Governmental budgeting principles and practices

¶ … Mayor Spark,

As I'm sure you're already aware, the nation has not yet been liberated from the worst economic disaster since the Great Depression. Tax revenues are down; budgets are shrinking; municipal employees are being laid off far and wide. While many of the proposals before your desk present short-term solutions to the fiscal crisis, they fail to address the long-term needs of our people, more specifically, our municipal workers.

The demographics of our workforce in Northville have shifted dramatically over the last several decades. Nearly thirty-five percent of the 1,800 public employees are now female (or roughly 630), while over forty percent (720) of the total male/female workforce has stated that available, affordable child-care is important to them. Mary Lux, Director of the office of Personnel has indicated that one of the primary reasons for municipal employees to be absent or arrive late is a lack of available, affordable daycare. While Reagan proposed trickle-down economics, this is trickle-up economics. Without access to child-care services, our municipal employees sacrifice their job in favor of their family, and rightly so. It is our children that will carry on the legacy of this great city, let-alone the nation. When public sector workers stay home, or arrive late, they reduce the efficiency of government. Paperwork isn't filed; calls go unanswered; inconveniences become emergencies. A small investment today could very well alleviate a crisis tomorrow.

Thus, with backing by Denardo Legato, leader of main city employees union and Klara Nemet, Director of Tiny Tots, Inc., a local not-for-profit child-care agency, the attached proposal for municipal child-care services should help alleviate the absenteeism and tardiness currently plaguing our workforce. With more employees working more consistently, our local government will be more efficient and effective at addressing the needs of the Northville metropolitan area, leading to stronger confidence amongst the general population, higher workplace satisfaction, as well the potential for greater tax revenues due to immigration to Northville. These are just a small sample of the benefits we will realize by providing affordable child-care.

The supporters of this initiative are fully aware of the fiscal crisis plaguing Northville and most other municipalities in the United States. Thus, it is not our intention to add significant amounts of debt to Northville's already strained budget. With the help of Mr. Legato and a grant from the state, you will find that the Municipal Employees Child-Care Initiative is not only cost-conscious, but also forward thinking in its proposal to fund the program.

Immediate start-up costs will be offset by a $90,000 grant from the state. This will be paid as a lump sum in January 2011 and will serve to make the program fiscally solvent immediately and cover three-days of training for each worker, mandatory by state law. Initial estimates for enrollment place the number of children at 120, requiring no less than fifteen workers in order to maintain the state-required 8:1 child to worker ratio. Ms. Nemet of Tiny Tots, Inc. requested a 6:1 ratio of children to workers. By operating at the state standard rather than the proposed ratio, the program will save nearly $200,000 in wages and benefits while still providing the standard of care required by state law.

Enrollment in the program is expected to grow at 10% for the first four months while continuing at 5% per month for the remainder of the year. As children are added to the program additional caregivers will need to be hired and trained in order to maintain the 8:1 ratio. The costs of training for the additional employees will be immediately offset by tuition in the program, currently set at $200 per child per month. This covers all 20 workdays for municipal employees. At the $200 per child mark, tuition will raise the bulk of the program's financing or roughly $450,000. Raising tuition to $225 would produce an additional $50,000 per year for the program, fully funding the shortfall though the additional cost to parents could harm enrollment. Reduction to 5% growth per month for the entire calendar year could result in a loss of nearly $50,000 to the program at the baseline ($200 per child) and a loss of $80,000 at the increased tuition ($225). If tuition were to be raised, it is suggested that the number of children per worker be decreased to 7:1. Labor costs would increase only $30,000 over the state minimum while still remaining almost $100,000 below the 6:1 level.

Negotiations with Mr. Legato, leader of the employees union produced a commitment to contribute one dollar per child, per day of enrolled union members. Nearly 70% of the children enrolled are expected to be apart of union families contributing over $30,000 to the program per year offsetting the additional cost of labor to maintain the 7:1 ratio. Food and supplies for the children is estimated to cost $200,000 per year ($134,000 and $67,000, respectively). Food includes daytime snacks and a nutritional lunch and adds only $3 per child, per day. Supplies include markers, crayons, and other educational materials adding only $1.50 per child, per day.

Without any additional funding for the program it is expected to operate at a deficit of $18,000 for year one and over $100,000 for future years. Rather than ask the city for any additional funding (Northville is already graciously donating space for the daycare as well as forgoing the cost of utilities, estimated at $24,000) the initiative proposes approaching local small businesses and corporations to offset the cost of supplies. A meager $.50 per child, per day would raise over $24,000 for the daycare program making it fiscally solvent and operating in the positive through year one. A contribution of $1 per child, per day, would raise nearly $50,000 for the program. Companies such as Crayola® are constantly seeking ways to introduce their products to children providing an excellent opportunity for corporate sponsorship. Additional companies could be approached to cover the costs of food and drinks for the children. Estimates suggest that raising $2 per child, per day is not only feasible but would almost completely fund the program through year two.

Mayor Spark, while the financial crisis has severely damaged the public sector's ability to fund social programs, complete abandonment of the tools to create a shape better future serves only to do further harm. By finding creative and alternative ways to fund the programs we need most dearly, we are protecting and securing a better future for the generations to come. This proposal for daycare services requires very little commitment from the city's already stretched budget while providing immense relief to Northville municipal employees. The tangible benefits of reduced tardiness and absenteeism pale in comparison to the intangible benefits of safety, security, and trust in the local government. Let us use this opportunity to sow the seeds of a better tomorrow.

Northville Daycare

2011 Annual Budget Baseline

Jan-11

Feb-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Oct-11

Nov-11

Dec-11

Total

# of Children

# of Caregivers

20

22

24

27

29

31

32

34

36

37

39

41

41

REVENUE

Jan-11

Feb-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Oct-11

Nov-11

Dec-11

Total

State Grant

7,500

7,500

7,500

7,500

7,500

7,500

7,500

7,500

7,500

7,500

7,500

7,500

90,000

City Contribution (in-kind)

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

2,000

24,000

Union Subsidy

1,680

1,848

2,033

2,236

2,460

2,583

2,712

2,847

2,990

3,139

3,296

3,461

31,285

Tuition

24,000

26,400

29,040

31,944

35,138

36,895

38,740

40,677

42,711

44,846

47,089

49,443

446,924

Total Revenue

35,180

37,748

40,573

43,680

47,098

48,978

50,952

53,024

55,201

57,486

59,885

62,404

592,209

EXPENSE

Salaries and Wages