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The administrative budget

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The administrative budget

by akhpad » Tue Jul 20, 2010 3:27 am
Source: Veritas Prep CR-1

Q42.
The administrative budget in the central Valley school district is proportionate to the value of the Valley's property tax base, the chief source of funding for the school district. As revenue from property taxes increases, each budget segment of school district is increased proportionately.

Which of the following statements, if true, is the best basis for the criticism of the Central Valley's budget policy as a economically sound budgeting method for school districts?

A: The school district might continue to pay for past inefficient allocation of funds.
B: The revenue from property taxes has remained relatively unchanged for the last decade.
C: Student performance is affected by fluctuations in the overall school district budget.
D: Many Central Valley taxpayers have complained about the high property tax rates in the area.
E: The current budgeting system has little impact on whether parents decide to take their children to non-district funded classes.

OA: A I could not understand why this is. Can someone elaborate about OA?
Last edited by akhpad on Tue Jul 20, 2010 8:20 pm, edited 1 time in total.
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by ayushiiitm » Tue Jul 20, 2010 4:08 am
akhp77 wrote:Source: Veritas Prep CR-1

Q42.
The administrative budget in the central Valley school district is proportionate to the value of the Valley's property tax base, the chief source of funding for the school district. As revenue from property taxes increases, each budget segment of school district is increased proportionately.

Which of the following statements, if true, is the best basis for the criticism of the Central Valley's budget policy as a economically sound budgeting method for school districts?

A: The school district might continue to pay for past inefficient allocation of funds. correct. because if there was insufficient allocation, then that continues to exist. So some resources will continues getting heavy investment, while some will continue to lag
B: The revenue from property taxes has remained relatively unchanged for the last decade. out of scope
C: Student performance is affected by fluctuations in the overall school district budget. we never talked about students
D: Many Central Valley taxpayers have complained about the high property tax rates in the area. we never talked if people are effected by high tax rates
E: The current budgeting system has little impact on whether parents decide to take their children to non-district funded classes. talking about admission is out of scope

Please explain.
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by akhpad » Tue Jul 20, 2010 8:21 pm
Can someone elaborate about correct option?
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by reply2spg » Tue Jul 20, 2010 8:31 pm
All options other than A are irrelevant.

In reality any budget is for that specific year or for that specific tenure. If district has an arrears, then it will keep on paying in current budgeting period. To pay previous amount district needs money and for that reason property taxes will be increased.

Therefore, A is correct here.
akhp77 wrote:Source: Veritas Prep CR-1

Q42.
The administrative budget in the central Valley school district is proportionate to the value of the Valley's property tax base, the chief source of funding for the school district. As revenue from property taxes increases, each budget segment of school district is increased proportionately.

Which of the following statements, if true, is the best basis for the criticism of the Central Valley's budget policy as a economically sound budgeting method for school districts?

A: The school district might continue to pay for past inefficient allocation of funds.
B: The revenue from property taxes has remained relatively unchanged for the last decade.
C: Student performance is affected by fluctuations in the overall school district budget.
D: Many Central Valley taxpayers have complained about the high property tax rates in the area.
E: The current budgeting system has little impact on whether parents decide to take their children to non-district funded classes.

OA: A I could not understand why this is. Can someone elaborate about OA?
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by Patrick_GMATFix » Wed Jul 21, 2010 3:14 pm
Hi akhp77,

I really don't like this question. I don't think it is reflective of GMAT questions for the following reasons:

1) Stem is unclear and ungrammatical
2) The question asks us to treat the answer choices as true statements; the right answer however is a statement that's always true (of course something 'might' happen). This renders the question partly redundant.

In all this really doens't feel like a GMAT question. Anyway below is what I think.

Premises: school budget increases in proportion with the value of property tax. Each segment of the budget is increased in the same proportion

Conclusion: Budget policy is good.

Prediction: The right answer should give us reason to think that the budget policy is NOT good. In other words, the answer should show why increasing all segments of the budget by the same proportion is not a good way to allocate funds. To do this the answer will suggest that this policy has a significant weakness and that there might be a better way to allocate funds when the overall budget increases.

A is a good answer. If there are inefficient allocations of funds in the budget (segments that receive $ even though they sould not), then the policy that increases all segments of the budget by the same proportion will only result in greater waste. For example, suppose program A, a segment of the school budget, is receiving $1,000 in wasteful spending. If the school budget increases by 50% as a result of an increase in property tax revenue, each segment of the budget will be increased by the same amount. So instead of receiving just $1,000 in wasteful spending, Program A will receive $1,500 in wasteful spending. This answer matches our prediction by suggesting that rather that the policy will exacerbate waste; a better policy would be to allocate the increased funds to segments of the budget that actually need them instead of distributing the funds equally to all segments.
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by paes » Wed Jul 21, 2010 5:57 pm
This problem is exact replica of one of the OG problems.
There the problem is related to army defense budgets and choice A(OA) is almost same.
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by akhpad » Wed Jul 21, 2010 9:33 pm
Thanks Patrick
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by Patrick_GMATFix » Thu Jul 22, 2010 4:29 am
You're welcome Akhilesh
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by kvcpk » Sat Aug 21, 2010 1:31 pm
Re-opening this thread to get more explanation on why A is right.
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by boazkhan » Sat Aug 21, 2010 2:48 pm
This question is an extremely poor attempt to replicate CR Problem 30 from OG 10th edition. My advice, ignore this question.
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by debmalya_dutta » Sat Aug 21, 2010 2:56 pm
the school budget is proportionate to the amount of property tax raised...

so suppose in 2000 , the school budget was a right proportion of the amount of property tax raised
in 2001, suppose there was inefficient allocation , the school budget does not increase proportionately as the increase in property tax raised. So the school budget gets an incorrect proportion
from then onwards even if the school budget assigned are efficient, it suffers from the inefficient allocation in 2001
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by abhi84v » Sat Aug 21, 2010 6:00 pm
If the property taxes in the region are increased, the school funding is increased, irrespective of the effciency of how past funds were utlized. Hence the allocation of funds is not linked to the efficiency of its expenditure and thus the practice is economically unsound as stated in A.
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