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Hard Asset Optimization

Pre-K Education (2017)

#Education
ProHub Comment

This case tests asset optimization and supply-demand analysis in a non-traditional business context (public education). The solution reveals that the candidate must recognize resource misallocation across regions rather than simply calculating additional capacity needs, and critically evaluate program effectiveness before justifying taxpayer investment.

Estimated Time 15 minutes
Difficulty Hard
Source Columbia
50 / 100

Your client is the State Department of Education and it is looking to improve the education outcomes of the general population. The department believes that investment in Pre-Kindergarten education (ages 3-4) is key and wants to increase the capacity of its state accredited Pre-K programs. The client is thinking about running a campaign to raise taxes to fund this initiative and have come to us with three questions:

  1. How many additional spots for children need to be funded for the Pre-K programs?
  2. How much will the campaign cost?
  3. How should they approach the tax increase campaign?

Clarifying Information

Market:

  1. Population experiencing steady growth. Assume equal distribution of children in each age amongst all kids 3-18 years old
  2. Not in competition with private programs as the public market is only for children from low-income families (who could not afford private programs)

State:

  1. The State Department of Education has already launched a similar initiative and provided some funding. Now they want to expand the program
  2. The graduates of last year’s program did not show great results when they were tested on their social and aptitude for learning skills. (How long they can sit still, how they interact with other kids.) The State Department of Education hope that perhaps the poor result is due to flaws in the test

Revenues:

  1. No revenues since the program will be free. Want to limit capacity to only children from low-income families

Costs:

  1. Cost per 1 spot is $10,000 a year to the state