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Town of Swampscott Financial Forecast Fiscal Years 2008-2012 And FY08 Budget Overview

Town of Swampscott Financial Forecast Fiscal Years 2008-2012 And FY08 Budget Overview. Presented to the Board of Selectmen, School Committee, Finance Committee and Town Meeting Andrew Maylor Town Administrator November 13, 2006. Table of Contents. I. Introduction

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Town of Swampscott Financial Forecast Fiscal Years 2008-2012 And FY08 Budget Overview

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  1. Town of SwampscottFinancial Forecast Fiscal Years 2008-2012And FY08 Budget Overview Presented to the Board of Selectmen, School Committee, Finance Committee and Town Meeting Andrew Maylor Town Administrator November 13, 2006

  2. Table of Contents • I. Introduction • Financial Planning Process • Goals and Priority Areas for FY08 • Managing the Impact of the Slow Economic Recovery • II. Five Year Financial Forecast • Pro Forma Assumptions General Fund • Revenue and Expense Summary and Chart • Town and School Charts • III. Fiscal 2008 Budget • Revenue Sources and Chart • Expense Categories and Chart • IV. Water and Sewer Enterprise Funds • FY08 Budget Overview • Pro Forma Assumptions Enterprise Funds • Five Year Forecast and Rate Projections • What to Expect • Fiscal Reality • Solutions Implemented to Date • Goals

  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 Communication are Essential to Develop the Financial Plan Required to Maintain the Town’s Fiscal Stability. Town Administrator will Distribute Budget Packages to Departments by December 8th. Budgets will be Due in the Town Accountant’s Office by Monday, January 8, 2007. School Committee Must Submit School Budget No Later than February 9, 2007.

  4. IntroductionFinancial Planning Process (continued) • Capital Improvement Committee Shall Recommend a Capital Improvement Program to the Town Administrator by February 2, 2007, 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 and the Finance Committee in Accordance with Town Charter. • Selectmen Approval by a Majority Vote by March 1st. • Financial Policies will be Used as Guideposts to Developing Financial Plan.

  5. IntroductionGoals and Priority Areas for FY08 • 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. • Continue to Review, Evaluate, Alter and Track Policy that Maintains and Enhances Town Government. • Improve the Coordination of Municipal Service Delivery.

  6. IntroductionManaging the Impact of the Slow Economic Recovery • Although the economy appears to be rebounding from the post 9/11 recession, it will take years, if not longer, for the State and its municipalities to fully recover from the financial devastation caused by what was arguably the worst municipal finance environment in decades. • Limit the Use of One Time Revenues to Balance the Budget. • To Increase Balances in Reserve Accounts to Ensure Future Financial Stability. • Limit Expenditure Growth to the Average Rate of Inflation. • Water and Sewer Enterprise Fund Projections are Based Upon Full Cost Recovery.

  7. Five Year Financial ForecastPro Forma Assumptions - General Fund Revenues • State Aid is Projected to Increase 5% in FY08 and 3% from FY09 Through FY12. • Tax Levy and Levy Limit will Grow Approximately by 3% Through FY2012. • 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 $325,000 for FY2008 Through FY2012. • Nahant Tuition is Level Funded From FY08 Through FY2012. Actual Dollar Amount will not be Known Until January For FY08. • Other Sources of Revenue Include: Enterprise Fund Indirects ($575,000).

  8. Five Year Financial ForecastPro Forma Assumptions - General Fund Expenses • Salaries and Operating Expenses (Including Schools) Projected to Increase 2.5% Annually, Plus $750,000 in Increased School Operating Costs. • Health Insurance Costs Projected to Increase By 12% 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 2.5% Each Fiscal Year. • Special Education Costs are Expected to Increase on the Average of 10% Each Fiscal Year Through FY2012. • Debt Service Based Upon Current and Future Capital Improvement Programs Cost Expected to Remain at approximately 5% of the Tax Levy Through FY2012 Exclusive of School Construction. • Includes Sewer Debt Exclusion through FY 2012. • Uncompensated Balance Account has a $83,440 Balance. This Appropriation will be Gradually Reduced.

  9. Five Year Financial ForecastRevenue and Expenditure SummaryGeneral Fund (FY07 Debt Includes New High School)

  10. Five Year Financial ForecastRevenue and Expenditure Gap

  11. School Department SpendingFY2006(FY2006 Schedule 19)

  12. School Department Funding SummaryExcluding Indirect Costs

  13. Fiscal 2008 Budget Revenue Sources Revenues Projected for the FY08 Operating Budget Total $43,606,029 Revenues are Derived From The Following Re-occurring Sources: • Taxes - $34,052,862 • Nahant Tuition - $1,403,025 • Motor Vehicle Excise - $1,850,000 • Licenses and Permits – $160,000 • Fines and Forfeits - $95,000 • State Aid- $4,228,167 (Gross) • Local Receipts - $916,975 Note- Revenue Detail Does Not Include Free Cash or Other Available Funds Which Total $900,000

  14. Fiscal 2008 Budget General Fund Revenue Sources FY 2008 Grand Total - $43,606,029

  15. Fiscal 2008 BudgetExpense Categories For Presentation Purposes FY08 Expenses are Detailed in the Following Categories: • General Government -$5,391,285 • School Department - $22,037,598 • Public Safety- $5,838,733 • Pensions- $2,872,293 • Insurances- $4,860,100 • Debt Service- $3,017,985 • State Charges- $856,392

  16. Fiscal 2008 Budget General Fund Expenditure Categories FY 2008 Grand Total - $44,874,386

  17. Water and Sewer Enterprise FundsFY08 Budget Overview • The Town’s water/sewer system infrastructure remains in adequate condition and requires yearly maintenance and upgrades. With the assistance of $550,000 provided by the MWRA through an interest free loan, the DPW was able to re-line and replace close to mile 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. • Many of the remaining water mains are decades 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.

  18. Water and Sewer Enterprise FundsFY08 Budget Overview (cont.) • The completion of the water meter replacement project has resulted in the Town of Swampscott reducing its unaccounted water from 33% to just over 10%. • The new system has allowed for the implementation of quarterly billing, which will go into effect November 15th. • 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. • Some of the remaining 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.

  19. Water and Sewer Enterprise FundsFY08 Budget Overview (cont.) • 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. • The Town through a sub-contractor, video inspected over 10 miles of sewer main, is now working with an engineering firm, to implement a plan to reduce infiltration and inflow into the Town’s sanitary sewer system.

  20. Water and Sewer Enterprise FundsPro Forma Assumptions - Enterprise Funds • Water Debt will Increase by $56,000 Each of the Next Several 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 $1,117,717 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.

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

  22. Fiscal Reality Solutions Implemented to Date Goals What to expect

  23. The Fiscal RealtyFiscal 2002 – Fiscal 2007Estimates • State Aid has decreased by $202,371. • Health insurance costs have increased by $1,782,710. • The Town’s retirement appropriation has increased by $478,935. • Property and casualty increases $185,000.

  24. Solutions Implemented to DatePartial List • Expense reductions • Renegotiated the ambulance contract - savings $135,000 annually. • 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. • Entered into the town’s first towing contract - $6,000 annually. • Increased town’s inspectional services fees - $50,000 annually. • Cell Tower Expansion – $37,000 annually.

  25. Goals • Close the Fiscal 2008 budget gap • State aid increase possible. • Stabilization Fund balance. • 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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