2011-10-05-AC-min-summit - Laserfiche WebLink

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October S, 2011 Summit Meeting — October 5, 2011 adequate pension funding, a good balance of revenues related to economic growth, low debt service, and adequate reserves. Lexington's financial condition is satisfactory in the areas of expenditure growth. Lexington's financial condition is unsatisfactory in the areas of state aid and employee liabilities (with the exception of pension funding). In particular, Lexington continues to witness significant increases in employee benefit costs, and unreliable levels of state aid. Notwithstanding the recent downgrading of the federal government's credit rating, the data in the report presented suggests that the Town's financial condition is strong and the Town is expected to maintain its Aaa credit rating. Revenue and Expenditure Projections FY2013 — 2015 Mr. Addelson presented a 3 year revenue and expenditure projection. He explained that budget decisions made within a given fiscal year often have significant implications for subsequent fiscal years. The revenue and expenditure projection presented is intended to facilitate discussion among community "stakeholders" with the hope that it will result in the identification of issues that call for further discussion and analysis as the FYI 3 budget cycle unfolds. The forecast presented projects general fund revenues and expenditures for the period FY 2013 — 2015 It is important to emphasize that the projection is not a proposed or recommended budget. The forecasting methodology is a maintenance budget approach; that is, the projected increase in costs needed to maintain the "current level of services" reflected in the adopted FYI budget. As a general rule, it only includes increases driven by estimated inflationary pressures, current collective bargaining agreements and other existing purchase of service contracts. Revenues are generally projected based on historical experience. The difference between projected revenues and expenditures is characterized as "surplus /shortfall "; that is, those surplus funds that can be used to fund "variable cost drivers ", for example, finance capital projects, provide for salary increases, restore services eliminated or reduced in a prior fiscal year, fund reserves, etc. Mr. Addelson reported that the Town is expecting a surplus in FYI 3, FYI 4, and FYI 5 as follows: FY2012 FY2013 FY2014 FY2015 Estimated Proj ection Proj ection Proj ection Total Revenues $152,730,211 $160,131,043 $161,144,705 $166,228,473 Total Expenses $152,730,211 $158,320,549 $160,854,047 $165,558,916 Surplus (Shortfall) $0 $1,810,495 $290,658 $669,558 FY2013 Budget Calendar The FY2013 Budget Calendar was included in the materials presented. The calendar lists dates for upcoming Summit Meetings: Summit II on November 17, 2011; Summit III on January 19, 2012; and Summit IV on February 16, 2012. -3-