FY2022-FY2026 Long Range Financial Plan

December 22, 2020

Summary

Employee Benefits and Collective Bargaining continue to put pressure on Town and School budgets

Local Receipts continue to lag

School Cost pressures: SPED, Steps, Collective Bargaining

Town Cost pressures: Collective Bargaining, Solid Waste and Recycling, Pension and OPEB funding

Town budget $1.7M deficit and the Schools have a FY2022 deficit of approx. $9.5M (structural deficit)

Primary Assumptions

Revenue

Within the Property Tax projections, “new growth” no longer based on anticipated projects –timing has been hard to predict and has reduced the base from which override plans have been built.

Uncertainty with State Aid - assuming 15% reduction

Refuse Fee - full year increase seen in FY22 (voted for 1/2 the year in FY21)

Parking Meter rates - recommended by the T-Board, but deferred by the SB for FY21


Expenditures

Health Insurance rate increases of 5% in FY22 -23 + continued subscriber growth 30/10 S/T.

Pension- follows funding schedule based on valuation as of 1/1/20.

2% Collective Bargaining increases in each fiscal year, 0% in FY22 for Town.

Schools assuming 5% personnel growth for steps, lanes and bargaining (net turnover).

Continued funding of OPEB’s per the Town’s funding schedule.

All formal Financial Policies (CIP, Free Cash, Reserves) are continued.


Recent History

In FY08, $3.2M budget gap addressed by a combination of revenue increases ($1.5M), Health Insurance plan design changes ($755K), DPW Initiatives ($369K), and Budget cuts ($548K).


In FY09, voters approved a $6.2M Override for structural deficit ($2.1M), infrastructure shortfall ($1.5M), Lengthened School Day & EWL ($2.6M).


In FY10, closed a $5M budget gap via cuts and reorganizations/consolidations, many proposed by the EIC. (Primary cause of deficit = $3.1M (19%) cut in State Aid.)


In FY11, entered the GIC, saving $5.6M, thereby avoiding budget cuts and service reductions. Began implementing an enhanced OPEB funding plan. Also realized first full-year of new meals tax and increased lodging tax, which was dedicated to pension funding.


In FY12 - FY14, Forecast dynamic of balanced Town budget vs $1.5M - $2M+ deficit for Schools.

Budgets ultimately balanced by a combination of increases in local revenues, realizing additional State Aid, lower growth in Health Insurance rates, and reductions in the School budget.


In FY15 “Bridge year” GIC rate savings allowed the town to delay implementation of a Parking Meter rate increase


FY16-FY18 Three-year funding plan provided $7.665M of addl. tax capacity (override funds) plus $2.3M in non-tax revenue primarily from the Parking Meter Rate Increase and Town expenditure reductions


FY19-21 New three-year funding plan disrupted by COVID-19 pandemic in the third year. Reductions to Town and School budgets


Future Revenue & Expenditure Growth