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Town Manager
<br />ROLE: To act as
<br />Chief Executive
<br />Officer of the Town
<br />as established in the
<br />Selectmen -Town
<br />Manager Act, and
<br />to, either directly or
<br />indirectly through
<br />staff, administer the
<br />policies and procedures of the Board of Selectmen, enforce bylaws
<br />and actions passed by Town Meeting, and prepare the budget and
<br />manage the daily operation of all town departments.
<br />Expenditures
<br />Payroll
<br />Expenses
<br />FY02
<br />FY01
<br />$ 317,369
<br />$ 16,576
<br />$ 306,819
<br />$ 14,389
<br />Personnel
<br />Full Time
<br />4
<br />4
<br />Part Time
<br />1
<br />1
<br />APPOINTED by the Selectmen: Richard White, since October
<br />1987.
<br />The Town maintained a payroll of $15,477,187 for the fiscal
<br />year ending June 30, 2002 covering 294 full -time and 52 part -
<br />time employees. The total amount expended for fiscal year
<br />2002 was $106,925,463 while $112,465,652 has been appropri-
<br />ated for fiscal year 2003.
<br />Finances
<br />During the last several years, considerable effort has been made
<br />by the staff to develop budget decision - making processes that
<br />encourage more collaboration between the staff and the Board
<br />of Selectmen, as well as the Board of Selectmen and the vari-
<br />ous interests that have a stake in the Town's budget develop-
<br />ment process.
<br />The budget development timelines for municipal and school
<br />departments were aligned and synchronized. This simple, but
<br />logistically complicated adjustment allowed for a carefully
<br />planned budget development process that permitted most of the
<br />major interests that have a stake in Lexington's budget process
<br />to be involved in the budget policy- setting and guidance
<br />process.
<br />To begin the FY2002 budget process, the Board of Selectmen
<br />and the School Committee, with involvement of the Finance
<br />and Capital Expenditures Committees, met in early fall 2001 to
<br />develop a common understanding of some of the decision -mak-
<br />ing parameters that would affect the 2002 budget. A series of
<br />five collaborative policy guidance sessions were held during
<br />the fall and winter months. These meetings, combined with last
<br />year's success, have clearly enriched the Town's budget deci-
<br />sion- making competency. The FY2002 budget included a
<br />school appropriation that was representative of the actual needs
<br />of the schools as represented by the School Superintendent and
<br />approved by the School Committee. The FY2002 budget was
<br />the second consecutive year in which the leadership of the
<br />Town, both elected and appointed, met together to collectively
<br />develop and agree upon budget policies and resources.
<br />Economic conditions surrounding the FY2003 budget required
<br />that both the Selectmen's cash reserve and cash capital policies
<br />be compromised. Policy direction from the Board required a
<br />balanced budget without exceeding the Proposition 2 -1/2 limi-
<br />tations. Expected increases in school enrollment, rising costs of
<br />providing employee health insurance, and reduced State aid in
<br />FY2002 as well as additional revenue losses expected for
<br />FY2003 limited growth in every budget category.
<br />The FY2004 budget will be Lexington's most challenging with
<br />no cash reserves, no cash capital policy, a sagging economy, a
<br />State budget crisis and a country reeling from threats of terror-
<br />ism; resources in 2004 will be more than scarce.
<br />Cash Reserves
<br />The Board of Selectmen voted, and Town Meeting supported,
<br />the establishment of a cash reserve policy in FY1997.
<br />Originally a 10 -year plan or strategy was adopted by the Board
<br />to accumulate a cash reserve of 5% of the tax levy. Operating
<br />budget needs caused the Board of Selectmen to suspend this
<br />policy in FY2000, extending its 10 -year plan to another year.
<br />FY2002 was the fifth year of the plan. The Board of Selectmen
<br />and School Committee reconfirmed their commitment to this
<br />policy during their planning sessions this past fall and winter.
<br />Unfortunately, lower than expected revenue growth and higher
<br />than expected appropriation requests in FY2003 caused the
<br />Selectmen to compromise the Town's cash reserve policies.
<br />This will have serious repercussions in the future. Our use of
<br />these cash reserves has been less than judicious, bordering on
<br />happenstance.
<br />Lexington appropriates free cash when it is available. Graph 1
<br />shows how much free cash has been certified in each year, and
<br />how much has been used for budgets.
<br />S10,000,000
<br />$9,000,000
<br />$8,000,000
<br />$7,000,000
<br />$6,000,000
<br />$5,000,000
<br />$4,000,000
<br />53,000,000
<br />$2,000,000
<br />$1,000,000
<br />SO
<br />Graph 1: History of Free Cash Use
<br />1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
<br />Certified Free Cash
<br />-0,- Use of Free Cash
<br />The "use of free cash" line shadows the availability of free cash
<br />line, so clearly when free cash is available, it is used, even in
<br />years with operating overrides (FY91, FY93, FY96, and FY01) .
<br />This has led to a problem since free cash is not a recurring rev-
<br />enue. This was brought home in the early 1990s and again
<br />recently: the high level of free cash available in FY2003 (60%
<br />continued on next page
<br />Page 6 2002 Annual Report, Town of Lexington
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