Controlling budgets

Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future, but increasing demand for services. In order to plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.

Program Area Costs
Administration
Salaries:
? Administrator $60,000
? Assistant $35,000
? Two Secretaries $42,000
Supplies $35,000
Advertising and promotion $9,000
Professional meetings/dues $14,000
Purchased Services:
? Accounting and billing $15,000
? Custodial $13,000
? Security $12,000
? Consulting $10,000
Community Mental Health Services
Salaries (two social workers) $46,000
Transportation $10,000
Outpatient mental health treatment
Salaries:
? Psychiatrist $86,000
? Two Social Workers $70,000

1. Give a dollar range of costs to reduce budgets (worst and best case analysis).
2. You need to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
3. How would you advise Dr. White to prepare for reduced budgets?

Part 2
1. Divide the costs between committed and discretionary.

2. Provide a budget for the best case analysis.
a. Write a short discussion about why you chose the reductions for this budget.

3. Provide a budget for the worst case analysis.
a. Write a short discussion about why you chose the reductions for this budget.

4. Provide a budget with a $94,000 cut in cost.
a. Write a discussion of why you chose these budget reductions and how they will affect the operations of the clinic.

5. Write a discussion of how you would advise Dr. White to prepare for the budget reductions.
a. Budget cuts can be traumatic, so how would Dr. White protect the reputation of the clinic, protect the feelings of the employees, patients, and community while she plans for the immediate cuts and plans for the future development and financial health of the clinic?