2015-03-AC-ATM-rpt - Laserfiche WebLink

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AC–2015ATM PPROPRIATIONOMMITTEE Due to the Town’s lower enrollment, and a 15% increase in the per-student capital assessment, the pre- liminary FY2016 assessment for Lexington is $41,572 (3.34%) less than the FY2015 actual assessment. FundsFunding RequestedSource Program 2000: Shared Expenses $49,978,942See Motion The Shared Expenses section of the budget is comprised of four different pieces. Each section is listed below with respective budget totals: FY2015FY2016 $ Change% Change RecapRecommended Benefits & Insurance$29,824,628$32,423,749$2,599,1218.71% Debt Service$6,730,641$6,755,562$24,9210.37% Reserve Fund$900,000$900,000$00.00% Public Facilities$9,897,675$9,899,631$1,9560.02% Total Shared Expenses$49,978,942 $47,352,943$2,625,9995.55% The recommended total Shared Expenses line represents an increase over the FY2015 recap amount by 5.55% and is almost entirely driven by an 8.71% increase in employee benefits and insurance. Employee Benefits and Insurance Nine specific increases are cited in the Brown Book that together make up the increase in this line item. Here we comment on the two largest. The Retirement Board recently decided to increase the amount for Contributory Retirement by approxi- mately $250,000 in order to move up the date that the Retirement Fund will reach 100% of full funding to the year 2025, which is 15 years in advance of the State mandate that full funding of the Retirement Fund be achieved by 2040. Our understanding is that the Retirement Board feels a potential downturn in the investment market could jeopardize the Town’s ability to reach full funding by the 2040 deadline, and adopting an earlier deadline improves the Town’s chances of meeting the legal requirement without a need for extraordinary steps during the years shortly before 2040. The Committee feels the 2025 target adopted by the Retirement Board represents an unnecessarily con- servative position, given that (1) the Town’s progress toward full funding is already superior to most oth- er Massachusetts communities, (2) excluded debt service for school and municipal projects will likely peak between 2017 and 2025, putting significant pressure on the Town budget, and (3) a statewide finan- cial downturn large enough to prevent the Town from reaching its funding target for five or more years would dramatically affect every municipality in the state. This would likely lead to a postponement of the legal deadline. While the legally mandated year for full funding remains at 2040, the Committee suggests that a self-imposed deadline of 2030 or 2035 would be prudent. An increase of $1,981,965, or 9.54%, for health insurance is driven by Group Insurance Commission (GIC) rate increases of about 7.5% on average for the Town’s active and retired employees, and by the projection that 103 new enrollees could be added to the Town’s plan in FY2016. Debt Service The increase of $24,921 in this line item is the net increase for within-levy debt service. The recommend- ed budget proposes the appropriation of $620,567 from the Capital Projects Stabilization Fund to pay down some of this line. The Town typically makes payments on exempt debt service without an appropriation from Town Meet- ing, and exempt debt service is not a part of the operating budget. Article 26 proposes an appropriation of 10