Week 5 Modules 5,7 & 8

3 2. In the scenario in assignment 1, the deputy county manager wants the cost allocation to be redone using expenditures as the base. What are the new cost allocations? Transportation Facilities Solid waste Stormwater Total Expenditures $37,525,813 $28,451,254 $8,752,486 $35,248,125 $109,977,678 Allocation of costs $1,561,049.46 $1,183,533.69 $364,097.73 $1,466,299.11 $4,575,000 3. In the scenario in assignment 1, the deputy county manager is still concerned with creating equity in the distribution of the costs of the organization. Additional information has been collected to increase the accuracy of the allocation. Each area, under the supervision of the deputy county manager, has tracked the time it spent providing services to each of the departments during the most recent month, as shown in Table 5.4. Use this additional information to produce a direct allocation for the deputy's organization. Allocation of cost based on time-tracking information Deputy county manager Human Resources Information Technology Transportation 15% 35% 25% Facilities 15% 18% 30% Solid waste 55% 2% 20% Stormwater Control 15% 45% 25% 100% 100% 100% Allocation by FTE Allocation by Expenditures Allocation by time tracking Transportation $1,461,237 $1,561,049 $1,198,750 Facilities $797,038 $1,183,554 $1,239,000 Solid waste $127,526 $364,098 $858,500 Stormwater Control $2,189,199 $1,466,299 $1,278,750 Total Cost $4,575,000 $4,575,000 $4,575,000 4. Prepare a one-page memo to the deputy county manager explaining the differences among the models, your recommended method, and why you recommend it .

6 Module 7: pages 50-52 7.1. Define the following: a. Nominal dollars, also known as current dollars, refer to the actual value of currency when it is used for transactions. It represents the face value or the amount printed on the currency note or coin. Nominal dollars do not account for inflation or changes in purchasing power over time. b. Constant dollars, also known as real dollars, are adjusted for inflation to account for changes in purchasing power over time. They provide a more accurate representation of the economic value by removing the impact of inflation. 7.2. Lake City’s gazebo is available for residents to rent for picnics and other gatherings. You have been tasked with building a compelling financial story to convince the city council to raise the rental rates. The rental revenue history is shown in Table 7.2, along with the CPI for each year. a. Calculate the 2012 constant dollar for the rental revenue. b. Calculate the 1984 constant dollar for the rental revenue. Constant dollar-2012 is computed as Nominal revenue*CPI of 2012/ Current year CPI. Constant dollar-1984 is computed as Nominal revenue*CPI of 1984/ Current year CPI. Year Revenue CPI Constant dollar 2012 Constant dollar 1995 Constant dollar 1984 1984 $13,366.55 103.93 $29,528.77 $19,598.00 $13,366.55 1985 $14,564.45 107.6 $31,078.59 $20,626.00 $14,068.09 1986 $15,487.57 109.692 $32,418.12 $21,515.00 $14,674.45 1987 $16,363.24 113.617 $33,067.81 $21,946.00 $14,968.54 1988 $17,161.30 118.275 $33,314.76 $22,110.00 $15,080.32 1989 $18,000.50 123.942 $33,346.14 $22,131.00 $15,094.53 1990 $18,379.25 130.658 $32,297.67 $21,435.00 $14,619.93 1991 $18,768.42 136.167 $31,647.20 $21,004.00 $14,325.48 1992 $19,026.90 140.308 $31,136.16 $20,664.00 $14,094.16 1993 $20,145.73 144.475 $32,016.20 $21,248.00 $14,492.52 1994 $21,099.88 148.225 $32,684.21 $21,692.00 $14,794.90 1995 $22,435.85 152.383 $33,805.35 $22,434.00 $15,302.40 1996 $23,575.86 156.858 $34,509.63 $22,903.00 $15,621.20 1997 $24,924.04 160.525 $35,649.65 $23,660.00 $16,137.24 1998 $26,636.09 163.008 $37,518.11 $24,900.00 $16,983.02 1999 $28,247.11 166.583 $38,933.44 $25,839.00 $17,623.69 2000 $29,829.21 172.192 $39,774.82 $26,398.00 $18,004.55 2001 $30,719.85 177.042 $39,840.27 $26,441.00 $18,034.17 2002 $30,417.06 179.867 $38,828.02 $25,769.00 $17,575.97

9 To clarify, the purchasing power of $10 in 1984 was significantly higher than its present- day equivalent in terms of the quantity of goods or services it could afford. Economists utilize the concept of constant or real dollars as a means to address the issue of inflation. Constant dollars refer to dollars that have been adjusted for inflation. Constant dollars represent the actual purchasing power of currency over a given period. Assuming a baseline year of 1984, we aim to determine the quantity of gasoline that can be acquired with a $100 budget in the year 2023. In the year 1984, it was possible to acquire 125 gallons of gasoline with a sum of $100, given the exchange rate of $0.80 per gallon. However, in 2023, with the same amount of $100, you would only be able to acquire a total of 29 gallons, calculated by dividing $100 by the price of $3.50 per gallon. It is possible that an individual possesses a $100 bill from the year 1984, which retains its face value of $100 in present times. However, it is important to note that the purchasing power of this bill has significantly diminished over the years. Compared to today, the quantity of goods that could be acquired with the same bill in 1984 was considerably greater. This outcome can be attributed to the phenomenon of inflation. To account for inflation, I have computed the rental revenue of the park in constant dollars. The park's revenue has experienced growth both in nominal dollars and in constant dollars. This implies that the growth in revenue in nominal currency exceeded the inflation rate. In 1984, the rental revenue of $13,366.55 would have covered the cost of a certain number of goods. The rental revenue for the year 2012, amounting to $40,892.75, can be allocated towards the purchase of a quantity denoted as X + Y of goods. During that specific period, there was a notable growth in revenues, with an increase of 206%. It is worth noting that the accumulated inflation during the same period was 121%. Due to a significantly higher percentage increase in rental revenue, the revenue in constant dollars experienced an increase. 7.4. Big East City’s Public Works Department is asking for an additional $100,000 for sign repairs in the next budget cycle because its costs have increased by at least that much since 1995. The department has provided you with the information in Table 7.3. Big East City has adjusted funding for each department every year to keep up with the buying power of money. The Price Deflator represents the rate of inflation for urban government expenses. a. Calculate the 2012 constant dollar for the expenditures . To calculate the expenditures in 2012 constant dollars, adjust each year's expenditures based on the Price Deflator in that year.

12 Module 8: pages 56-57 8.1. Winterville, a city with a population of 125,000 in the Rust Belt, has a significant homeless population. At present, it has facilities that can provide overnight residence for 200 single homeless individuals and 100 family members (normally mothers with children). No one really knows how many homeless are in Winterville, and other nearby localities also have some number of homeless individuals. However, due to all too frequent emergency responses during periods of severe weather, it is clear that the number of beds is insufficient. A proposal is to acquire a former hotel and convert it to 200 spaces for family members while converting the 100 current family spaces to additional spaces for single individuals. Write three scenarios reflecting the possible outcome of the decision. The scenarios should reflect policy success, potential failure due to doing too little, and potential failure due to doing too much. Scenario 1:  The goal is to achieve success in policy-making by creating various policies. In this scenario, the idea of having control over the hotel is highly appealing. This is because food, clothing, and shelter are essential for every individual's well-being. If these fundamental needs are not met, there is no reason to prioritize a lavish lifestyle akin to th at of a hotel. Positive results ensue: 1) Shelter capacity will be expanded: The capacity of shelters will be expanded compared to the initial number. Providing adequate shelter is paramount, as it is a fundamental necessity. The shelter will prioritize maintaining a professional and composed mindset among the individuals and homeless people. The city will see an increase in the number of beds available to provide shelter for individuals experiencing homelessness. 2) The occurrence of emergencies will be minimized: An emergency occurs when there is a situation that is beyond one's control. Once the fundamental need for shelter is met, the demand for emergency services will decrease. 3) Encouraging family unity: With sufficient shelter for all families, every family member can remain together. The mother will confidently attend to the needs of the child and other family members, free from any concerns or worries. It will enhance the sense of connection within the family. Scenario 1. Consider Space Utilization at 90% Single Family Total Space Require 300 200 500 Utilized Space 270 180 450 Vacant Space 30 20 50 This Scenario will be successful due to the appropriate balance in utilization.

15 In conclusion, the cost-benefit analysis for the public transit expansion in Toronto demonstrates the importance of considering alternative policy options and their sensitivity to key variables. The central recommendation to pursue a subway extension remains robust, but alternative options may become more favorable under certain conditions. This analysis highlights the need for governments to continuously evaluate and adapt their policies based on evolving circumstances and uncertainties (Couture et al., 2016). References Couture, L-E., Saxe, S., & Miller, E.J. (2016). Cost-benefit analysis of Transportation Investment: A Literature Review. University Of Toronto Faculty of Applied Science & Engineering. Transportation Research Institute. https://uttri.utoronto.ca/files/2017/10/16-02-04-01-Cost- Benefit-Analysis-of-Transportation-Investment-A-Literature-Review.pdf 8.5. Eastview’s Police Department: Using the information in worksheet 8.3, analyze how the cost would vary from the lowest enrollment to the highest enrollment if Eastview and the four surrounding communities cooperated on a joint Academy. The Academy provides room and board to all trainees for a period of 11 weeks . Eastview Only All-Low All-High Trainees 50 70 110 Trainees * weeks 11 weeks 550 770 1210 Room cost per person per week $110.00 $60,500 $84,700 $133,100 Food cost per person per week $94.50 $51,975 $72,765 $114,345 People per classroom per week 55 1 classroom 2 classroom 2 classrooms Cost estimate per classroom per week $1,000 $11,000 $22,000 $22,000 Instructors per classroom per week $1,500 $16,500 $33,000 $33,000 Academy materials per person total $5,000 $250,000 $350,000 $550,000 Number of weeks 11 Total $389,975 $562,465 $852,445