When I was appointed to the Business Advisory Council (the first time) in 2003, the BAC had just recommended the district cut $20 million out of its Five-Year Forecast. This group of extremely bright people understood that, while the Five-Year Forecast is a projection of what could happen, it is also a very valuable tool to manage that potential future. Unfortunately, the district, under a previous board and administration, disregarded this advice and, over the next several years, spent itself into fiscal caution status.
The first year I joined the board, the prevailing attitude was still that the Forecast was not really valuable for planning purposes and understanding the future. The board made some very large financial decisions without an updated Forecast – and they were mistakes. We may have made the same decisions; I can’t judge that. But if we had, we would have at least understood the impact not only those decisions, but other changing factors, had over the next few years.
Today, I’m happy to say the administration and board understands the value of the Forecast. After those uninformed decisions a little over three years ago, I insisted we change our approach and update the Forecast not only at the “required” times, but any time there is a major change in either revenue or expenditures.
The most recent forecast is a good example of this. We now have more information on state funding and some other expenses (for example, staffing and insurance cost), and Treasurer Debbie Caudle presented an up-to-date forecast for our review. This coincided well with the legal requirement to file a Forecast by October 31 – whether we had details on these pieces or not, we would have to file with the best information we had.
In addition, this Forecast looks very different than those from a few years ago. Why? Because the board and administration over the past six years has done exactly what the BAC recommended back in 2003, and cut over $20 million from the Forecast.
The Forecast shows where we can expect to be in five years if nothing were to change. This, of course, is impossible: costs will shift, new requirements will be implemented, revenues will change based on many factors. With the new attitude of using this as a planning tool, we will keep the Forecast updated and use it to understand the shifts in the business of running a school district.
The current Forecast is available here 05 Five Year Forecast 101413 if you’d like to see it. Any questions, please let me know.