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experience to project future trends. The opinions of the City's department heads are also factored into this approach before finalizing these
projections.

EXPENDITURE METHODOLOGY

In addition to each of the revenue forecasting methods explained above, Benbrook's financial forecast for expenditures includes a combination
of the incremental and deterministic forecasting models. The following summary outlines the major characteristics of the expenditure portion of
the forecast.

1) The expenditure forecast assumes "a constant level of services" that accounts for inflation but ignores service enhancements.

2) The forecast does not allow for personnel increases based on projected population increases but does include salary adjustments based
on the projected rate of inflation.

3) The forecast separates expenditures into a variety of line items, and projects those expenditures based on a separate set of inflation
factors or rates.

4) The forecast includes operational and maintenance costs associated with new capital facilities.

These revenue and expenditure forecasts combine to form the basis of a comprehensive financial condition analysis of each of the City's
operating funds.

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