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proportionality (acceptable), such as <br />personnel counts, budget size, etc. <br />Acquisition of statistical information from <br />City databases will likely be requested <br />throughout the study as issues for further <br />analysis arise. <br />Task 3 1 Revenue Requirement <br />Forecast <br />The purpose of this task is to develop the <br />financial plan that serves as the foundation for <br />cost of service and cost recovery requirements <br />for each fully self -supported internal service <br />fund. It will produce a multi -year forecast — 5 to <br />10 years — of fund needs and estimated <br />performance. <br />TASK 3.11 OPERATING FORECAST <br />ClearSource will prepare a forecast of <br />operating revenues and expenses in each <br />fund, built from prevailing levels (e.g., <br />adopted budget) and forecasted by <br />applying industry inflation metrics and/or <br />City -specific historical patterns and known <br />schedules. Attention will also be paid to <br />expenses that do not follow a yearly <br />spending pattern. This will yield total <br />annual recurring expenses and <br />corresponding annual revenues in each <br />year of the forecast. <br />TASK 3.2 1 CAPITAL FORECAST <br />ClearSource will prepare a forecast of <br />capital revenues and expenses in each <br />fund, built from established plans of each <br />internal service fund and/or historical <br />activity. Capital investments encompass <br />ongoing, annual levels of rehabilitation <br />and/or replacement of assets, as well as <br />specifically identified projects (e.g., major <br />replacements or widely applied <br />improvements). Revenues encompass <br />sources outside of the ISF rate structure, <br />where applicable (e.g., grants, external <br />cost -sharing, special fees, or negotiations) <br />and capital replacement components <br />embedded in the ISF rate structure itself <br />for long-term asset management. This <br />forecast will yield annual burdens to the <br />fund in each year of the total financial <br />plan. <br />TASK 3.3 1 FUND PERFORMANCE FORECAST <br />ClearSource will model yearly cash flow in <br />each internal servicefund, identifying <br />:) Beginning cash balances. <br />Z All inflows and outflows stemming <br />from the forecasts. <br />:) Ending cash balances. <br />Z Attainment of established or <br />recommended fiscal policies. <br />:Z Health of dedicated reserves for <br />bother operations and capital <br />requirements. <br />TASK 3.4 1 RESERVE FUNDING ANALYSIS <br />Stemming from the fund performance <br />forecast, ClearSource will develop a <br />reserve funding target to level annual <br />burdens demonstrated. This identifies a <br />component of the overall rate burden <br />intended to accumulate cash balance in <br />the fund in advance of peaks in spending, <br />typically caused by any noteworthy <br />periodic operating expenses or, more <br />often, by specific capital investments <br />anticipated in certain years of the forecast <br />or over longer -term life cycles of major <br />assets, such as facilities or core <br />infrastructure. Reserve components in <br />rates provide an ongoing revenue source <br />for long-term asset management and yield <br />CLEARSOURCE PROPOSAL TO THE CITY OF SANTA ANA SECTION 4 <br />