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STM 2023-1 APPROPRIATION COXMTTEE 31 OCTOBER 2023 Introduction This report includes the Appropriation Committee's analysis and recommendations regarding all appropriations of Town funds that are anticipated at this special town meeting, and other municipal matters that may be considered. This report is distributed as an electronic document via the Town website. The Committee also makes presentations during Town Meeting, including recommendations on appropriations and other matters for which the Committee's formal position has been revised since the time of publication. The Committee published its Report for the 2023 Annual Town Meeting on March 20, 2023. Please refer to the preface of that report for more details of how this report is prepared and the conventions used within. The Committee's goal is to publish its report at least one week prior to the date when the articles covered in this report may be taken up by Town Meeting. That date is typically the same night that the annual town meeting or a special town meeting is convened. Committee Membership There have been no changes in the membership of the Committee. Reserve Fund As of publication, there have been no requests for transfers from the Reserve Fund and the balance remains at $750,000. Developments Since Adoption of the FY2024 Budget On July 10, 2023, the Committee reviewed final budget adjustments for FY2023 as recommended by Town staff. The end-of-year(EOY)budget adjustments were: 1. The transfer of$12,800 from "Town Manager-Professional Services"to "Property&Liability Insurance" 2. The transfer of $13,000 from "Select Board - Contractual Services" to "PEG Access - LexMedia Contractual Services" 3. The transfer of$187,000 from the Salary Adjustment Account to "Police -Regular Wages" 4. Authorization to increase the spending limit of the Health Programs Revolving Fund by $10,000 from $45,000 to $55,000. The Committee voted to approve the EOY transfers from the Town Manager and Select Board budget line items, and to increase the spending limit for the Health Programs Revolving Fund. The transfer from the Salary Adjustment was approved by the Select Board. Planning for the FY2025 budget began on October 18, 2023 at Budget Summit I, a joint meeting of the Select Board, School Committee, Capital Expenditures Committee and Appropriation Committee. The summit opened with a review of the financial results from FY2023 which concluded on June 30, 2023. These results must be certified by the state Dept. of Revenue to determine the Town's cash balances before they can be appropriated. At the end of FY2023, the education budget (which includes Lexington Public Schools and Minuteman Regional High School)turned back approximately $3.4 million. Those funds included $402,987 resulting from an unpaid bill that will be corrected under Article 2. The bulk of the education turn back was $2.7 million from LPS. The Shared Expense budget turned back approximately $2.8 million, of which about$2 million was due to lower than expected costs for employee benefits. The Municipal budget turned back approximately $1.1 million. As a result, approximately $7.3 million will flow to Free Cash (note that this makes up only one part of Free Cash). Town staff expects Free Cash to be certified in mid-November,but this will be too late to use the funds at this town meeting. The Town's New Growth has been certified by the state Dept. of Revenue. The FY2024 budget used a conservative estimate of$3 million in New Growth of the tax levy. The certified figure is $5,723,276, which exceeds the budget figure by $2,723,276. This, in combination with some small changes in State Aid,the release of$400,000 from the Snow & Ice budget, and payments from the Opioid Mitigation Settlement, add up to $3,375,295 in additional revenue for FY2024 that will be appropriated at this town meeting. 1