FILE:  DCF

 

LONG-TERM FORECASTING

 

 

The annual operating budget focuses on a single twelve month period.  Nevertheless, spending and revenue decisions made today have effects that extend beyond the twelve month period.  New capital expenditures require additional spending on operations, maintenance, and debt carrying charges.  Additionally, altered health care benefits carry long-term commitments to other post employment (OPEB) benefits. Hiring, layoff, and salary schedule decisions also have fiscal impacts that extend well beyond the year in which they are made.

 

Accordingly, the purpose of this policy is to:

 

 

Financial sustainability is defined as the School Board’s long-term financial performance and positioning, where planned educational services can continue without interruption, without unplanned increases in taxes, and without disruptive cuts to services.

 

Commitment

 

Each year, the Superintendent or his/her designee shall forecast operating revenues and expenditures for all funds that will have an ending fund balance or net position (as defined by Generally Accepted Accounting Principles).  A clear presentation of such information and/or the resources needed shall be presented with, and made a part of, the annual operating budget document.

 

The process should identify critical areas which have, or are expected to have, an impact on the financial condition of the School Board over the next three to five years.  This commitment is intended to:

 

 

Scope

 

The Superintendent shall issue long-term forecasts of revenues, expenditures, and financial position for a period of at least three years into the future, or longer where the specific issues call for.  The forecast shall include, but not be limited to, an analysis of the affordability over a multi-year period of:

 

 

IDENTIFYING POTENTIAL FUTURE Imbalances

 

Long-term forecasting shall be required annually and shall be included in the annual operating budget document for the purpose of identifying potential future imbalances.  The forecasting method shall include financial data and shall start with the baseline assumption that current programs and services will be maintained.

 

The financial data used to support the forecast shall consist of financial data from the previous two budget years, the current budget year, the proposed budget year, and forecasted data for at least three (3) years beyond the proposed budget year.  Additionally, the financial data within each fund shall include at a minimum:

 

 

Should long-term forecasts and analysis show that the school system does not have a “positive operating balance” over the multi-year period, the Superintendent shall bring this to the attention of the School Board by including such information within the transmittal letter section of the operating budget document.

 

For the purposes of this policy, a “positive operating balance” means that the ending fund balance (or net position) meets or exceeds the minimum levels prescribed by the School Board’s reserve policies.

 

Long-Term Balance

 

To maintain long-term fiscal solvency and to minimize any disruptive effects in future budget years, the School Board directs the Superintendent to present proposed budgets and/or budget revisions that will place all one-time revenues and unpredictable revenues (which are defined as non-recurring because they are unreliable in future budget periods) into non-recurring expenditures first.  Acceptable uses of non-recurring funds shall include, but not be limited to:

 

 

Additionally, if a “positive operating balance” is not shown within a fund for any fiscal year forecasted beyond the proposed budget year, the Superintendent shall be required to identify strategies that would restore these reserves to the required minimum levels outlined in the School Board’s reserve policies.

 

New policy:  March 6, 2014

 

 

Ref:    Board minutes, 3-6-14

 

DeSoto Parish School Board