Do we spend this scarce public money on a new high school or on a new water plant? That is the kind of tradeoff in cost effectiveness that local government make every day.
Here was the problem in Flint and it might well have occurred even without an emergency manager.
Detroit Water and Sewer District (DWSD) is run by the city of Detroit, yet it provides water and sewer services for much of southeast Michigan (including Flint). DWSD has two problems. First, it has become a bloated "jobs program" for the city. Second, the city doesn't have the political will to turn off the water for those not paying their bills resulting in people that can pay not paying either. To fund their massive bureaucracy, DWSD relies on raising the rates for those "evil, rich suburbanites" to make ends meet. Flint isn't "rich" and the poverty rates are similar to Detroit.
Flint saw a way out of DWSD by joining a group of government entities tapping Lake Huron for their own water. Unfortunately, that would take a couple of years. DWSD wanted an arm and a leg for a short term deal and the decision was made to use the Flint River as an interim solution. They calculated that they could make the water safe for drinking (and the water was probably safe to drink at the water plant). Unfortunately, the decision was made not understanding the condition of the water mains, the taps to the houses, and the house interior plumbing.
What was done was supposedly for the public good and to make water more affordable for the poor in Flint. The road to Hell is often paved with good intentions. Once problems were found, the bureaucrats and the politicians did what they always do when there is a problem, they duck and run and start a coverup.