The following appeared in a memo from a budget planner for the city of Grandview.” Our citizens are well aware of the fact that while the Grandview Symphony Orchestra was struggling to succeed, our city government promised annual funding to help support its programs. Last year, however, private contributions to the symphony increased by 200 percent, and attendance at the symphony’s concerts-in-the-park series doubled. The symphony has also announced an increase in ticket prices for next year. Such developments indicate that the symphony can now succeed without funding from city government and we can eliminate that expense from next year’s budget. Therefore, we recommend that the city of Grandview eliminate its funding for the Grandview Symphony from next year’s budget. By doing so, we can prevent a city budget deficit without threatening the success of the symphony.”

The following appeared in a memo from a budget planner for the city of Grandview.

“Our citizens are well aware of the fact that while the Grandview Symphony Orchestra was struggling to succeed, our city government promised annual funding to help support its programs. Last year, however, private contributions to the symphony increased by 200 percent, and attendance at the symphony’s concerts-in-the-park series doubled. The symphony has also announced an increase in ticket prices for next year. Such developments indicate that the symphony can now succeed without funding from city government and we can eliminate that expense from next year’s budget. Therefore, we recommend that the city of Grandview eliminate its funding for the Grandview Symphony from next year’s budget. By doing so, we can prevent a city budget deficit without threatening the success of the symphony.”

Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation is likely to have the predicted result. Be sure to explain how the answers to these questions would help to evaluate the recommendation.

The writer makes a number of good points, but he does not adequately explore all of the factors that must be examined before making a decision to eliminate city funding for the symphony. This memo assumes that the city will continue funding the organization in the future. While this is possible, it is not certain. The poor financial performance of the symphony may be the result of mismanagement rather than a lack of support from the city. Therefore, the city should not be quick to pull the plug on this organization. The memo also states that the city will pay 200% more in contributions next year if the city continues to fund the organization. This may be true, but it does not tell the reader why private contributions have increased. It is possible that the symphony’s concerts in the park are attracting more attendees than in the past, thus leading to a larger contribution from individuals. If the symphony has done a great job of marketing these events, then its increased revenue may be the result of an increase in ticket sales. If the symphony has simply been lucky, then the elimination of funding from the city government will not result in a significant loss in revenue, and the city can rest assured that it is not jeopardizing the symphony’s survival.

The memo does not explain why the symphony’s attendance has doubled. This may be the result of a variety of circumstances, including a greater interest in classical music among the general public, an increase in ticket prices, or an increase in the number of people who live in the area. The memo does not say. Therefore, it is difficult to determine whether the city’s investment in the symphony is paying off. Also, the memo does not state whether revenue from the symphony’s subscriptions has increased. If the number of subscribers has increased significantly, then the city’s contribution may be underused. If the number of subscribers has remained the same, the city’s contribution may be overused.

The memo does not explain whether the city’s budget will be balanced if the symphony is eliminated. It is possible that the elimination of city funding would free up funds that could be used to increase revenue in other areas. On the other hand, if the elimination of funding from the city government will have a negative effect on the city’s revenue, then the deficit may continue to grow. Therefore, the city must examine all options before deciding to eliminate funding. For example, the city could seek additional revenue through increased taxes or by eliminating unnecessary expenses. The city might also decide to cut spending in other areas, thus ensuring that the elimination of funding for the symphony will not cause a budget deficit.

The memo suggests that the city should not eliminate funding for the symphony from next year’s budget without examining whether the symphony will be able to remain solvent. A city that decides to eliminate funding without first determining how this will affect the rest of the budget may discover that it cannot afford to keep the symphony. Therefore, the city should invest some time in researching the symphony’s finances before making a final decision.