Forecasting and Public Budget

Subject: Findings from analyzing the Arapahoe County 2017 Adopted Budgets by using the 2013-16 Adopted Budgets to establish a baseline for comparison
The purpose of this memo is to relay to you the findings I obtained from a comprehensive analysis of the Arapahoe County 2017 Adopted Budgets through the preceding Adopted Budgets for the preceding 2013 – 2016 financial years, with the aim of developing a baseline for making comparisons. The main objective of this analysis is to pinpoint prospective areas to make inquiries to the department regarding the budget submissions made.
The forecasting process was conducted in three ways. The first approach was through regression using the forecast function. The forecasted amounts for all expense categories increased as compared to the 2016 Adopted Budget. The adopted budgets for 2013 to 2016 fiscal years ranged from 8.4 million to 12.4 million. The second approach employed for the budget projection is the compounded annual percentage change. The compounded annual percentage change for salaries and wages and employee benefits were obtained to be 9.3 percent and 4.4 percent respectively. The 2017 forecasted amount for salaries and wages using the compounded approach is $7,467,104.77 whereas that of employee benefits is $1,937,808. One of the assumptions that we made is that personnel-related categories would be trend whereas the non-personnel categories would not trend. This particular assumption can be perceived to be right as the percentage change in the budget projection trended upwards for salaries and wages and employee benefits expense items. The compounded annual percentage change for salaries was computed to be 9.3 percent and that for employee benefits stands at 4.4 percent. This indicates that these expense category items for the 2017 trended upwards. However, it is imperative to note that these changes do not indicate a consistent trend.
There is an expense item in the comparisons between the high and low projections and the 2017 Adopted Budget amounts that necessitates increased analysis and scrutiny. The projections for the central services indicates an alarming change between the two projections. The low projection stands at 56.61 percent whereas the high projection stands at 1.38 percent. This is indicative of a significant discrepancy and therefore necessitates detailed and closer scrutiny.
The methods of projecting the 2017 budget seems to highlight a number of issues on what the budget developers came up with. This is based on the fact that the 2017 Adopted Budgeted expense items are considerably lower in comparison to the 2017 low projections and 2017 high projections. The 2017 adopted budget is $10,614,333 whereas the total low projection is $11,938,401 and the total high projection is $13,058,708. This indicates that the amounts in the adopted budgets are lower than the projections given. This approach without doubt can act as a standard stick to employ in assessing future budgets to ascertain if the request of the Clerk and Recorder’s department request is not at par. In this particular case, the high and low projections show that the budgeted amounts are too low.