Question: The Division of Motor Vehicles DMV is part of the

The Division of Motor Vehicles (DMV) is part of the State Department of Transportation (DOT). The purpose of that department is to ensure the safety and free flow of people and goods throughout the State by ensuring that there is a reliable system of transportation and motor vehicle services. This mission is accomplished by funding the maintenance of the existing transportation infrastructure, by adding to and improving the infrastructure, and by otherwise operating a transportation system that minimizes congestion and promotes safety and the economic growth of the State.
Among the key functions served by the DOT are:
Driver licensing and insurance
Vehicle inspection
Bridge and highway construction and maintenance
Public transit
The current year budget for the DOT is $ 874 million. Of that amount, $ 96 million is budgeted to be spent on the DMV, which has the following objectives:
To provide customer-friendly, efficient motor vehicle services;
To regulate drivers and motor vehicles to deter unlawful acts and protect the public safety;
To further protect public safety by identifying vehicle safety problems,
To further protect the public by ensuring that all drivers carry insurance.
1. Prepare a monthly operating budget for the DMV for the fiscal year ending August 31, 2014. Determine the operating surplus and deficit for each month and for the year as a whole. Use one page or worksheet in your spreadsheet to list all of the base information, and another for the operating budget.
2. To what do you attribute the changing surplus/ deficit pattern during the year?
3. What would happen to the overall deficit or surplus if the number of vehicles failing inspections increased from 15 percent to 30 percent? Keep in mind that vehicles must be re- inspected, so this would also increase the total number of inspections. Does this give the DMV a reason to make its standards tougher? Is this good policy?
4. Suppose the DMV can choose when to implement the new digitized licensing system.
a. What would happen to the finances of the DMV if the new licenses are implemented at the beginning of the year and issued throughout the year?
b. What would happen if the new licenses are not implemented at all during the coming year? In either case, assume the total number of licenses issued for any month does not change. Is that assumption realistic? How does it affect your results?
5. What other changes would you suggest that might help the DMV’s situation? What are the advantages and disadvantages of the various suggested changes? Select the approach that you believe is best, create a worksheet showing the resulting budget, and provide an explanation defending your choice of changes.

  • CreatedDecember 19, 2014
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