From the time of 2004, City of Somerville Mayor Joseph Curtatone has assumed a succession of economic reform that has allowed the City to move ahead the municipal services all through monetary tough times. A key alteration has been the City's support of the budgeting approach labeled activity-based costing (ABC budgeting).A vital reform has been the City's adoption of the budgeting strategy called activity-based costing (ABC budgeting). With ABC budgeting, City officials have been competent to make budgetary decisions based in-depth information about the expenses and revenues related to discrete City activities. The transition to ABC budgeting from line item budgeting that many municipalities use has not been easy, yet. Computing costs at the program level required a less comprehensive investigation than calculating costs at the activity level.
They identified the activities connected with recognized performance goals for every action and each plan. During the autumn of 2004, HKS Prof. Linda Bilmes and her students helped Somerville officials see through these measures. Together, this information let officials and residents to recognize for the very first time how the City's expenditure of tax dollars translated directly into the City's delivery of services that constituents valued. Supported by the results, the Mayor asked Prof. Bilmes and her students to focus on a municipal action of particular concern to officials and residents: traffic enforcement. Mayor Curtatone requested whether raising enforcement of the City's traffic laws might pay for itself through increased citation sales. The case walks through the steps Bilmes and her pupils took to determine the answer, including allocating employee’s expenditures to the action of traffic enforcement, allocating non-staff expenses to that task through selection and application of a suitable cost driver, and computation of the revenue generated from traffic enforcement.
PUBLICATION DATE: August 15, 2013 PRODUCT #: HKS718-PDF-ENG
This is just an excerpt. This case is about GLOBAL BUSINESS
Related Case Solutions & Analyses:
The Banyan Tree: Branding the intangible
SAP: The Challenge of Aligning Sourcing and Innovation Strategies
Indonesia: Growth and Stability in a Global Economy
National Australia Bank (A)
McKinsey & Co.-Protecting its Reputation (A)
KFC China: Still “Finger Lickin’ Good?”
6 Items for the Top of Every Board’s Agenda
Billy Beane and the Oakland Athletics (B): Advanced Metrics Beyond Baseball
Robert Mandavi and The Wine Industry
Employee Handbook
