The City of Happyville Public Library has an annual operating budget of $7,000,000. 95% of its revenues come from property taxes and 5% come from things like late charges for overdue books and charges to community groups that use the library for special events. Given fiscal pressures that have emerged during the middle of the current fiscal year , the City (for next fiscal year) has ordered all programs to either cut back expenditures by 5% and/or raise user charges to cover next year's operations. The City has no excess budget reserves to draw down.

The Library does not want to cut expenditures. Instead (to increase revenues by $350,000) it is considering imposing a new user charge that would involve charging a certain dollar amount per book borrowed(assume that Happyville is in a state that allows public libraries to impose user charges on a wide variety of library services). There are at least four options: charge all households, charge all households except those with children under 18, charge all households except those that are low income and have children under 18, charge all households but charge low income households with children under 18 a lower rate per book borrowed.

1. What information does the library need to help assess the user charge options listed above?
2. Should the Library consider an expenditure reduction option or options? Provide at least one example option and briefly indicate what information is needed to help assess such an option.
3. You MAY consider additional approaches but need to consider the tight time-table faced by the Library in this scenario.
4. Which option or options do you tend to lean towards and why?