Page 65 - Southlake FY24 Budget

Another strategy that the City uses to manage General Fund cost growth is to consider the cost of
existing services to the growth of the Consumer Price Index (CPI) for the Dallas/Fort Worth Area, less
food and energy. This includes any contract increases, salary increases, or any expenses that relate to
the current cost of doing business. Any expenses that are service enhancements or unfunded legislative
mandates are not considered a part of this evaluation. The CPI used in the FY 2024 budget is shown in
Figure 8. These are just some of the strategies that are used to manage expenses.

Maintaining Optimum Fund Balances

Another important financial goal is ensuring the maintenance of optimum fund balances in operating Budget Overview
funds, in accordance with City policy, which can be found in the Appendix. Maintaining proper reserves
increases the organization’s ability to absorb or respond to temporary changes in the environment or
circumstances, such as an unanticipated event or changes related to operating revenues. Per the Fund
Balance Policy, the undesignated fund balance in the General Fund should range between 15% and
25% of operating expenses. For FY 2024, 25.1% of General Fund operating expenses are reserved for
unanticipated or emergency needs.

Forecast Expenditures
The City of Southlake conducts a five year forecast for the General Fund, Utility Fund, Hotel Occupancy
Tax Fund, and sales tax funds. These forecasts reflect the annual projected expenditures required to
sustain the current adopted level of service, meet debt obligations, and the obligations of the proposed
Capital Improvements Program. In addition to forecasting using the assumptions shown in this section,
the financial model conducts several scenarios to understand the health of the fund in the event of an
impact on revenues. The forecast for the General Fund is shown in the chart below.

Figure 9

General Fund Five Year Financial Forecast* FY 2024 - FY 2028

FY 2024
FY 2027
FY 2028
FY 2026
Revenue Adopted FY 2025 Forecast Forecast Forecast
Forecast
Budget*
Revenues $55,826,936 $56,552,633 $57,385,811 $58,031,855 $58,708,443
Expenses $52,625,123 $54,863,400 $57,634,304 $59,816,511 $62,112,334
Surplus/ $3,201,813 $1,689,233 ($248,493) ($1,784,656) $3,403,891
(Deficit)
Net Transfers ($2,682,760) ($718,923) ($205,018) $2,808,957 $2,823,002
Reserves $13,211,435 $14,181,745 $13,728,234 $14,752,535 $14,171,645
Reserves as a
% of operating 25.10% 25.85% 23.82% 24.66% 22.82%
expenses
*Forecast is not a budget, but is a preliminary estimate of FY 2024 to FY 2028 financial results.

Forecast Results
The FY 2024 to FY 2028 five year financial forecast indicates a structurally balanced budget, while
aligning with the City’s financial principles. Under this forecast, the City of Southlake does not anticipate
the need for service reductions to meet the needs of today’s service levels. This forecast is continually
updated throughout the fiscal year to ensure continued accuracy of these projections.

FY 2024 City of Southlake | Budget Book 65