You have also collected the following information on agency operations. 1. The primary materials required for each mission center are copies. The typical foster care placement requires 250 copies, the typical investigation requires 150 copies, and separation prevention averages 100 copies per case. Copies cost $0.075 per copy. Each mission center has a copy machine which is leased for $1,500 per year. Maxwell School of Citizenship and Public Affairs PAI 734: PUBLIC BUDGETING 2. Each social worker receives a laptap computer, which are leased for $500 per year. 3. Each social worker is reimbursed for mileage on their vehicles at a rate of $0.50 per mile. Last year the foster care center spent $14,800, the investigations unit spent $23,400 and separation services spent $17,000 on mileage reimbursements. 4. CPS is managed by a Director who is paid $120,000 per year in salary and fringes, an assistant director who is paid $90,000 in salary and fringes, and an administrative assistant who is paid $60,000 per year in salary and fringes. 5. CPS leases office space at a cost of $200,000 per year. 6. Social workers are on average paid $70,000 per year in salary and fringes. 7. The director has projected the following number of cases for the upcoming fiscal year80 foster care cases, 250 investigations, and 180 separation prevention cases. 8. The foster care unit spends $15,000 per foster care case to foster families. Please address the following questions in order to develop a unit cost table and to use it to address key issues facing the agency. A. For each mission center identify the key expenditure categories and for each category indicated, identify whether it is a direct or indirect cost, and whether it is a variable, step, semi-variable or fixed cost. B. Using the information above, develop a unit cost table for the upcoming fiscal year that assigns all agency costs to mission centers. In the table, please indicate which cost categories are direct and which are indirect, and along with costs in each specific category, calculate total direct cost, direct cost per unit, total indirect cost, total cost, total cost per unit, total revenues and the total surplus/deficit for each mission center and the agency overall. Use total direct cost to allocate management costs and number of social workers to allocate office space. C. Can CPS cover its cost given the new DHHS reimbursement rates. D. Research you conducted found that in a similar child protective agency in another part of the state social workers are assigned 20 foster care cases per worker and 25 investigations per worker. If you decided to assign 20 foster care case per social worker and 25 social workers per investigation would CPS be able to cover its costs? For this question, you do not need to re-allocate fixed costs (i.e., assume the allocations are the same as in question B). E. A local non-profit agency has offered to take over providing the foster care caseload for CPS. They are willing to take over these cases for the reimbursement rate that the state is paying. Should CPS agree to this arrangement? For this question assume the productivity rates you used in the unit cost table developed in response to question B.

You should complete this analysis using Microsoft Excel. Please prepare a brief memo discussing your conclusions as well as your detailed analysis.

EXERCISE #3: COST ANALYSIS EXERCISE CHILD PROTECTIVE SERVICES Assume that you have taken over as the assistant director for Upstate County Child Protective Services (CPS). CPS provides three services-foster care placement, investigations, and separation prevention. The state Department of Health and Social Services (DHSS) provides reimbursements for each of the services provided by CPS. DHSS has recently changed its method of reimbursement. In the past, DHSS has allowed all services to be pooled in calculating unit costs. The result has been some cross-subsidization across types of services. This practice has been changed, and the maximum rate that an agency can receive is set separately for each type of service. These rates are $20,000 per foster care case, $3,750 per investigation case, and $5,000 per separation and prevention case. The previous assistant director had little finance background and maintained the bare minimum records to prepare a budget and reimbursement request. You have been hired to develop a flexible cost accounting and budgeting system and to help the agency adapt to this new funding environment. You have pulled together the following information on caseloads and personnel employed in CPS over the last three years. Exhibit 1 You have also collected the following information on agency operations. 1. The primary materials required for each mission center are copies. The typical foster care placement requires 250 copies, the typical investigation requires 150 copies, and separation prevention averages 100 copies per case. Copies cost $0.075 per copy. Each mission center has a copy machine which is leased for $1,500 per year. EXERCISE #3: COST ANALYSIS EXERCISE CHILD PROTECTIVE SERVICES Assume that you have taken over as the assistant director for Upstate County Child Protective Services (CPS). CPS provides three services-foster care placement, investigations, and separation prevention. The state Department of Health and Social Services (DHSS) provides reimbursements for each of the services provided by CPS. DHSS has recently changed its method of reimbursement. In the past, DHSS has allowed all services to be pooled in calculating unit costs. The result has been some cross-subsidization across types of services. This practice has been changed, and the maximum rate that an agency can receive is set separately for each type of service. These rates are $20,000 per foster care case, $3,750 per investigation case, and $5,000 per separation and prevention case. The previous assistant director had little finance background and maintained the bare minimum records to prepare a budget and reimbursement request. You have been hired to develop a flexible cost accounting and budgeting system and to help the agency adapt to this new funding environment. You have pulled together the following information on caseloads and personnel employed in CPS over the last three years. Exhibit 1 You have also collected the following information on agency operations. 1. The primary materials required for each mission center are copies. The typical foster care placement requires 250 copies, the typical investigation requires 150 copies, and separation prevention averages 100 copies per case. Copies cost $0.075 per copy. Each mission center has a copy machine which is leased for $1,500 per year