The 5 Year Forecast and Its Implications

Based on the information provided in West Clermont's November 2023 Five Year Forecast, key budget projections include the following:

Revenues vs Expenditures:

• Revenues are projected to grow by an average of 1.4% annually from FY24 to FY28
• Expenditures are projected to grow by an average of 5.4% annually over that period
• This means expenditures are growing faster than revenues, which leads to a budget deficit

Cash Balance:

• The cash balance grew to a high of $24.75 million at the end of FY24 
• However, due to expenditures outpacing revenues, the cash balance is projcected to decline after FY25.
• The May 2024 Five Year Forecast projects spending deficits (expenditures exceed revenues) beginning in FY26.  By FY28, the ending cash balance is projected to be $4.2 million with a spending deficit of $10.77 million.  

Levy Outlook:

• The assumptions do not include any new levies during the 5 year forecast period through FY28
• However, with expenditures exceeding revenues and leading to low cash balances by FY28, indicates the district will likely need to pursue a new operating levy as early as FY26 to avoid critiacally low balances or even a deficit.

Long-Term Outlook:

• With a projected budget spending deficit and low cash balances by FY28, the long-term financial health depends on either increasing revenues (likely via a new levy), decreasing the rate of expenditure growth, or a combination of both
• Continued expenditure growth of 5.4% annually is likely unsustainable without new revenue sources long-term
• The district will need to balance educational investment needs with the financial capacity of the community in its long-term planning

West Clermont's five-year forecast points to a likely need for a new operating levy as early as FY26.  Long-term sustainability will require carefully managing the growth of expenses and aligning them with revenue growth and community funding capacity. Proactive planning and stakeholder communication will be essential.