budget 16

Question #3  Critical Thinking/ Problem Solving

 

You are the lead policy analyst for a Southern California municipality of approximately 200,000 people. This is a blue-collar city that has never been known to be particularly affluent. The past two years, due to an economic downturn, have been especially rough for the city. Over the past decade the nature of the local economy has also gone through significant changes. Historically, it was dominated by large labor intensive industries. Currently, however, most of the large employers are technology-driven and are not necessarily as labor intensive. The unemployment rate, which has traditionally fluctuated around 10%, has risen over the past two years to 20%. The worsening condition of the city has become the focal point of local and national attention.

 

The federal government has decided to award the municipality a $10 million grant to address the growing unemployment problem. The city council, however, is divided on how the funds should be spent. Half of the members believe that the funds should be spent on attracting new businesses. Their main argument is that new businesses will provide additional jobs. Such a strategy would also increase revenues for the city. The other half believes that money should be spent on education. Their main argument is based on the fact that education leads to more innovation, which in turn creates more business opportunities and jobs.

 

You have been tasked with evaluating these two perspectives.

 

1- Define the management objectives and analyze the merits of both approaches (e.g., effectiveness, opportunity cost) in achieving the objectives. 

would you need additional information/research to make your decision?What additional information do you need know?