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APPROPRIATION COMMITTEE—2.020 ATM 25 March 2020 Table A-4b provides the department's notes on the assumptions underpinning the projections. Table A-4b.Notes on Projected Expenses Expense Category Notes on Assumptions Education 8 UPS Wages Illustrates a level-services budget and does not include program improvements. Includes a 2.5%increase on base budget for step increases and($750,000)for annual staff turnover savings. Assumes anticipated funding for unsettled contracts in FY2021-25. Includes additional staffing due to projected enrollment increases in FY2021-25 based on preliminary FY2020 Enrollment projections from Oct.1 data. Recurring additional staff-related costs are inclusive of benefits, workers comp.,and Medicare. 9 UPS Expenses Program budget per pupil rates are adjusted by 2.2%Consumer Price Index(CPI)in FY2021 and 2.40%in FY2022-25; applied against preliminary projected enrollment levels. All other lines adjusted by 2.2%in FY2021 and 2.4%in FY2022-25. Special Education Out-of-District Tuition and Transportation lines are projected based on program trends. Approximately 81-85%of total expense line increases are driven by these budget lines(FY2021-25). 10 Minuteman FY2022-25 projections increase by 10%. Municipal 11 Municipal Wages Projections based on step increases for current staff,settled collective bargaining contracts,and anticipated contract settlements for out-years. 12 Municipal Expenses Level-service budget using CPI of 7%for electricity,5.5%for natural gas,20%for IT software expenses as the Town transitions to the Cloud,and 1.8%for all other expenses. Shared Expenses 13 Debt Service Within levy debt service is projected to grow by 5%annually. Amounts above that will be mitigated by use of the Capital Stabilization Fund. 14 Mitigated Within Levy Within levy debt service mitigated by use of the Capital Stabilization Fund. FY22-25 left as$0 to not dilute the rest of Debt Service the projections. 15 Land Purchase Note Retirement Use of Free Cash to pay down short-term notes issued to pay for the land purchases at 173 Bedford St.and Pelham Rd. 16 OPEB Continued funding of OPEB-increasing by$50,000 per year 17 Retirement Contributory Retirement assessment(based on 2024 amortization of unfunded liability and 7.50%interest rate assumption)plus Non-Contributory payments 18 Benefits 18a Medicare 5%increase in Medicare,reflecting an increase in the number of eligible employees and increases in wages. 18b Health Insurance FY2021,growing at 5%annually. 18c Dental FY2021,growing at 4%annually. 18d Life Level Funding 19 Reserve Fund Level Funding 20 Workers'Comp. FY2021 base growing at 3%annually. As a continuing balance account,full appropriation is effectively spent each year; "actual"values reflect current year spending. Balance as of 6/30/19=$1.5M. 21 Unemployment Level Funding 22 Property&Lib.Ins. Reflects additional expenses for new buildings(LCP,Fire Station,Hastings),with 5%growth in out-years 23 Uninsured Losses Level Funding. As a continuing balance account,full appropriation is effectively spent each year;"actual"values reflect current year spending. Balance as of 6/30/19=$1.06M. 24 Solar Production Payments to Syncarpha for construction costs of Hartwell Ave.solar arrays. 25 Capital Includes$4.9M for cash capital in FY2021;$5.6M in FY2022,$6.3M in FY2023 and$7.0M in FY2024-25 from 26 Other Reflects various warrant articles such as Senior Tax Work-Off and$200K in unanticipated needs in FY2021-25. 27 Approp.to Capital Stab. Fund Reflects past and projected transfers to continue funding the Capital Stabilization Fund to cover the high school project. 28 Unallocated Revenue Proposed allocation set-aside for yet to be determined priorities. Source:Lexington Department of Finance To simplify the discussion of the expense projections, Table A-5a aggregates the expense categories from Table A-4a. The three major groupings are Education,Municipal,and Shared Expenses. For Education,we show LPS and Minuteman separately. We provide a further breakdown for shared expenses, breaking out appropriations for capital projects and to the Capital Stabilization Fund and OPEB, all three of which are determined by explicit policy decisions, some of which are made after the Town knows actual new growth 52