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Town of Swampscott

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

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Town of Swampscott

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  1. 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

  2. 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

  3. IntroductionFinancial 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.

  4. IntroductionFinancial 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.

  5. IntroductionGoals 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.

  6. IntroductionManaging 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.

  7. Five Year Financial ForecastPro 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).

  8. Five Year Financial ForecastPro 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.

  9. Five Year Financial ForecastRevenue and Expenditure SummaryGeneral Fund

  10. Five Year Financial ForecastRevenue and Expenditure Gap

  11. School Department SpendingFY2004(FY2004 Schedule 19)

  12. Fiscal 2006 BudgetRevenue 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

  13. Fiscal 2006 Budget General Fund Revenue Sources FY 2006 Grand Total - $38,135,750

  14. Fiscal 2006 BudgetExpense 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

  15. Fiscal 2006 Budget General Fund Expenditure Categories FY 2006 Grand Total - $40,267,512

  16. Water and Sewer Enterprise FundsFY06 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.

  17. Water and Sewer Enterprise FundsFY06 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. .

  18. Water and Sewer Enterprise FundsFY06 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.

  19. Water and Sewer Enterprise FundsPro 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%.

  20. Water and Sewer Enterprise FundsFive Year Forecast and Rate Projections

  21. WHAT TO EXPECT Fiscal Reality Solutions Implemented to Date Goals

  22. The Fiscal RealtyFiscal 2002 – Fiscal 2005Estimates • 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.

  23. Solutions Implemented to DatePartial 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.

  24. 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.

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