Transcript City of Chelsea

Town of Swampscott
Financial Forecast Fiscal Years 2007-2011
And FY07 Budget Overview
Presented to the Board of Selectmen, School Committee and
Finance Committee
Andrew Maylor - Town Administrator
November 14, 2005
Table of Contents
I.
Introduction
•Financial Planning Process
•Goals and Priority Areas for FY07
•Planning for Future Financial Stability
II.
Five Year Financial Forecast
•Pro Forma Assumptions General Fund
•Revenue and Expense Summary and Chart
•Town and School Charts
III.
Fiscal 2007 Budget
•Revenue Sources and Chart
•Expense Categories and Chart
IV.
Water and Sewer Enterprise Funds
•FY07 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 9th.
• Budgets will be Due in the Town Accountant’s Office by
Monday, January 9, 2006.
• School Committee Must Submit School Budget No Later than
February 10, 2006.
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 have been created and will be used as
Guideposts to Developing the Financial Plan.
Introduction
Goals and Priority Areas for FY07
» 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.
» Develop a Program for Roadway Improvements and
Maintenance.
» Voter 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.
» Implement a Fiscal Policy for Future Budgeting.
Introduction
Planning for Future Financial Stability
» Begin to Increase the Balances in Reserve Funds to Meet
Nationally Accepted Standards.
» Develop a Long Range Plan for Funding Special Education,
including Proposing Special Legislation.
» Limit the Use of One Time Revenues to Balance the Budget.
» Establish a New Method for Calculating the Funding Available
for Annual Capital Improvements.
» 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
•
•
•
•
•
•
•
State Aid is Projected to increase 5% through Fiscal 2011.
Tax Levy and Levy Limit will Grow Approximately by 3%
Through FY2011.
Charges, Licenses, Fees 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 $275,000
for FY2007 with an Incremental Increase Through FY2011.
Nahant Tuition is Level Funded From FY06 to FY07 and
Through FY2010. Actual Dollar Amount will not be Known
Until January For FY07.
Other Possible Sources of Revenue Include: Enterprise Fund
Indirects ($500,000).
Five Year Financial Forecast
Pro Forma Assumptions - General Fund Expenses
•
•
•
•
•
•
•
Salaries and Operating Expenses (Including Schools) Projected
to Increase 2.5% Annually.
Health Insurance Costs Projected to Increase By 15% Annually.
This is Net of Savings From the Town Accepting MGL 32B s18
and Assumes a Change to the Existing Benefit Mix.
State and County Charges and Cherry Sheet Offsets are Expected
to Increase by 2.5% Each Fiscal Year.
Special Education Costs are Expected to Increase on the Average
of 10% Each Fiscal Year Through FY2011.
Debt Service Based Upon Current and Future Capital
Improvement Programs Cost Expected to Remain at
approximately 5% of the Tax Levy Through FY2011 Exclusive
of School Construction.
Includes Sewer Debt Exclusion.
Uncompensated Balance Account has a $58,914 Balance. This
Appropriation will be Gradually Reduced.
Five Year Financial Forecast
Revenue and Expenditure Summary
General Fund
FY06-ACT
FY07-EST
FY08-EST
FY09-EST
FY10-EST
FY11-EST
REVENUES
Property Taxes
New Growth
Debt Exclusion
Total Tax Revenue
$
30,792,489
31,795,507
32,744,145
33,716,498
34,713,161
35,734,740
227,518
150,000
150,000
150,000
150,000
150,000
1,098,855
1,108,561
1,117,717
1,130,103
1,141,753
1,154,884
32,118,862
$
33,054,068
$
34,011,862
$
34,996,601
$
36,004,914
$
37,039,624
Local Receipts-
4,201,696
4,201,696
4,201,696
4,201,696
4,201,696
4,201,696
State Aid
3,848,944
4,041,391
4,243,461
4,455,634
4,678,415
4,912,336
275,000
300,000
325,000
350,000
375,000
500,000
500,000
500,000
500,000
500,000
Free Cash
-
Other Available Funds
TOTAL REVENUE
815,000
$
40,984,502
$
42,072,155
$
43,257,019
$
44,478,931
$
45,735,025
$
47,028,656
$
25,223,005
$
25,853,580
$
26,499,920
$
27,162,418
$
27,841,478
$
28,537,515
EXPENSES
Base Operating Expense
Group Health
3,775,000
4,341,250
4,992,438
5,741,303
6,602,499
7,592,873
Other Personnel Benefits
Special Education
2,720,056
5,424,469
2,872,293
5,641,448
3,015,908
5,867,106
3,166,703
6,101,790
3,325,038
6,345,861
3,491,290
6,599,696
Debt Service - CIP
1,811,805
1,900,000
1,700,593
1,749,830
1,800,246
1,851,981
Sewer Debt
1,098,855
1,108,561
1,117,717
1,130,103
1,141,753
1,154,884
906,392
856,392
877,802
899,747
922,241
945,297
Non- Appropriated Exp.
TOTAL EXPENSES
SURPLUS (DEFICIT)-
$
40,959,582
$
$
24,920
$
42,573,524
$
(501,369) $
44,071,482
$
(814,464) $
45,951,894
$
(1,472,962) $
47,979,116
$
(2,244,090) $
50,173,536
(3,144,880)
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
FY07 FY08 FY09 FY10 FY11
Total Revenue
Total Expenses
School Department Spending
FY2005
(FY2005 Schedule 19)
Pupil
Transportation
2%
Instruction
82%
Operations &
Maintenance
5%
Payments to Nonpublic Schools
8%
Administration
3%
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
FY02
FY03
FY04
FY05
FY06
Fiscal 2007 Budget
Revenue Sources
Revenues Projected for the FY07 Operating Budget Total $42,072,155
Revenues are Derived From The Following Sources:
• Taxes - $33,054,068
• Nahant Tuition - $1,231,696
• Motor Vehicle Excise - $1,850,000
• Licenses and Permits – $160,000
• Fines and Forfeits - $95,000
• State Aid- $4,041,391
• Local Receipts - $865,000
Note- Revenue Detail Does Not Include Free Cash or Other Available Funds
Which Total $775,000
Fiscal 2007 Budget
General Fund Revenue Sources FY 2007
Intergovernmental
Aid
9%
Licenses, Permits &
Fines
0%
Other Revenue
2%
Motor Vehicle Excise
5%
Taxes
84%
Grand Total - $42,072,155
Fiscal 2007 Budget
Expense Categories
For Presentation Purposes FY07 Expenses are Detailed in the
Following Categories:
•
•
•
•
•
•
•
General Government -$5,165,812
School Department - $20,915,202
Public Safety- $5,414,014
Pensions- $2,872,293
Insurances- $4,341,250
Debt Service- $3,008,561
Non-Appropriated- $856,392
Fiscal 2007 Budget
General Fund Expenditure Categories FY 2007
Debt Service
7%
Non-Appropriated
2%
General Government
12%
Insurances
10%
Pensions
7%
Public Safety
13%
School Department
49%
Grand Total - $42,573,524
Water and Sewer Enterprise Funds
FY07 Budget Overview
•
•
•
•
•
The Town’s water/sewer system infrastructure requires yearly
maintenance and upgrades. With the assistance of $565,000
provided by the MWRA through an interest free loan, the DPW
was able to re-line and replace three miles of water main.
Over the past several years, the Department has contracted out
the re-lining or replacement of close to eight miles of water
main. This total represents about sixteen percent of the Town’s
overall infrastructure.
Obsolete water mains present the Town with significant losses in
water pressure, as well as, considerable water discoloration
problems.
The installation of new waters meters is virtually complete with
less than 100 of the 5,000 old meters remaining unchanged. This
will greatly reduce the amount of unaccounted for water
consumption.
The new meters are equipped with radio read technology, which
will ensure accurate and timely reading of usage and allow the
town to institute quarterly billing in FY07.
Water and Sewer Enterprise Funds
FY07 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.
• Many of the existing mains are 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 could rise sharply if our system is not upgraded as well.
• 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 $189,890 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
$1,108,561 for FY 2007 the impact on rates would have been
$2.11.
For Projection Purposes, the MWRA and Lynn WSC
Assessments have been Increased by Ten Percent Each Year.
The MWRA has Projected a Double Digit Increase for
FY2007, and the Lynn WSC Fees Should also be in This
Range.
Direct Expenses were Increased by 2.5 % per year and indirect
costs are level funded.
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 2007
Projected
FY 2008
Projected
FY 2009
Projected
FY 2010
4,729,794
5,036,602
5,370,436
5,733,857
6,129,678
4,729,794
5,036,602
5,370,436
5,733,857
6,129,678
882,294
1,677,500
770,000
800,000
100,000
500,000
4,729,794
8.99
-0.01%
$
$
$
$
$
904,352
1,845,250
847,000
840,000
100,000
500,000
5,036,602
9.17
2.0%
$
$
$
$
$
926,961
2,029,775
931,700
882,000
100,000
500,000
5,370,436
9.35
2.0%
$
$
$
$
$
950,135
2,232,753
1,024,870
926,100
100,000
500,000
5,733,857
9.54
2.0%
Projected
FY2011
$
$
$
$
$
973,888
2,456,028
1,127,357
972,405
100,000
500,000
6,129,678
9.73
2.0%
WHAT TO EXPECT
Fiscal
Reality
Solutions Implemented to Date
Goals
The Fiscal Realty
Fiscal 2002 – Fiscal 2006
Estimates





State Aid has decreased by $482,866.
Health insurance costs have increased by
$1,499,585.
The Town’s retirement appropriation has increased
by $478,935.
The School department’s special education budget
has increased by $1,805,575.
Property and casualty increases $170,000.
Solutions Implemented to Date
Partial List

Expense reductions
–
–
–
–
–

Renegotiated the ambulance contract - savings $135,000 annually.
Negotiated a new Trash contract - savings $80,000.
Purchased 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
–
–
–
–
–
–
Bid cell tower placement increasing revenue by at least $30,000 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.
Sold surplus town owned land - $585,000.
Goals

Close the Fiscal 2007 budget gap
–
–
–
–

State aid increase possible.
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.