

Fees do not vary if less than a full day or less than a month of day care is used by the parents.

Based on projected demand, it is expected that the day care center will open in January 2019 with 130 children. Ms. Nemet has been successful in negotiating a ratio of 6 children to 1 day care worker for the first year of operation.

Day care workers earn $8.50 per hour. They work from 9 to 5 and get paid for eight hours.

Children get a snack and lunch. The food cost is $3.50 per child per day. The cost of supplies is $2.00 per child per day. The City of Northville has purchased certain equipment (such as cots and desks) for the first 130 children. However, these costs are estimated to increase by $50 per child as the enrollment at the day care center goes up. For the first four months, it is expected that the number of children will grow by 10 percent, beginning in February 2019.

Beginning June 2019, the monthly growth is expected to be 5 percent. (5% of mays total)

Parents pay $250 per month per child.

In the first year, Northville is "donating" space and utilities. Ms. Lux says that this city contribution is worth $2,000 a month. (everything needs to be showed in budget)

Mr. Legato says that the union will contribute to the cost of the city's new day care center by providing $1.00 per child per day for the children of union members. It is estimated that 70 percent of the children will be children of union members.

The state has a subsidized day care start-up grant for the first year of operation. This grant is $90,000 a year.

DAY CARE COMPUTER EXERCISE, Part I

You are a budget analyst in the Budget Office of the City of Northville. Mayor Spark just

asked you to "run some numbers" so that she can take a look at the arrangement that was just negotiated between Ms. Lux, Mr. Legato, and Ms. Nemet. You should prepare the budget in a spreadsheet. Since Mayor Spark may ask you some questions about the day care budget, you should prepare the budget using parameters and as many formulas as possible. A well-designed (and flexible) spreadsheet will simplify your task later.

Complete the following tasks and a brief memo describing your findings (you can do both parts of this assignment in a single memo if you would like): part 1 and part 2 in one memo.

1) Prepare the baseline 2019 monthly budget for the day care. (You can assume a calendar year.)  

(monthly budget)

1 column items, second jan, feb, march ..... grand total for each individual line items

total cost

total revenues

surplus deficit

total surplus

Determine the total surplus and deficit for each month and provide an annual total (for all expenditures and revenues).

(3rd spreadsheet)

2) Suppose the child/staff ratio were changed to the maximum allowed by law.(8 kids one teacher) On another sheet (within the same excel workbook), create a monthly budget that would allow for this change. What impact would this have on the budget?

deficit shrink? surplus?

3) On another sheet (within the same excel workbook), show what would happen to the deficit if the enrollment increased by only 5 percent per month for all months? isolation of staff ratio

8:1 ... next to each other

4) What other changes can be made to balance the budget? What are the advantages and

disadvantages of these changes? On a final sheet (within the same excel workbook), produce a balanced budget and defend your choice of changes. freewill you decide how would you balance books, get to where we are breaking even

8:1 ratio, slow growth, hike union contribution

DAY CARE COMPUTER EXERCISE, Part II

It is now September of 2019, and the day care center has been successfully operating for 8

months. The demand for day care has been as strong as anticipated, with enrollment growing

by 5 percent per month and significant unmet demand. While most of the parameters used to

construct the 2019 budget were correct, there are a few adjustments which must be made to

personnel scheduling and other cost factors for 2020. Create a monthly budget for 2020 that allows for the following adjustments.

Budget Adjustments:

create seperate workbook

1) Tiny Tots, Inc. has started providing paid vacation/personal days to their employees. Day care workers get 2 weeks of paid time, based on 40 hours per week. fringe benefit

2) In 2019, the budget did not include coverage for a lunch hour for each employee. As a

result, employees had to work during lunch; that violates union rules. This year, the staff will

be provided a one-hour paid lunch (they still get paid for 8 hours/day), and the director is

considering using part-time work study college students to cover the lunch hours. The

college students have to work at least 15 hours per week and will get paid at the going rate

for day care workers. Lunch hours are from 11 to 2, and employees can be assigned to any

lunch hour. (The objective is to schedule lunch hours for the staff to minimize staffing

requirements)how many students needed to cover workers pay.

3) Day care workers can work up to 9 hours per day, 40 hours per week, without being paid

overtime (time and a half). The personnel costs will rise to:

Wage: $9.50 per hour

Social Security: 7.5%

Unemployment: 8%

Pension: 6.5%

Health insurance: $100

4) In addition, the center has had to add liability insurance of $2,100 per month and fire and

theft insurance of $500 per month that will cover any services provided by the center.

5) All other costs are expected to increase by an inflation rate of 5 percent. modified from part one

ASSIGNMENT: 

Modify your spreadsheet from Part 1 to incorporate these changes. Assume that the child/staff ratio for toddlers will be maintained at 6:1 for Part II. You may carry over any other alterations you made to balance the budget from Part I such as fee increases. Carry out the following tasks and you provide a single memo summarizing your results for both Part I and Part II .