Laserfiche WebLink
APPROPRIATION COMMITTEE REPORT TO 2009 ATM —MARCH 2009 <br />Introduction <br />In this Introduction, we give an overview of financial developments since the 2008 Annual Town Meeting, <br />the proposed FY2010 budget, the current status of the Town's financial reserves, and the financial outlook <br />for FY2011 and beyond. The "Report of the Town Manager" in the FY2010 Brown Book (see link in the <br />Preface) is useful to read before this introduction. <br />Developments since adoption of the FY2009 budget <br />Prior to the Special Town Meeting in November 2008, the Massachusetts Department of Revenue certified <br />the Town's free cash balance as of July 1, 2008, to be $5,481,717. The DOR also certified the balances, <br />also known as "retained earnings ", in the Water Enterprise Fund ($2,537,249), the Sewer Enterprise Fund <br />($2,763,179), and the Recreation Enterprise Fund ($1,258,039). The Assessors and the State determined <br />the final figure for new growth for FY 2009, viz., $3,276,649, which is substantially larger than the amount <br />of $1,681,000 that was assumed for the recommended budget for FY 2009. At a total of $9,963,453, state <br />aid for FY2009 originally came in modestly higher than the $9,670,275 estimate used in the adopted <br />budget. However, the State is reducing the aid level by about $186,000 due to the impact of the economic <br />downturn on its revenues. The drop in revenues likely will affect state aid for years. <br />At the Special Town Meeting in November 2008, several financial articles were approved. They included <br />minor increases in various line items in the FY2009 operating budget totaling $457,760 that were funded <br />by the increase in state aid and new growth over the estimates used during budget formulation, minor <br />adjustments to the Water and Sewer Enterprise Fund budgets, two projects to be funded by Community <br />Preservation Act funds, and the transfer of monies received mainly from developers into specific <br />stabilization funds. Please see the Appropriation Committee Report to the Special Town Meeting for <br />further details (this report and others are available at http: / /www.lexingtontmma.org or at <br />http: / /www.lexin tog nma. ov/bud eg t.cfm ). <br />As of press time, the most recent review of current fiscal year expenditures and staffing in the School Dept. <br />and a projection to the end of the fiscal year on June 30 suggests that the Lexington Public Schools will <br />finish the year with a deficit of about $275,000. This is the net result of several factors, the most prominent <br />of which is a projected overrun in spending in various SPED categories in the neighborhood of $650,000. <br />On the municipal side, the actual expenditures for snow removal in the DPW budget stand at about <br />$1,500,000 as of early March 2009, far above the budgeted amount of $946,325 (of which $646,325 is in <br />the DPW budget and $300,000 was set aside via a revenue offset). On the other hand, there was an error in <br />formulating the health insurance budget line that resulted in that line being about $1,000,000 too high. <br />Together with the effect of including a contingency in the projection of health insurance expenses, it is now <br />expected that there will be a surplus of about $1,500,000 in that line item (see the Brown Book, page IV -6 <br />and the errata circulated on March 9, 2009). <br />The Town Manager and staff are likely to request the approval of adjustments to the FY2009 budget that <br />address the school and snow /ice removal deficits in full or in part under Article 30. This will appropriately <br />be done late in Town Meeting. The Reserve Fund can be used, upon approval of this Committee, to <br />address deficits that arise after the end of this Town Meeting. There is also a mechanism for making limited <br />inter - line -item transfers at the end of the year. Finally, the Town Manager has recommended setting aside <br />$200,000 of the Free Cash balance in case it is needed to help cover FY2009 deficits. <br />Of the $532,500 put into the FY2009 Reserve Fund, $15,000 has already been transferred out to cover legal <br />expenses related to a potential land acquisition. It is presently anticipated that an additional amount will be <br />needed to cover expenses for legal services for other purposes such as assistance in collective bargaining. <br />Due to the precipitous drop in the stock market over the past year, the Lexington Retirement Fund's <br />investments have declined in value from roughly $120M a year or so ago to roughly $80M early in 2009. <br />This increases the Town's unfunded liabilities for future pension payments (the liabilities were fully funded <br />Page 7 of 59 <br />