EXPENDITURES

The Expenditures category of the Town’s budget is comprised of six sections; Municipal Departments, the School Department, Non Departmental, Special Appropriations, Enterprises and Non-Appropriated. Overall, expenditures in the FY 21 Budget are $358,754,772, up by $23 million for an increase of 6.8% over FY 20. Following is a summary of the FY 2021 recommendations to each category of Expenditures.

Municipal Departments

The total amount of all municipal department budgets is recommended to be $81,681,032 in FY 21, or an increase of 3.4% over FY 20. This amount includes a reserve to cover one unresolved collective bargaining agreement with a municipal union.


The available budget capacity allocated to Municipal Departments in FY 21 was necessary to absorb cost increases in employee wages and benefits and contractual increases for various goods and services. The costs for employee health insurance will increase by 5% in FY 21 following a few years of lower than average rate increases. The cost to support the Town’s Pension funding plan increases by 7.94%, excluding free cash allocated in FY21, but we are beginning to see the end of a long journey to properly fund the liability in this obligation. In FY 21, the Town is proposing to increase the Refuse Fee to cover extraordinary cost increases to collect, process and dispose of the Town’s recycled materials.


In June 2020, all current solid waste disposal and recycling contracts with Casella Waste Systems will expire. Negotiations are underway for potential contract extensions but preliminary proposals from Casella have indicated that solid waste disposal costs will increase by nearly $338,000 and recycling costs will increase by $236,000. Without addressing the user fee, this budget increase would have the net effect of reducing the cost recovery to 59%.


Adoption of the new rates will restore the cost recovery of the Sanitation Program to previously accepted levels and provide the Town with the additional revenue needed to fund cost increases for the additional recycling processing costs and to fund the provisions of new contract extensions. As recycling costs hopefully decrease in the next few years, as new markets open, the cost recovery rate will increase but still remain below a comfortable 80%.

The FY 21 Budget maintains existing staffing and service levels in most departments, but is extremely limited in funding new initiatives or expansion of services and programs. An exception is the funding of two additional positions to support the inspectional obligations of the Town for private construction; one in the Building Department’s inspection division and another in the Fire Department’s fire prevention division. The inspectional function is a fundamental public safety obligation of the Town which has been impacted by increased development activity in Brookline. With the upcoming regulation of short tern rental units (Airbnb) this will create even more impacts upon our inspectional personnel.


Revenue from host community agreements with adult use marijuana establishments has provided a new source of dedicated funding that must be used to address community and neighborhood impacts from this new enterprise. At the Special Town Meeting in December 2019, the Town appropriated $867,660 of this revenue to support a series of mitigation expenses for Brookline Village, the site of the most active marijuana retail shop in Massachusetts. These funds support additional police presence, parking enforcement, park patrols and litter control. Other funds are being used for youth education and substance abuse programming. This funding is included in the FY 21 Budget.

HCA Summary

In addition, we will be establishing a special fund to hold new host community revenues for future appropriation. The Select Board has created a new advisory body to evaluate and recommend use of these funds. Meanwhile, we must consider the resolution adopted by Town Meeting that encouraged the use of marijuana revenue to support racial equity advancement programs. The non-binding resolution identified marijuana excise tax revenue for this program, but I am proposing use of marijuana host community impact revenue instead. The current Override plan had already committed the tax revenue, and its diversion to the racial equity funding would create unacceptable impacts to current municipal and education funding. I believe a strong case can be made that using host community impact funds for racial equity programming is consistent with the Cannabis Control Commission’s commitment to support populations that have been disproportionately impacted by high rates of arrest and incarceration for marijuana crimes as a result of state and federal drug policy. In the event that the Commission does not allow use of host community revenue for this purpose, we will need to reevaluate the projected growth in marijuana excise tax funding and more fully understand the impacts on the Budget by allocating general revenue for this new initiative


We are proposing that a portion of new revenue proposed by Governor Baker resulting from surcharges on ride sharing services like Uber and Lyft be allocated to transportation sustainability purposes. A Town Meeting resolution passed in December sought more aggressive sustainability initiatives in transportation, and we believe the use of these funds for professional staffing in this area is both permissible and essential. We also believe additional effort in maintaining traffic painting markings to facilitate safe and efficient bicycle travel in Brookline would be a prudent use of the new funds. It should be noted that the Governor’s proposal to enact this surcharge requires approval of the Legislature.


Finally, we will propose use of Boston Marathon special funding to create a local match for state funded grants to arts and cultural programs chosen by our local cultural council. To date, the Marathon funds have supported community based cultural and recreational programming and we consider the cultural grant match to be consistent with these efforts.


A more detailed description of changes in municipal departmental budgets can be reviewed within the Departmental Budget recommendations section.

School Department

The School Department’s Budget is recommended to be funded at $123,361,137 in FY 21, an increase of 5.1% over FY 2020. This amount is inclusive of all salary and wage adjustments for teachers and other school employees. This budget amount is derived by applying the Town School Partnership formula plus $1,223,591 in budget capacity from the three year tax override plan approved by Brookline voters in May of 2018.


Despite the additional revenue allocated to the School Department from the Override, the School Department’s budget is constrained by increases in employee wage and benefit costs and increases in mandated special education expenses.


For a more detailed review of the School Budget, see the School Department submission in Section IV of this document.

Non-Departmental

This category of Expenditures is a large component of the Town’s Budget, including such fixed costs as pensions, health insurance, other insurances and debt service. It also covers the Reserve Fund, which is the account administered by the Advisory Committee to cover any emergency or unforeseen expenses that occur throughout the year, including snow and ice removal expenses. While this category is not assigned to a particular department, its costs are accounted to Municipal or School departments as part of the Town School Partnership formula for allocating new revenues.


Overall, this category of expenditures is recommended to be funded at $98,720,655 in FY 21, an increase over FY 20 of 10.5%. This category includes many of the Town’s “budget busters”, which are those expenses that rise higher than the general rate of inflation. This category of expenditure also includes a $2,000,000 appropriation for the Town’s Stabilization Fund and a $800,000 appropriation for a new Host Community Stabilization Fund which will be created at the Annual Town Meeting.


Pensions and OPEB- Eligible employees of the Town and School departments are part of the Massachusetts Contributory Retirement System and receive a defined benefit upon retirement (state and local government employees in Massachusetts are not eligible for participation in the federal Social Security system). The Town of Brookline funds the annual expense of existing pension payments, and has established a special, actuarially approved schedule to meet the unfunded liability of the system. The total amount of Pension funding in FY 21 is $26,569,845, representing a 6.64% increase over FY 20. Within ten years, the Town will eliminate the unfunded portion of the pension liability. At that time, the Town intends to shift this funding capacity to meet the other major unfunded retirement obligation of the Town; Other Post Employment Benefits, or OPEB. OPEB involves the cost of providing health insurance benefits to municipal and school employees and their survivors upon retirement. For FY 21, we are recommending an appropriation to the OPEB Trust Fund of $4,431,980, a decrease of 7.32% over FY 20 due to the use of Free Cash to boost the appropriation in FY 20. The OPEB liability has become an important factor in disclosing the fiscal health and credit worthiness of a municipality. The Government Accounting Standards Board (GASB) has initiated Statement #74, which requires disclosure of the OPEB liability in a municipality’s financial statements. While not yet a required funding obligation by the town, this new requirement makes the OPEB liability a major factor in the Town’s long term fiscal health. The latest net OPEB liability on the Town’s FY 2019 financial statements is $247,463,420.

Employee Health Insurance- The Town is obligated to provide health insurance to permanent employees (and their families) who work at least 18.75 hours per week. The Town also covers retirees and their survivors. The Town procures its insurance coverage through the Massachusetts Group Insurance Commission (GIC), a governmental entity that manages the health care benefit for employees of all state agencies and dozens of cities and towns. The contributions of GIC premiums and other out of pocket costs between the Town and its employees are a mandatory subject of collective bargaining. An official Public Employee Committee (PEC), comprised of representatives of unions and retirees, meets with the Town to bargain over the costs and other terms of this benefit.


The GIC has been very aggressive in keeping its costs/rates as low as possible. We are projecting 5.0% increase in rates for FY 21 and have created a reserve for future employees who may join the plan during this period.


Special Appropriations- This category of expense is mainly the annual appropriations for projects within the Capital Improvement Plan (CIP). The CIP is funded through a combination of direct appropriations and the issuance of debt. In FY 21, the direct appropriations to fund capital projects is $13,958,250. This level of appropriation is bolstered through the use of over $8 million in Free Cash. A much more detailed review of projects funded through the annual budget appropriation is discussed in the CIP Section of this document.


Debt Service- Another expense within the Non-Departmental category is the Town’s obligation to repay debt, which is the cost of principal and interest charged on the issuance of municipal bonds. Incurring debt is an accepted mechanism to amortize the cost of major capital purchases or projects over time and is a major strategy in the Town’s capital financing program. The Town’s fiscal policy dictates that at least 6% of the Town’s net revenue be allocated to fund capital projects. Within that 6% amount, we strive to have 4.5% funded via debt. In FY 2021, the Town will fund a total of $22,391,916 in debt service, up by 18.9% from FY 20 due to the borrowing for the High School and Driscoll School projects. Since the debt for these projects have been excluded from the limitation on tax increases imposed by Proposition 2½, the percentage of the Town’s Budget devoted to financed capital projects within the levy will be 4.1% in FY 2020. As the BFAC report highlights, this increasing debt burden can create a concern for the bond rating agencies.


In anticipation of funding for an expanded Baldwin School, the Town had acquired a three-unit townhouse property on Oak Street intended to increase the space available for the new school. After the project failed, that funding source was no longer available and the Town has added the cost of this property acquisition to its debt load. Preliminary efforts to sell the property failed at Town Meeting, so the Town will lease the units to help defray this unanticipated expense.

Enterprises

The FY 21 Budget includes $32.3 million in expenses related to business type enterprises of the Town. It is the Town’s policy to recover 100% of the costs associated with these activities through fees or other charges to users rather than through the general tax levy. The Town’s formal enterprises include the water/sewer utility and the golf course. A recreation revolving fund is a similar but separate accounting mechanism. The water/sewer and golf course operations are fully funded through fees and charges while the recreation programs are subsidized 23% from the Town’s General Fund. It is the Town’s policy that all direct and indirect expenses of the Enterprises, including debt service and employee benefits, be accounted for and paid to the Town’s general fund to ensure that the Town’s taxpayers do not subsidize such activities.

Non-Appropriated

This category of expenses relates to charges that are mandated but not required to be appropriated by Town Meeting. However, since these expenses must be funded within the Town’s Budget, they are fully disclosed and accounted for in this Financial Plan. State and county assessments at $6.8 million are the largest part of this category, of which the $5.3 million assessment to the MBTA represents the major share. The Town’s assessment to Norfolk County is $1.1 million in FY 21, leading new calls (this time as part of the BFAC report) to eliminate this unreasonable financial burden on the Town. Most other counties in Massachusetts have been abolished and their costs assumed by state government. Furthermore, the Town of Brookline has the highest assessment of all 28 Norfolk County municipalities, despite its geographic distance from county facilities and services.


Another expense that is covered in the Non-Appropriated category is the Tax Overlay account at $1.8 million. This is an account that is under the control of the Board of Assessors and is used to fund the annual cost of property tax abatements and exemptions.