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Independent Analysis of Waste Water Treatment Plant

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Analysis of the City of Columbus’ Waste Water Treatment Facility Budget process in the face of potential budget cuts and management promotion potential tied to budget performance

Ann Paxton, the manager of The City of Columbus’ Waste Water Treatment Plant, is in the process of preparing her budget for the upcoming year. In reviewing the prior year’s numbers she has determined that her budget should be approximately $4,200,000 but due to budget cuts she is anticipating a 10% budget cut by the controller due to reduced tax revenues. Since promotions are tied to budget performance, she feels that submitting a budget of $4,900,000 would cover the shortfall and keep her under budget.

Ann’s proposed Budget is $700,000 more than her anticipated expenses. By inflating her budget amount, Ann is padding her budget and setting herself up for the potential of being found out and receiving disciplinary action. By tying Ann’s promotion potential to budget performance, when they are cutting the budget and the amount of waste processed are out of her control, the City is creating an incentive for her to attempt to pad her budget. It is Ann’s ethical duty to produce and present a budget that is true to cost and in the best interest of the City, not self-serving. When she inflates her budget in order to ensure that all her cost are covered, she is defeating the intent of the City to cut cost and work leaner at a time when revenues are being reduced. It could also cause potential issues in other department that may be monetarily shortchanged by the loss of funds being diverted to her department unnecessarily.

If Ann would take a closer look at her budget, she would realize that if she worked her budget with the expectation that the facility will be processing 9,500,000 gallons of waste and that with the potential of a new Labor Contract with a potential increase of

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