Transcript City of Chelsea

Town of Swampscott
Financial Forecast Fiscal Years 2006-2010
and FY06 Budget Overview
Presented to the Board of Selectmen, School Committee and
Finance Committee
Andrew Maylor - Town Administrator
November 15, 2004
Table of Contents
I.
Introduction
•Financial Planning Process
•Goals and Priority Areas for FY06
•Managing the Impact of the Economic Downturn
II.
Five Year Financial Forecast
•Pro Forma Assumptions General Fund
•Revenue and Expense Summary and Chart
•Town and School Charts
III.
Fiscal 2006 Budget
•Revenue Sources and Chart
•Expense Categories and Chart
IV.
Water and Sewer Enterprise Funds
•FY06 Budget Overview
•Pro Forma Assumptions Enterprise Funds
•Five Year Forecast and Rate Projections
Introduction
Financial Planning Process
• Annual Financial Planning Process Mandated by Town Charter.
• The Financial Forecast Outlines the Status of the Town’s
Finances for the Future and Identifies Areas of Need for Further
Attention.
• Coordination and Integration of the Components are Necessary to
Develop the Financial Plan Required to Maintain the Town’s
Fiscal Stability.
• Town Administrator will Distribute Budget Packages to
Departments by December 3rd.
• Budgets will be Due in the Town Accountant’s Office by
January 10, 2005.
• School Committee Must Submit School Budget No Later than
February 11, 2005.
Introduction
Financial Planning Process (continued)
• Capital Improvement Committee Shall Recommend a Capital
Improvement Program to the Town Administrator by
February 1st, Including:
- A Clear and Concise Summary of its Contents;
- Proposed Capital expenditures for the Ensuing Year;
- A Five Year Capital Improvement Plan with Supporting Information
as to the Need, Cost and Method of Financing for Each Projected
Capital Expenditure.
• Town Administrator will Submit Operating Budget to Selectmen
in Accordance with Town Charter for Approval by a Majority
Vote by March 1st.
• Selectmen will Forward Budget to Finance Committee within
Seven Days.
• Financial Policies will be created and Used as Guideposts to
Developing Financial Plan.
Introduction
Goals and Priority Areas for FY06
• Present a Balanced Budget to the Board of Selectmen and the
Finance Committee.
• Control Personnel Related Costs and Find Additional Sources
of Revenue to Offset Out Year Deficits.
• Develop an Improvement Plan for Public Buildings and Open
Space.
• Implement the Town Wide Water Meter Replacement
Program.
• Town Meeting Acceptance of M.G.L. Ch. 44B, the
Community Preservation Act.
• Continue to Review, Evaluate, Alter and Track Policy that
Maintains and Enhances Town Government.
• Improve the Coordination of Municipal Service Delivery.
• Develop a Fiscal Policy for Future Budgeting.
Introduction
Managing the Impact of the Economic Downturn
• Limit the Use of One Time Revenues to Balance the Budget.
• To Retain Some Balances in Reserve Accounts to Ensure
Future Financial Stability.
• Prepare for the Uncertainty of School Costs Associated with
State Mandated Education Reform and the New Education
Reform Formula.
• Water and Sewer Enterprise Fund Projections are Based Upon
Full Cost Recovery, As Required By Statute.
Five Year Financial Forecast
Pro Forma Assumptions - General Fund Revenues
Revenues
• State Aid is Projected to be Level Funded in FY06 and 2%
Increase for FY07 – FY10.
• Tax Levy and Levy Limit will Grow Approximately by 3%
Through FY2010.
• Charges, Licenses, Fess and Miscellaneous Revenue Projected
at Either Level Funded or Minimal Increases.
• Fee Schedule will be Analyzed and Reviewed to Maximize
Local Receipts.
• The Use of Free Cash is Expected to be approximately $350,000
for FY2006 with a Slight Increase Through FY2010.
• Nahant Tuition is Level Funded From FY05 to FY06 and
Through FY2010. Actual Dollar Amount will not be Known
Until January For FY06.
• Other Possible Sources of Revenue Include: Overlay Surplus
and Enterprise Fund Indirects ($490,000).
Five Year Financial Forecast
Pro Forma Assumptions - General Fund Expenses
Expenses
• FY05’s Expense Projection was within $47,069.
• Salaries and Operating Expenses (Including Schools) Projected
to Increase 2% Annually.
• Health Insurance Costs Projected to Increase By 10% Annually.
This is Net of Savings From the Town Accepting MGL 32B s18.
• State and County Charges and Cherry Sheet Offsets are Expected
to Increase Slightly Each Fiscal Year.
• Special Education Costs are Expected to Increase on the Average
of 10% Each Fiscal Year Through FY2010.
• Debt Service Based Upon Current and Future Capital
Improvement Programs Cost Expected to Remain at
approximately 5% of the Tax Levy Through FY2010 Exclusive
of School Construction.
• Includes Sewer Debt Exclusion.
• Uncompensated Balance Account has a $90,200 Balance. This
Appropriation will be Gradually Reduced.
Five Year Financial Forecast
Revenue and Expenditure Summary
General Fund
FY05-ACT
FY06-EST
FY07-EST
FY08-EST
FY09-EST
FY10-EST
REVENUES
Property Taxes
New Growth
Debt Exclusion
Total Tax Revenue
$
27,480,655
28,423,921
29,288,269
30,174,226
31,082,332
32,013,140
250,000
150,000
150,000
150,000
150,000
150,000
1,090,973
1,098,547
1,108,561
1,117,717
1,130,103
28,821,628
$
29,672,468
$
30,546,830
$
31,441,943
$
32,362,435
1141753
$
33,304,893
Local Receipts-
4,479,635
4,101,135
4,126,135
4,151,135
4,176,135
4,201,135
State Aid
3,522,147
3,522,147
3,592,590
3,664,442
3,737,731
3,812,485
405,000
350,000
350,000
375,000
425,000
450,000
1,871,955
490,000
495,000
500,000
505,000
505,000
Free Cash
Other Available Funds
TOTAL REVENUE
$
39,100,365
$
38,135,750
$
39,110,555
$
40,132,520
$
41,206,300
$
42,273,513
$
25,223,664
$
25,728,137
$
26,242,700
$
26,767,554
$
27,302,905
$
27,848,963
EXPENSES
Base Operating Expense
Group Health
3,125,000
3,437,500
3,781,250
4,159,375
4,575,313
5,032,844
Other Personnel Benefits
2,480,438
2,604,460
2,734,683
2,871,417
3,014,988
3,165,737
Special Education
4,588,838
5,047,722
5,552,494
6,107,743
6,718,518
7,390,369
Debt Service - CIP
1,740,940
1,483,623
1,527,342
1,572,097
1,618,122
1,665,245
Sewer Debt
1,090,973
1,098,547
1,108,561
1,117,717
1,130,103
1,141,753
850,512
867,522
884,873
902,570
920,622
939,034
Non- Appropriated Exp.
TOTAL EXPENSES
SURPLUS (DEFICIT)-
$
$
39,100,365
-
$
$
40,267,512
$
(2,131,761) $
41,831,902
$
(2,721,347) $
43,498,474
$
(3,365,954) $
45,280,569
$
(4,074,269) $
47,183,945
(4,910,432)
Five Year Financial Forecast
Revenue and Expenditure Gap
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
FY05 FY06 FY07 FY08 FY09 FY10
Total Revenue
Total Expenses
School Department Spending
FY2004
(FY2004 Schedule 19)
Payments to
Other Districts
4%
Administration Payments to
3%
Collaboratives
4%
Operations &
Maintenance
9%
Pupil
Transportation
3%
Instruction
77%
School Department Funding
Summary
Town Appropriation
Excluding Indirect Costs
Chapter 70
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
FY01
FY02
FY03
FY04
FY05
Fiscal 2006 Budget
Revenue Sources
Revenues Projected for the FY06 Operating Budget Total $38,135,750
Revenues are Derived From The Following Sources:
•
•
•
•
•
•
•
Taxes - $29,672,468
Nahant Tuition - $1,026,135
Motor Vehicle Excise - $1,850,000
Licenses and Permits – $160,000
Fines and Forfeits - $95,000
State Aid- $3,522,147
Local Receipts - $970,000
Note- Revenue Detail Does Not Include Free Cash or Other Available Funds Which Total
$840,000
Fiscal 2006 Budget
General Fund Revenue Sources FY 2006
Intergovernmental
Aid
10%
Other Revenue
Licenses, Permits &
3%
Fines
0%
Motor Vehicle Excise
5%
Taxes
82%
Grand Total - $38,135,750
Fiscal 2006 Budget
Expense Categories
For Presentation Purposes FY06 Expenses are Detailed in the Following
Categories:
•
•
•
•
•
•
•
General Government -$3,551,896
School Department - $20,530,365
Public Safety- $6,038,599
Pensions- $2,604,460
Insurances- $4,092,500
Debt Service- $2,582,170
Non-Appropriated- $867,522
Fiscal 2006 Budget
General Fund Expenditure Categories FY 2006
Debt Service
6%
Non-Appropriated
2%
General Government
9%
Insurances
10%
Pensions
6%
Public Safety
15%
School Department
52%
Grand Total - $40,267,512
Water and Sewer Enterprise Funds
FY06 Budget Overview
• The Town’s water/sewer system infrastructure remains in
adequate condition and requires yearly maintenance and
upgrades. With the assistance of $1.1M provided by the MWRA
through an interest free loan, the DPW was able to re-line and
replace two miles of water main.
• Over the past several years, the Department has contracted out
the re-lining or replacement of close to six miles of water main.
This total represents only about fourteen percent of the Town’s
overall infrastructure.
• The remaining water mains are over one hundred years old, and
present the Town with significant losses in water pressure, as
well as, considerable water discoloration problems. Thus the
need for continuous maintenance, which again we hope will be
funded through the MWRA’s Local Pipeline Assistance Program.
Water and Sewer Enterprise Funds
FY06 Budget Overview (cont.)
• Currently over one third of the water purchased by the Town
from the MWRA, is unaccounted for. The Town of Swampscott
has the highest percentage of unaccounted water of any of the
sixty communities serviced by the MWRA. This figure
represents a tremendous loss of revenue to the Town.
• The replacement of existing water meters, many of which are
over fifty years old, will greatly reduce the amount of
unaccounted for water.
• The new systems will be equipped with radio read technology,
which will save the Department a great deal of manpower, as it
relates to the current system of manually reading meters.
• The radio read technology will eliminate several sources of
errors in the current method of reading meters, many of which
are related to estimates, as opposed to actual readings.
• The new system will also allow for the implementation of
quarterly billing, instead of the current semi-annual billing
practice.
.
Water and Sewer Enterprise Funds
FY06 Budget Overview (cont.)
• Through an inter-municipal agreement signed with the City of Lynn
in 1989, the Town of Swampscott sends all its raw sewage to Lynn
for treatment. The sewer system infrastructure is in very poor
condition.
• Almost all the existing mains are well over one hundred years old,
and are constructed of brick or clay. Both these materials have
become obsolete, and contribute significantly to the infiltration and
inflow into the Town’s sewer system.
• During periods of heavy precipitation, the total daily flow to Lynn
is increased by as much as 500%, significantly increasing the
Town’s costs for treatment.
• As the City of Lynn continues to remove infiltration and inflow
from its own sewer system, the resulting percent of costs for
Swampscott rises sharply, again increasing our costs for future
capital projects.
• Through a low interest loan from the DEP, the Town is currently
working with a consultant, engineering firm, to implement a plan to
reduce infiltration and inflow into the Town’s sanitary sewer system.
Water and Sewer Enterprise Funds
Pro Forma Assumptions - Enterprise Funds
• Water Debt will Increase by $56,000 Each of the Next Few
Years. This Represents the Additional Commitments to the
Zero Interest Loan Program Conducted Through the MWRA.
• Debt Service Includes $265,000 to Pay for Replacement of All
Meters and the Installation of Radio Read Devices.
• The General Fund Continues to Pay the Debt Service on Bonds
Required for the Connection to the Lynn SWC. This represents
$1,098,852 for FY 2006 the impact on rates would have been
$2.36.
• For Projection Purposes, the MWRA and Lynn WSC
Assessments have been Level Funded For FY06 and Increased
by Ten Percent Each Year. The MWRA has Projected a Double
Digit Increase for FY2006, and the Lynn WSC Fees Should
also be in This Range.
• Direct Expenses were Increased by 2.5 % per year and indirect
were increased by 20%.
Water and Sewer Enterprise Funds
Five Year Forecast and Rate Projections
ENTERPRISE FUND
Revenues
Water and Sewer Fees
Interest
Liens/Miscellaneous
Total Revenues
Expenditures
Direct Expenses
MWRA Assessment
Lynn WSC Assessment
Debt Service
Additions to Reserves
Indirect Expenses
Total Expenditures
Combined Rate
Percent Change
$
$
$
$
$
$
Projected
FY 2006
Projected
FY 2007
Projected
FY 2008
Projected
FY 2009
Projected
FY 2010
4,612,095
4,996,397
5,417,457
5,878,909
6,384,748
4,612,095
4,996,397
5,417,457
5,878,909
6,384,748
892,095
1,500,000
900,000
825,000
100,000
395,000
4,612,095
8.84
2.9%
$
$
$
$
$
914,397
1,650,000
990,000
907,500
100,000
434,500
4,996,397
9.57
8.3%
$
$
$
$
$
937,257
1,815,000
1,089,000
998,250
100,000
477,950
5,417,457
10.38
8.4%
$
$
$
$
$
960,689
1,996,500
1,197,900
1,098,075
100,000
525,745
5,878,909
11.26
8.5%
$
$
$
$
$
984,706
2,196,150
1,317,690
1,207,883
100,000
578,320
6,384,748
12.23
8.6%
WHAT TO EXPECT
•Fiscal Reality
•Solutions Implemented to Date
•Goals
The Fiscal Realty
Fiscal 2002 – Fiscal 2005
Estimates
• State Aid has decreased by $800,000.
• Health insurance costs have increased by
$1,040,000.
• The Town’s retirement appropriation has increased
by $460,000.
• The School department’s special education budget
has increased by $1,600,000.
• Property and casualty increases $145,000.
Solutions Implemented to Date
Partial List
• Expense reductions
–
–
–
–
–
Renegotiated the ambulance contract - savings $135,000 annually.
Negotiated a new Trash contract - savings $80,000.
Privatized streetlights – savings $35,000 annually.
Adopted M.G.L. Chap. 32B, Section 18, re: medicare provision – savings $25,000 annually.
Reorganized town hall staff – savings $20,000 annually.
• Revenue enhancement
–
–
–
–
–
–
–
Re-bid leases on town owned property – revenue increase $15,000 annually.
Adopted M.G.L. Chap. 59, Section 2A to capture additional new growth - $100,000.
Entered into the town’s first towing contract - $6,000.
Increased town’s inspectional services fees - $25,000 annually.
Appropriated unspent article balances - $600,000.
Stabilization Fund – $803,500.
Sale of town owned land - $375,000.
Goals
• Close the Fiscal 2006 budget gap
–
–
–
–
–
State aid increase possible.
Stabilization Fund balance.
Additional use of Overlay Surplus.
Health Insurance premium increase less than expected.
Reduce spending without impacting service delivery.
• Looking ahead
– Reduce long-term debt as a percentage of budget.
– Find additional sources of revenue.
– Reduce the dependency on one-time revenue.
– Adopt a Financial Reserve Policy.