Culminating Project Part III - only have to do question #4 because it is team project

White Group Memo One Summary

White Group

Bethany Grissum

Darrell Johnson

Megan Schlager-Reyes

Nika Spann

Ryan Benavides

Valerie Brower

Grand Canyon University: ADM-626-0500

August 23, 2017

White Group Memo One Summary

Hadleyville, Arizona is facing a deep financial crisis. Wilson Performance Automobile Plant, one of the town’s largest employers, closed down three years ago leaving more than 2,500 people accounting for over six percent of the town’s 40,000 population. This drastic decrease in unemployment is forcing the city to make hard decisions regarding the town’s budget and future. The mission of Hadleyville is to provide services that offer a quality of life that makes people want to live and raise their children in Hadleyville (Budget Briefing Books, n. d.). The focus of the White Group will be to gather information from the Budget Briefing Books (BBB) and dissect the budget looking for ways to reduce spending immediately and long-term elimination of deficit spending while increasing revenues will provide challenges and opportunities over the coming three to five years.

Challenges

In additio n to a 12% budget reduction two years ago, the town faces the following challenges:

• Additional budget cuts of 13% immediately

• Eliminate deficit spending within three years

• Increase revenue generating programs

• Attract major industry employers to relocate in Hadleyville

• Consolidate and/or restructure under-performing departments to become more efficient

• Maintain and enhance the infrastructure

• Adopt written, financially-sound policies to assist the Mayor, Council, and City Manager to make wise and prudent financial decisions

• Residents are moving due to job loss and inability to meet financial obligations

• Public utilities are insolvent and unable to meet demands and repay debts despite two hikes

• Potentially more job loss

Opportunities

Financial challenges can present opportunities fo r growth and change. Hadleyville, though facing a financial crisis, has many opportunities over the next three to five years including:

• Three major capital constructions projects essential to improving the quality of life, a new elementary school, a senior center, and a water treatment plant

• Evaluate current and past budgets to ensure capital construction project timelines are feasible with the overall goal of reducing deficit spending, and adjust the timelines if necessary

• Restructuring positions to improve efficiency

• Developing and implementing financially-sound policies to provide a needed foundation and framework regarding financial issues and decisions

• Redefine old practices to reduce inefficiencies

• Attract major industry employers to bring new jobs and opportunities

• Potentially privatize some services which reduce costs in the budget while creating job opportunities

Additional Areas of Concern

The Mayor, Council, and City Manager have additional areas of concern for Hadleyville and the residents. The housing market is suffering because the residents are struggling to meet their financial obligations, including their mortgages, which could affect whether or not people will want to move to Hadleyville. A consistent source of revenue for the town has come from speed cameras and photo radar to increase safety, but the leaders would like to see this revenue decrease, which would show they are being effective . If this revenue decreases, it would affect the budget.

Possible Budget Formats

Appropriate budget formats will be developed and in compliance with Generally Accepted Accounting Principles (GAAP), using the modified accrual basis of accounting (BBB, n. d.). Possible budget formats include:

• Line Item Budget

  • Make comparisons the financial situation three years ago when Wilson Performance Automobile Plant was operating and the financial situation now

• Performance Budget

  • Provides information on profitable services so similar services could be established

• Zero Based Budget

  • Identify efficiencies and inefficiencies

  • Reduce staff costs through early retirements or furlough

  • Reduce costs not essential to the operation

    • Travel

    • Uniforms

    • Office supplies

(Smith & Lynch, 2004).

Conclusion

The White Group will analyze the town’s direct and entitlement obligations with their proposal and recommendations of at least two town departments to reduce spending, an overall immediate reduction in spending of at least 13%, and ways to eliminate deficit spending in three years. The proposal will outline a three to five year plan for financial recovery with recommendations for necessary positions to aid in the recovery, such as economists and accountants. The goal is Hadleyville’s financial recovery, leading to a flourishing town that attracts businesses and where people want to live and raise their children, fulfilling the town’s mission.

References

Budget Briefing Books. (n. d.). Retrieved from file:///C:/Users/Megan/Downloads/BudgetBriefingBooks_student.pdf

Smith, R. W. & Lynch, T. D. (2004). Public budgeting in America (5th ed.). Upper Saddle River, NJ: Prentice Hall. perspectives