Budgeting for Dr. Stephanie White
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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
Give a dollar range of costs to reduce budgets (worst and best case analysis).
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.
How would you advise Dr. White to prepare for reduced budgets?
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In the worst case analysis, it means that the costs need to be cut at the extreme level and keep only the most critical services as follows: -
Administration
Salaries:
Administrator $60,000
Assistant 0
One Secretary $21,000
Supplies $17,500
Advertising and promotion 0
Professional meetings/dues 0
Purchased Services:
Accounting and billing $15,000
Custodial $13,000
Security $12,000
Consulting 0
Community Mental Health Services
Salary (one social worker) $23,000
Transportation $10,000
Outpatient mental health treatment
Salaries:
Psychiatrist $86,000
One Social Worker $35,000
Total $282,500
In the best case analysis, only some of the costs that will not affect the services of the community health agency will be cut as follows: -
Administration
Salaries:
Administrator $60,000
Assistant $35,000
One ...
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