DAY CARE COMES TO NIRVANA

Nirvana, a medium$-$sized city in the midwestern part of the United States, has experienced a significant change in the municipal work force of $1800$ employees. Many more employees are responsible for caring for children than in the past. In a recent survey of city employees, over forty percent of employees said that $$affordable day care for children$$ was important to them. Meanwhile, the Director of the Office of Personnel, Mary Lux, has become convinced that the lack of affordable day care is one of the main reasons for absenteeism and lateness among city employees. Mayor Petula Spark, some of the members of the city council and the leader of the major city employees$$ union $($Denardo Legado$)$ have all agreed that something should be done. The question is$$what would it be$?$

Mayor Spark was in favor of doing something as long as it did not result in a major expense for the city$$s already strained budget. She told Legado, who was negotiating for day care on behalf of the city employees: $$We$$ll give you space and utilities for one year at no cost$.$ It is up to you to come up with a suitable day care center that conforms to state and federal law.$$ The only state and federal requirements specific to day care centers are that they a$)$ need to be licensed and inspected once a year $($the cost of annual inspection is $$300)$; b$)$ that all new day care workers take part in a three$-$day state$-$certified training program $($training costs are $$600$ per employee$)$; and c$)$ that the child to day care giver ratio be no greater than $8$ to $1.$

Mary Lux was responsible for planning the details of the day care program for the children of city employees. With Mr$.$ Legado$$s support, Ms$.$ Lux negotiated an arrangement with a local non$-$profit agency that was already providing day care services in the Nirvana metropolitan area. Tiny Tots Inc. has three locations; the contract with the city of Nirvana would be the fourth center. The Director of Tiny Tots, Klara Nemet, was enthusiastic about the new center. Ms$.$ Nemet told Ms$.$ Lux that $$we will not need any additional administrative staff since my administrative secretary Ms$.$ Perfekt and I could handle the additional administrative work.$$ Ms$.$ Perfekt earns $$3000$ per month, while Ms$.$ Nemet$$s salary is $$5000$ per month. Tiny Tots, Inc. also must pay $7\mathrm{.}65$ percent of all salaries in the form of Social Security and Medicare contributions, $8$ percent for unemployment and disability benefits, $6$ percent of salaries into a pension fund, and $$100$ per month for health insurance for each employee.

The additional details of the contract are as follows:

$1.$ The day care center will be open $20$ days every month.

$2.$ Parents will pay a monthly fee based on an $8$ hour day $(9$:$00$ a$.$m$.$ to $5$:$00$ p$.$m$.).$ Fees do not vary if less than a full day or less than a month of day care is used by the parents.

$3.$ The city and Ms$.$ Nemet agreed that the center would have a $6$:$1$ ratio of children to day care workers for the first year of operation.

$4.$ Day care workers earn $$14\mathrm{.}00$ per hour. They work from $9$ to $5$ and get paid for $8$ hours.

$5.$ Children get a snack and lunch. The food cost is $$10\mathrm{.}00$ per child per day.

$6.$ The cost of supplies is $$5\mathrm{.}00$ per child per day.

$7.$ The city of Nirvana has purchased certain equipment $($such as cots and desks$)$ for the first $120$ children. These costs are expected to increase by $$200$ per child for each child over $120.$

There are several other relevant facts that will affect the budget of the day care center. When it opens in January of $2024$ it is projected to have $120$ children. Beginning in February, it is expected that the number of children will grow by $10$ percent per month through May $2024.$ Beginning in June the monthly growth is expected to slow to only $5$ percent. Parents will pay $$600$ per month per child. The space and utilities donated by the city is estimated by Ms$.$ Lux to be worth $$4,000$ per month $($e$.$g$.$ if the daycare center had to pay a market rent, that rent would be $$4,000$ per month$).$ Mr$.$ Legado says that the union will contribute $$5\mathrm{.}00$ per child per day to the center for the children of union employees $($note: $70$ percent of children are estimated to be children of union members$).$ The state has a subsidized day care start$-$up grant for only the first year of operation. The grant is $$90,000$ for that year, and is paid monthly.

THE ASSIGNMENT

You are a budget analyst in the Nirvana budget office. Mayor Spark asked you to $$run some numbers$$ so she can take a look at what was just negotiated between Ms$.$ Lux, Mr$.$ Legado, and Ms$.$ Nemet. You should prepare the budget in a speadsheet. In the end, this is to result in a memorandum prepared for Mayor Spark $($no more than two single$-$spaced pages not counting tables$)$ that will include the following information:

$1)$ An initial $2024$ budget for the day care center $($assume a calendar year$).$ This should include the total surplus or deficit for each month, as well as for the