Amos Town Council Case

INTRODUCTION
The Town of Amos, a municipality in the north-west part of Quebec, has to address the continuous rise of its local police budget. Over the past five years, the Amos Police Force budget has increased at an annual rate of 5% (while the budgets of all the other town departments have increased by only 3%), and it currently represents 30% of the town’s annual budget. Regardless of these increases, over the same time interval the actual police expenditures have exceeded the allocated budget by as much as 4%.
PROBLEM STATEMENT
Faced with the trend of Amos Police Force’s continuous budget increases and expenditures exceeding allocated funds, the Town Council is considering whether to replace the existing police services with a contract
The quantitative analysis examines both the operating cost of accepting the CRP proposal as well as the CRP performance based on 1997 statistical figures. The fee structure of the proposal is mainly composed of a flat fee of $325,000 and a per capita fee $10 both growing at annual rate of 2%. The assumption was made that the population of Amos will be growing at a rate of 1% annually to allow for the results in Appendix 1. Government grants were excluded from the revenue since the Town of Amos would not have its own police force. Also, all the miscellaneous receipts received by the Town Council would be given to the CRP for its administrative expenses. Hence, the cost of accepting the CRP proposal is budgeted to be $392,090, $400,254, and $408,598, as budgeted for 1998, 1999, and 2000 respectively. It is worth noting that the agreed upon lease expenses of $ 1,200/month for the next 3 years can be considered as sunk costs since they would be paid out whether or not the CRP proposal is accepted. If we assume otherwise, the budgeted costs mentioned above would be higher by $14,400. In examining the 1997 statistics of the police service performance targets, the CRP only met the targets set for the Training and Administration
Flat fee and per capita fee growth rate at 2% 2. Population growth at 1% 3. 300 hours of overtime for special events 4. No growth/inflation on the overtime charge of $40 5. Leasing expenses ($1,200/month for 3 years) considered as sunk costs and hence irrelevant
APPENDIX 2 – Selected Comparative Police Statistics - 1997 Program | Target | AMOS | CRP | CMPC | Traffic Control | Solve 90% of traffic offenses | 94 | 86.3 | 90.7 | | Respond within 5 minutes | 4 | 5.4 | 8.5 | Non-Traffic Control | Solve 80% of criminal and non-criminal offenses | 82 | 75.6 | 79.3 | | Respond within 5 minutes | 4.2 | 5.2 | 10.6 | Safety and Prevention | Less than 2accident fatalities per 1000 population covered | 2.2 | 3 | 1.8 | | Less than 30% repeat offenses by known offenders | 35.8 | 31.41 | 29.6 | | Inspection of 80% of commercial and public properties | 71.5 | 45.1 | 82.2 | Training and Administration | At least 20 days of training | 18 | 24 | 19