Worksheet Grade 11 Social Studies & Civics
Fairden's Water Utility Budget: A Grade 11 Enterprise Fund Worksheet
A grade 11 civics worksheet on a fictional city's water enterprise fund in which students compute budget shares and evaluate a proposal to cut main maintenance.
Objectives
- Students will read a municipal water utility budget and compute each category's share of total spending.
- Students will explain why a water utility operates as an enterprise fund separate from a city's general fund.
- Students will evaluate a proposed budget cut in terms of intended savings and unintended consequences.
Vocabulary
- Enterprise fund
- A separate money account a city keeps for its water system. Water bill payments go in, water system costs come out, and the money is not mixed with other city spending.
- Debt service
- The money a utility must pay back each year on loans it took out to build big projects, much like a family paying its mortgage. These payments come out of customers' water bills.
Also: revenue, reserve, fixed cost, variable cost
Teacher overview
Most city water systems are run as enterprise funds, meaning the utility pays its own way from the bills its customers pay rather than from general taxes. This worksheet gives students the annual budget of a fictional utility, walks them through the arithmetic of shares and shortfalls, and then asks them to judge a council proposal that looks attractive on the budget sheet. The scenario is invented, but the budget categories match the ones a real utility budget would show, so the worksheet doubles as practice in reading a public document.
Student Worksheet
The city of Fairden, a fictional city created for this worksheet, runs its water utility as an enterprise fund. By law, the fund's revenue comes from its customers and must cover the system's own costs. The adopted budget for the coming year is below.
| Revenues | Amount | Expenses | Amount |
|---|---|---|---|
| Residential rates | $5,400,000 | Personnel | $2,800,000 |
| Commercial rates | $2,100,000 | Energy | $800,000 |
| Connection fees | $500,000 | Treatment chemicals | $600,000 |
| Main maintenance | $1,400,000 | ||
| Debt service | $1,600,000 | ||
| Reserve contribution | $800,000 |
- Calculate the utility's total budgeted revenue.
- Calculate the utility's total budgeted expenses.
- Calculate personnel costs as a percent of total expenses.
- Calculate debt service as a percent of total expenses.
- Energy and treatment chemicals rise and fall with the amount of water produced, so treat them as the variable costs. Calculate their combined share of total expenses as a percent.
- A drought-year conservation push cuts revenue 10 percent while expenses stay the same. Calculate the size of the resulting shortfall in dollars.
- Using the description above and the budget, explain in one or two sentences why Fairden keeps the water utility's money separate from the city's general fund.
- To avoid a rate increase, one council member proposes cutting main maintenance from $1,400,000 to $900,000. Calculate the savings from this cut.
- Name the cut's intended outcome and one likely unintended consequence for the system in later years. Answer in two or three sentences.
- The reserve contribution is $800,000 per year. If the reserve starts at zero and earns nothing, calculate how many years of level contributions it takes to reach $4,000,000, the cost of the utility's next planned filter rebuild.
From Water for Schools (waterforschools.org). This material is in the public domain (CC0) and may be copied, edited, and shared freely.
Answer Key
- Answer: $8,000,000 total revenue. Residential rates of $5,400,000 plus commercial rates of $2,100,000 plus connection fees of $500,000 equal $8,000,000.
- Answer: $8,000,000 total expenses. Adding $2,800,000, $800,000, $600,000, $1,400,000, $1,600,000, and $800,000 gives $8,000,000, so the budget is balanced.
- Answer: 35 percent of expenses. $2,800,000 divided by $8,000,000 is 0.35.
- Answer: 20 percent of expenses. $1,600,000 divided by $8,000,000 is 0.20.
- Answer: 17.5 percent of expenses. Energy plus chemicals is $800,000 plus $600,000, or $1,400,000, and $1,400,000 divided by $8,000,000 is 0.175.
- Answer: $800,000 shortfall. Revenue falls to 90 percent of $8,000,000, which is $7,200,000, while expenses remain $8,000,000, leaving a gap of $800,000.
- Answer: Because an enterprise fund must pay its own costs from customer revenue, keeping the money separate shows whether rates actually cover the system and prevents water bills from quietly funding unrelated city spending, or taxes from hiding the water system's true cost.
- Answer: $500,000 in savings. Cutting maintenance from $1,400,000 to $900,000 reduces spending by $500,000.
- Answer: The intended outcome is avoiding a rate increase in the coming year. A likely unintended consequence is that deferred maintenance lets mains deteriorate, so the utility faces more breaks and a larger repair bill later, costs that can exceed the $500,000 saved now.
- Answer: 5 years. $4,000,000 divided by $800,000 per year equals 5 years of level contributions.
Differentiation
Support
Have students complete items 1 and 2 with the addition already set up in column form, then confirm the balanced total before moving to percent items. Provide the percent formula worked once using the reserve contribution as the example.
Extension
Ask students to rebalance the fictional budget after the item 6 shortfall without touching main maintenance or debt service, stating which categories they would cut or which revenues they would raise and defending the fairness of their choice in three sentences.
ELL supports
Pre-teach revenue, expense, and reserve with a three-jar visual labeled money in, money out, and money saved. Allow items 7 and 9 to be answered with a sentence frame: "The fund is separate because ___" and "The cut saves money now, but later ___."
Extensions
Students can locate a real utility budget summary the teacher provides and compare its category shares to the fictional Fairden budget, noting one category real budgets include that this simplified table leaves out.