HomeMy WebLinkAbout2006-04-05-ATM-AC-rptAPPROPRIATION COMMITTEE
TOWN OF LEXINGTON
REPORT TO THE
2006 ANNUAL TOWN MEETING
Released April S, 2006
Appropriation Committee Members Fiscal Year 2006
Alan M. Levine Chair ~ Deborah Brown Vice-Chair
John Bartenstein ~ Rodney E. Cole ~ Richard Eurich
Paul Hamburger ~ Pam Hoffman ~ David G. Kanter • Eric Michelson
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Summary of Warrant Article Recommendations
2006 Annual Town 1V~eeting
Abbreviations: GF =General Fund; EF =Enterprise Fund; RF =Revolving Fund
CPA =Community Preservation Act Fund; BAN =Bond Anticipation 1Vote
An entry of "Indefinitely Postpone" in the right-hand column merely signifies our expectation.
Ar-
Title Funds Funding Committee
ticle Re uested
q Source Recommendation
Appropriate FY2007 Operating $118,109,334(8-1)
Budget (which includes
$4,891,751 contingent
upon one or more
17 X118109 334
' GF +Free override questions-
Cash? $3,774,986 for the
Schools Budget;
$914,235 for the
Municipal Budget)
18 Appropriate FY2007 Enterprise $14 609 253 EF $14 609 253 9-0
( )
Funds Bud ets
g
19 Approve Senior Tax Relief (Accept None (Overlay A rove 9-0
pp ( )
Cha ter 59 Section 5 Clause 41 C
p ~ ~ ) Account
)
20 Establish Property Tax Deferral None Not A rove 9-0
pp ( )
Interest Rate for FY2007 A licable
Pp
Rescind MGL Chapter 59, Section Overla
( y
21 5K Pro ert Tax Work-off
( p y None
Account
~ A rove 9-0
pp ( )
Pro ram
g )
GF (with
22 Appropriate for Senior Service
$25,000 corresponding
reduction to
$25,000 (9-0)
Program the Overlay
Account
23 Continue Departmental Revolving X705 073 RF $705 073 9-0
( )
Funds
24 Acce t Cha ter 157 of the Acts of
p p
None Retirement Approve
(Section 1: 8-1;
2005 Trust Fund
Section 2: 7-2)
Appropriate the FY2007
25 Community Preservation $2,040,000 CPA $2,040,000 (9-0)
Committee Operating Budget
26 Appropriate for Outdoor Sound
$0
GF
Indefinitely Postpone
S stem Citizens' Petition
y ( )
Page 2 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Ar-
Title Funds Funding Committee
ticle Re uested
q Source Recommendation
A ro riate for Recreation Ca ital
pP p p $225,000 GF $300,000
27
Projects X300,000 Debt + (Part (a): 7-2; Parts
$75,000 EF (b) & (c): 9-0)
$690,000 GF
+ $2,217,000 $3,527,000 ($690,000
GF Debt + GF + $2,167,000 GF
28 Appropriate for Municipal Capital $3 627 000 $460,000 Debt + $460,000
Projects State Aid Chapter 90 + X210,000
(Chapter 90) CPA) (Unanimous) +
+ $260,000 Pending (see details)
CPA
29 Appropriate for Water Distribution X900 000 EF Debt $900 000 9-0
( )
Im rovements
p
EF Debt
($250,000
30 A ro riate for Water Meters
pp p X500 000 each in
Water & $500 000 9-0
( )
Wastewater
EFs)
31 Appropriate for Sanitary Sewer X300 000 EF Debt $300 000 9-0
( )
Im rovements
p
32 A ro riate for School Ca ital
pP p p
$2,056,000 $2,011,000
GF Debt +
$2,056,000 (9-0)
Projects and Equipment
$45,000 GF
33 Appropriate for School
TBD
TBD
Pending
Administration Buildin
g
GF Free
Cash
34 Appropriate for Fiske School X250 000 (Advance $250 000 9-0
( )
Construction NSTAR
Energy
Rebate)
35 Appropriate for Municipal Parking X125 000 Parking Pendin
g
Lot (Owned by NSTAR) Meter Fund
36 Appropriate for Senior Center $0 GF Indefinitel Post one
y p
Design/Conceptual Study
37 Appropriate for Public Works TBD Pendin
g
Facility
38 Appropriate for Municipal Electric X150 000 Indefinitel Post one
y p
Feasibility Study
39 Appropriate for Post Employment $0 Indefinitel Post one
y p
Benefits
Page 3 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Ar- Funds Funding Committee
ticle Title Re uested
q Source Recommendation
X2,000,000
40 Appropriate for Stabilization Fund $2,650,000 Free Cash + $2,650,000 (8-0)
X650,000 GF
41 Appropriate for Prior Years' $0 GF Free Indefinitel Post one
y p
Unpaid Bills Cash
42 Amend FY2006 0 eratin Bud et
p g g TBD GF Free Pendin
g
Cash
43 Appropriate for Authorized Capital $0 Free Cash Indefinitel Post one
Y p
Improvements
44 Use of Funds to Reduce the Tax $0 GF Free Indefinitel Post one
Y p
Rate Cash
Page 4 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Contents
Summary of Warrant Article Recommendations .......................................................................................................... 2
Introduction ....................................................................................................................................................................... 6
Overview ........................................................................................................................................................................... 7
Warrant Article Analysis and Recommendations .......................................................................................................13
Article 17: Appropriate FY2007 Operating Budget ..........................................................................................13
Lexington Public Schools ...............................................................................................................13
Minuteman Regional High School ................................................................................................15
Shared Expenses .............................................................................................................................16
Municipal Departments .................................................................................................................17
Article 18: Appropriate FY2007 Enterprise Funds Budgets ............................................................................ 18
Article 19: Approve Senior Tax Relief (Accept Chapter 59, Section 5, Clause 41C) .................................... 22
Article 20: Establish Property Tax Deferral Interest Rate for FY2007 ........................................................... 24
Article 21:Rescind MGL Chapter 59, Section SK (Property Tax Work-off Program) .................................. 25
Article 22: Appropriate for Senior Service Program ......................................................................................... 25
Article 23: Continue Departmental Revolving Funds ....................................................................................... 27
Article 24: Accept Chapter 157 of the Acts of 2005 ......................................................................................... 28
Article 25:Appropriate the FY2007 Community Preservation Committee Operating Budget ..................... 30
Article 26: Appropriate for Outdoor Sound System (Citizens' Petition) ......................................................... 31
Article 27: Appropriate for Recreation Capital Proj ects ................................................................................... 32
Article 28: Appropriate for Municipal Capital Projects .................................................................................... 34
Article 29: Appropriate for Water Distribution Improvements ........................................................................ 42
Article 30: Appropriate for Water Meters .......................................................................................................... 43
Article 31:Appropriate for Sewer Improvements ............................................................................................. 44
Article 32: School Capital Projects and Equipment .......................................................................................... 45
Article 33:Appropriate for School Administration Building ........................................................................... 49
Article 34: Appropriate for Fiske School Construction .................................................................................... 49
Article 35:Appropriate for Municipal Parking Lot (Owned by NSTAR) ....................................................... 49
Article 36: Appropriate for Senior Center Design/Conceptual Study .............................................................. 50
Article 37: Appropriate for Public Works Facility ............................................................................................ 50
Article 38: Appropriate for Municipal Electric Feasibility Study .................................................................... 50
Article 39: Appropriate for Post Employment Benefits .................................................................................... 51
Article 40: Appropriate for Stabilization Fund .................................................................................................. 51
Article 41:Appropriate for Prior Years' Unpaid Bills ...................................................................................... 51
Article 42: Amend FY2006 Operating Budget .................................................................................................. 52
Article 43:Appropriate for Authorized Capital Improvements ....................................................................... 52
Article 44: Use of Funds to Reduce the Tax Rate ............................................................................................. 52
Appendix A: At-Risk List .............................................................................................................................................. 53
Appendix B: Estimated Impact of Override Questions and Other Factors onSingle-Family-Home Taxes for
FY20071 ........................................................................................................................................................................... 57
Appendix C: Financial Forecasts with Reserves Projections for FY2007-FY2008 ............................................... 58
Page 5 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Introduction
Herein we are pleased to present to you our analysis of and recommendations about the financial aspects
of the Town's fiscal situation and the fiscal year (FY) 2007 budget. VUe do not attempt to present
information that has been presented in another easily accessible and digestible form to the Town Meeting.
In particular, the Town Manager has given an excellent overview of the estimated revenues and proposed
expenditures for FY2007 in his "Fiscal Year 2007 Recommended Budget & Financing Plan," dated
March 10, 2006 (the "Brown Book") (distributed to Town Meeting members and available online at
httpa/ci.lexington.ma.us/TownManager/Budget/budgethomealt.htm) and will present the recommended
budget in more detail in a later publication (the "Blue Book"). The Superintendent of the Lexington
Public Schools has also presented detailed information on the school budget (available online at
http://lps.lexingtonma.org/). Overviews from the Town Manager, Superintendent, and staff, as well as
many details on the nuts and bolts aspects of the budget, may be found in these materials. Another
important reference for this Town Meeting is the report of the Capital Expenditures Committee (also
available at http://www.lexingtontmma.org) which naturally contains much useful information on the
proposed appropriations for capital projects.
As in past years, we participated in a series of meetings where the budget was the main topic of
discussion together with the Board of Selectmen, School Committee, and Capital Expenditures
Committee. Those meetings have been excellent opportunities to discuss the most salient issues and for us
to give preliminary advice to the members of the other boards and committees. Though not every difficult
issue has been resolved to date, the joint meetings were very helpful.
We have been pleased to work this year with Town Manager Carl Valente and Superintendent of Schools
Paul Ash. Their leadership skills became evident soon after they commenced working in their positions
last July and they continue to serve us well. We also extend our sincerest thanks to Budget Officer
Michael Young, who has performed yeoman service to the Town and to our Committee in his pinch-hitter
role as staff. VUe are pleased to welcome Comptroller and Assistant Town Manager for Finance Rob
Addelson, who started working for the Town earlier last month.
This report is organized as follows. An overview of the current year, of FY2007, and of the Town's
financial future is given in the next section. That section is followed by our analysis and
recommendations on each of the financial articles at this Town meeting. Finally, appendices contain
information on the items that are expected to be at risk in the upcoming Proposition 21/2 override
referendum, on the potential tax impact in FY2007, and on our projections of the Town's finances in
future years.
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
Overview
Like other recent years, this year has been both interesting and challenging. Among other things, we saw
a Special Town Meeting last November, the voters approved adoption of the Community Preservation
Act (CPA), and the major boards and committees decided to proceed with a Proposition 21/2 override this
June. The next few years promise to be equally interesting and challenging. Here we give from our
perspective an overview of the current year (FY2006), FY2007, and FY2008.
Decisions on reserves, on use of debt vs. cash for capital investment, and on many other fiscal matters are
more easily made if guidance is available in the form of general policies. Toward this end, this past year
the Board of Selectmen constituted the Ad Hoc Financial Policy Committee (FPC) and charged it with
proposing policies on these matters. That committee met many times from October through earlier last
month (March, 2006) and has recently issued a report. Our Committee commends the FPC for its
vigorous and thoughtful review of financial policies. We have not had an opportunity to review the
recommendations made by the FPC. We intend to begin such a review after the conclusion of the Annual
Town Meeting. We also intend to discuss policy issues that the FPC did not review in detail. Input to our
review from Town Meeting members and all others will be most welcome.
Developments since the 2005 Annual Town Meeting
A Special Town Meeting was convened in November 2005 in order to appropriate funds to pay bills
incurred by the School Department in FY2005 and to correct underestimates in the appropriated school
budget for the current fiscal year (FY2006). The Special Town Meeting responded affirmatively to the
requests. Under Article 4 of that meeting, $528,178 was appropriated to cover the unpaid bills from
FY2005, and, under Article 5, $847,396 was appropriated to augment the FY2006 school budget. No
other funds were appropriated at the Special Town Meeting (although $425K was transferred from the
overlay accounts to reduce the FY2006 tax levy). See our report from November 2005 for details
(httpalci.lexington.ma.us/townmeeting/App.Comm.2005.Report.pd~.
The appropriation to augment the FY2006 school budget not only gave the School Administration
additional resources, but also a definite funding limit. In response, the School Administration is working
hard to deal with further increases in special education (SPED) and energy. It is our understanding that, at
least as of March 30, 2006, the School Administration believes that these increases will be able to be
managed within the school budget and that there is no plan at present for a supplemental budget request
for the schools at this Annual Town Meeting. This could change, of course, if substantial, further,
unplanned expenses materialize.
In our report to the Special Town Meeting, we described the changes in the Town's Free-Cash position
over the prior year. The appropriations by the Special Town Meeting were covered in part by new tax-
levy growth in excess of that projected in March 2005 and a modest increase in State Aid above the
projected amount, in part by transferring $57,433 from the line item for Minuteman Regional High
School (for the middle school technology program that was not continued), and in part by use of $962,465
from Free Cash. A summary of changes in Free Cash is given below.
The increase in property-tax revenue from new construction for FY2006 was finally certified at
$1,854,326 in contrast to the values of $1,105,000 assumed for the budget presented to the 2005 Annual
Town Meeting and of $1,605,000 assumed at the time of the November 2005 Special Town Meeting.
Adoption of the Community Preservation Act (CPA) was approved at the 2005 Annual Town Meeting
and was ratified by the voters at the Town election on March 6, 2006. Thus, a 3 % surcharge on property
taxes will generate approximately $2,300,000 in revenue in FY2007. These funds will be matched by
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
State funds that will be received in FY2008. The Town's Community Preservation Committee will
present proposals to the Town Meeting for the use of the CPA funds. More information maybe found in
our analysis of Article 25 and in our report of February 2006 on the CPA-which can be found at
<http :ll www. lexingtontmma. org>.
At the 2005 Annual Town Meeting, funds were appropriated to begin the design of buildings and
facilities to replace the present Department of Public Works (DPW) building and facilities and the School
Administration Building. At that time there was an expectation that designs of new facilities would be
available at this Town Meeting and that appropriations for the actual construction would be requested.
However, the planning for both is still in progress, and approval of construction must await a future Town
meeting.
FY 2007
Before discussing the substance of the FY2007 budget proposals, we note that the Town Manager and
staff have made some changes in the presentation of financial information in the Town Manager's
recommended budget and also changes in the way Town Meeting will appropriate funds. These include
combining several smaller lines of the operating budget and shifting all benefits to the Shared Expenses
line items. Appropriations for the enterprise funds will now be covered under separate articles, as will
appropriations for revolving accounts. Although this Committee has not voted to approve or disapprove
any of these changes, in general we feel that the changes are reasonable. However, in order to fully
evaluate the budget, we and others will need to continue to be able to determine full program costs
including costs of debt service and shared expenses (e.g., benefits). This applies to all programs, not just
to a school vs. municipal differentiation.
The topic of full program costs naturally leads us to note that there are a number of entities within the
Town government that serve other Town government entities rather than providing services directly to the
public. For example, the equipment-and-road-machinery group within the DPW maintains the vehicles of
all of the divisions of the DPW as well as of the Fire and Police (and perhaps other) Departments. The
Finance Department makes sure that every other department or project has the financial resources that
have been allocated according to the decisions of the Town Meeting and the Town Manager. In a true
full-cost accounting system, the costs of providing such internal services would be allocated along with
more direct costs in the determination of the cost of providing a school system, police services, fire
protection, library services, water-and-sewer services, road maintenance, etc. The determination and
allocation of indirect costs require a lot of effort and would, no doubt, involve some subjective decisions.
This is not merely an academic discussion. In the past year, the Town Manager and staff have reviewed
the indirect costs incurred by other departments that should be attributed to the Water and Sewer
Departments-and thus funded by the corresponding Enterprise Funds. We applaud the Town Manager
and staff for their efforts on this topic, and we expect to participate in reviews of the estimates that have
been or are being developed.
The Town Manager, with the support of the Board of Selectmen, has recommended the use of $2,000,000
of Free Cash for FY2007 operating expenses; however, $650,000 of that will, in effect, be a transfer to
the Stabilization Fund. (This is true in concept even though the motion under Article 40 will use $650,000
from the tax levy.) Thus the FY2007 recommended operating budget is supported by the use of
$1,350,000 from Free Cash. In addition, the recommended budget includes the transfer of an additional
$2,000,000 from Free Cash to the Stabilization Fund. This transfer has no material effect upon the
Town's fiscal condition because, from areserves-balance perspective, the differences between Free Cash
and a Stabilization Fund are minimal. Two of the procedural differences are: (1) Free cash is not available
during the annual certification process from July 1 until the Town is notified by the Commonwealth of the
certified value, whereas the Stabilization Fund provides a continuously available reserve with a definite
value; and (2) The appropriation of funds from Free Cash requires a simple majority vote whereas that
from the Stabilization Fund requires a 213 majority. Additionally, $250,000 of Free Cash will be
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
transferred to the Fiske School Project; these funds were received as a rebate from work done on the
Harrington School project. (See Article 34.) It is also anticipated that a supplementary appropriation for
the FY2006 Municipal budget may be requested. These changes to Free Cash are summarized in Table 1
and the anticipated changes to the Stabilization Fund are summarized in Table 2.
Table 1: Anticipated Free Cash Changes-2006 Annual Town Meeting
Certified Free Cash, July 1, 2005 $5,409,985
Less 2005 Special Town Meeting appropriation ($962,465)
Free Cash as of March 30, 2006 $4,447,520
Less transfer to Stabilization Fund (Article 40) ($2,000,000)
Less transfer to Fiske School Construction (Article 34) ($250,000)
Less use for operating budget (Article 17) ($2,000,000)
Remaining Balance (Before Article 42) $197,520
Less possible FY2006 supplement (Article 42) ?
Remaining Balance at End of Town Meeting ?
Table 2: Anticipated Stabilization Fund Changes
Balance July 1, 2005 $1,522,111
Projected Balance June 30, 2006 $1,611,394
Transfers in Article 40 $2,650,000
Projected Balance July 1, 2006 $4,261,394
*Note: Assumes an interest rate of 3.5% for 1Vlarch through June 2006
A question has been raised about whether it would be acceptable to use a larger amount of Free Cash to
support the operating budget and to thereby enable an item or items to be removed from the at-risk list for
the upcoming Proposition 21/~ operating-override referendum. Conversely, others have wondered whether
the recommended budget leaves enough funds in reserve. Most of us believe that the recommended
budget is a reasonable compromise between the competing needs of the operating budget and of reserve
building. Use of much more Free Cash would put expenditures above a sustainable level (i.e., where
recurring expenditures should not exceed recurring revenues), while leaving more in reserves would
either lead to a reduction in services or capital investment or to a significant increase in the amounts that
will be at risk in the forthcoming override referendum.
Financial reserves are an important component of the Town's financial picture. They serve multiple
purposes, nearly all of which are to provide funds on a temporary basis to help solve an acute problem.
Reserves do not address the Town's dominant, long-term, financial problem: expenses are growing more
rapidly than revenues. To the contrary, building and/or replenishing reserves requires the appropriation of
funds for that purpose which adds to the long-term gap between revenues and expenses. Further
information on reserves for that purpose may be found in our Report to the 2005 Annual Town Meeting,
the Report of the Ad Hoc Financial Policy Committee, and Appendix C of this report.
With respect to reserves, the Town is in a much better position just prior to this Annual Town Meeting
than at the corresponding time last year. One year ago the total of Free Cash plus the balance in the
Stabilization Fund was only $3,241,665. The corresponding total on the same date this year is $6,040,251.
(See Table 3.) This is excellent growth in only one year and essentially alleviates any immediate need to
dramatically grow reserves further. A major contributor to the increase in reserves was made pursuant to
the State instructing the Town to closeout to Free Cash the interest earned ($1,852,214) on the proceeds
of bonds issued for the secondary-school renovation project pending the use of those proceeds on the
project. Though it doesn't change this description of the present state of the Town's reserves, we note that
the reserves would be even higher now if none had been needed to solve the financial problems at the
November 2005 Special Town Meeting. In any case, it remains highly desirable to continue to build
Page 9 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
reserves at a modest pace over the next few years. (A discussion and projection of reserves through June
30, 2008, may be found in Appendix C.)
Table 3: Free-Cash and Stabilization-Fund Balances
As of: March 1, 2005 March 1, 2006
Free Cash $2,323,201 $4,447,520
Stabilization Fund $918,464 $1,592,731
Total $3,241,665 $6,040,251
*YVith accrued interest
The Town Manager conservatively estimates that Free Cash will be approximately $1,997,500 on
July 1, 2006 (although determination of the actual value must await certification by the Mass. Dept. of
Revenue). The total of Free Cash and the balance in the Stabilization Fund is then projected to be
approximately $6,259,000 on July 1, 2006.
The FY2007 recommended budget can only fund the current level of services and some needed service
restorations with the help of new revenue that is subject to approval in a Proposition 21/2 override
referendum (anticipated to take place in early June). The recommended budget, including the portions at
risk in the referendum, is only formulated with the goal of funding the desired level of services in
FY2007. Revenue is not expected to grow adequately to support the same services in FY2008 without an
additional tax increase.
This Committee has, in collaboration with Town staff, worked on making projections in order to gain
some insight to the FY2008 fiscal picture (see Appendix C). The projections quantify, according to a set
of assumptions, the growth of expenses relative to revenues. We believe that we have made reasonable
assumptions, and therefore are obligated to consider seriously the implications of the projections. They, as
expected, indicate that it is reasonably likely that maintenance of the FY2007 level of services in FY2008
will require either drawing heavily on reserves by as much as $2.8 million (and possibly even more),
having another override referendum, or cutting services.
We recognize that it will be necessary to raise taxes via a Proposition 21/2 override this year in order to
maintain services and to restore some important previously lost positions. As noted above, we support the
provisions to modestly build reserves. However, as we complete this report, the deliberations on the
budget and proposed override questions and amounts are just being concluded. VUe comment on some of
the issues here since they are pertinent to the entire budget and to the Town's overall fiscal situation.
During the refinement of the proposed school budget, the School Committee recommended, among other
proposed override questions to be put to the voters, a question to approve a revenue increase of $280K to
be used to cover growth of SPED costs beyond those foreseen at the time the FY2007 budget was put
together. This question generated a lot of discussion. One issue was that there was no explicitly identified
reserve, apart from that in the proposed question, to be used in case of unforeseen growth in SPED costs.
Rather, in many years the Superintendent has frozen non-SPED portions of the school budget in order to
keep spending within the appropriated amount. The frozen items, which may include supplies, building
maintenance, and possibly some personnel costs, effectively acted as the School Department's internal
reserve account. Since the School Committee and Administration advocate that the supplies, etc., that
were at risk are valuable, there should be some means of protecting them from being wiped out by SPED
cost increases. The School Department does not want to do this by explicitly reserving an amount for
SPED cost growth since that would impact spending on other items. An alternate proposal has been
accepted; it sets up a four-part process for covering unforeseen SPED cost increases and would not
include putting forward any question seeking new funds in the upcoming override referendum.
This Committee has discussed a proposal to allow voters the chance to decide if they would like to
increase taxes in FY2007 in order to reduce or eliminate the likelihood that another override referendum
will be needed for the following year. The concept is to include an additional question on the upcoming
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
override referendum for $1.4 million in revenue to be raised and placed into the Stabilization Fund. These
funds would not be spent in FY2007. Rather, together with the $1.4 million additional revenue that would
be received in FY2008, the total amount of $2.8 million would be available to support the FY2008
budget. That total amount is projected to allow services to be maintained without drawing upon reserves
or requiring that another override be approved. (See Appendix C.) However, this scenario presupposes
that the override questions (not including the possible question for $1.4 million for the Stabilization Fund)
that will be put to the voters this year will pass. If some do not pass, but the $1.4 million question passes,
then a natural conflict in FY2008 will arise between the need to provide critical services and the intention
of putting off another override for an additional year. Other objections to this proposal have also been
raised. Although the Board of Selectmen, School Committee, Capital Expenditures Committee, and this
Committee did not decide to include the proposed question on the override, discussion of it furthered our
goal of ensuring that the Town look to future years as well as the current year when making financial
decisions.
FY2008 and beyond
The financial difficulties that the Town faces are the result of a number of factors which are not unique to
FY2007, but that have been a factor for some time and will continue to be of concern in FY2008 and
future years. The factors include the rapid and sustained growth of costs of critical items, the fact that the
annual budgets have not been built fully in accordance with a philosophy of sustainability, and last, but
not necessarily least, that not all of the Town's revenue streams are growing (on a percentage basis) at a
rate that approximates the growth rate of expenses.
Health insurance, energy, and special-education services are, of course, the most rapidly escalating cost
drivers. Wages and salaries are not escalating at such a high rate, but they are escalating faster than 2.5%
per year and have major effects because they make up a large portion of the budget. The annual increases
in the number of students attending our public schools have moderated substantially; the school
population is no longer a major cost driver. Indeed, there is even some possibility that the school
population will actually begin a slow decline.
The concept of sustainability in the context of Town finances is easy to state, but is difficult to apply in
practice because there are many uncertainties in both projected revenues and expenses. In particular, each
annual budget should fund all of the costs of providing the services to be delivered as well as all the
liabilities that are incurred that year, and should leave the Town's financial reserves, trust accounts,
revolving funds, continuing balance accounts, etc., with balances that have increased according to the
expense-growth rate. The liabilities include both the well-known obligations to fund pensions and health-
care costs for retirees, as well as those incurred by depreciation of the Town's physical assets (i.e.,
buildings, facilities, and equipment). It is relatively easy to determine in hindsight if the financial assets
grew from one year to the next according to the expense-growth rate, but it is another matter to estimate
revenues and expenses in advance and to construct a budget that will achieve this. It is possible to obtain
an actuarial estimate of the liabilities incurred in a particular year for pension and retiree health-care
costs. (That such an estimate could eventually prove to be inaccurate adds another dimension.) The net
value of depreciation of the Town's physical assets less the sum of the investments in those assets could
be estimated each year. That would require outside technical help, particularly when making such an
estimate for the first time.
A further complication to this discussion of sustainability is that the Town is presently paying for
liabilities incurred in prior years. To be specific, for a number of years the Town has been appropriating
extra amounts to the Retirement Trust Fund in order to fund the future pension liabilities incurred mostly
in prior years. Also, one cannot forget about the ongoing principal payments for the major school- and
library-building projects that have been completed in the last few years.
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
The Town's liabilities for future pension payments are projected to be fully funded in 2015. Of course,
changes in the investment performance of the Retirement Trust Fund, in the rate of growth of salaries and
wages, or in other factors would affect this projection, but, nonetheless, the Town is doing very well in
this regard in comparison with other municipalities. An actuarial estimate of the Town's future liability
for retiree health-insurance costs will be obtained within the next year. (The Town covers most of the
costs of health insurance for retired teachers as well as other employees, whereas it only covers the
pension costs for the other retired employees.) We know the liability is large, possibly $60 million to $90
million, and will need to be funded some day. This wouldn't be such a worrisome problem if it weren't
for the rapid escalation ofhealth-care costs which promises to turn that large amount into an astronomical
sum.
The Town's physical assets need to be evaluated in order to put discussions of long-term maintenance
needs on a sounder footing. That will, in turn, most likely point to a need to increase the level of
maintenance activity and the funding needed to carry out that activity. Apart from this, major investments
will need to be made in the short term for reconstructing the DPW building and facilities and the School
Administration Building, in the reconstruction or major renovation of four elementary schools, and in a
larger and more functional senior center. Voter approval through a Proposition 21/z debt-exclusion
referendum will be required for each of these major building projects.
On the revenue side, the level of State Aid grew nicely from FY1998 through FY2002, and then declined
sharply. It has increased modestly since FY2004, but remains well below the FY2002 level. The level of
local receipts peaked in FY2001, then declined until FY2004. For FY2007, it is projected to approach the
FY2001 level. Please see the Blue Budget Book for charts showing the history of State Aid and local
receipts. The lack of growth in these revenue streams means that nearly all of the burden of funding year-
to-year cost increases has fallen onto the property tax. Furthermore, for residential tax payers the
property-tax increases have been compounded by the long-term increase in residential property values
relative to those of commercial properties (and also by changes in the Commercial/Industrial/Personal
Property [CIP] tax-rate factor). New tax revenue from construction at the former Raytheon site on Spring
St., at the Avalon at Lexington residential redevelopment of the former Metropolitan State Hospital, and
from other building projects, will help to buoy up the revenue the Town receives from commercial
properties. However, as the escalation of housing prices moderates or even vanishes, one is tempted to
wonder whether the annual value of new residential construction will continue to stay high for the
foreseeable future.
The above considerations suggest the following conclusions:
As long as expenses continue to grow faster than revenues, maintenance of the current level of services
will continue to require periodic overrides or other forms of new revenue. Indeed, depending on the
amounts of the override put to the voters this spring, whether those questions are approved, and on the
rate of growth of other revenues relative to expenses, an override may even be necessary for FY 2008.
Continuing rapid growth of the costs ofhealth care for current employees and for retired employees is
a major problem. Although this is a national problem, it is not clear that the Town can afford to wait for
this to be solved at higher levels. Employees will see undesirable changes of one kind or another. We
need to make sure these changes will be fair and reasonable; some kind of compromise between the Town
and its employees in this matter will be a necessity.
The Town should evaluate its future liabilities and their rate of growth, particularly in the areas of
health-care costs and building, facility, and equipment maintenance.
The Town should strive to find efficiencies wherever possible, and particularly in the use of energy.
Page 12 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Warrant Article Analysis and Recommendations
Article 17: Appropriate
FY20O7 0 eratin
p g Funds
Requested Funding
Source Committee
Recommendation
Bud et
g X118,109,334 GF + Free Cash $118,109,334
which includes
$4,891,751 contingent
upon one or more
override questions-
$3,774,986 for the
Schools Budget;
$914,235 for the
Municipal Budget)
(8-1)
Lexington Public Schools Funds Requested: $65,430,478
.v
Funds Recommended: $65,430,478
(which includes $3,774,986 contingent upon one
or more override questions)
Dr. Paul Ash became Lexington's 6th Superintendent in 15 years on July 1, 2005. The FY2007 budget
created by Dr. Ash and his staff differs from recent school budgets in two important respects: 1) at the
direction of the School Committee it was developed from "the ground up" by reviewing and modifying
existing programs, and identifying what the school system needs to deliver its programs, rather than by
just making incremental adjustments to the previous year's budget; and 2) it was written as a "program
budget" rather than aschool-based budget. A program budget format allows one to read a description of a
particular program and understand the costs and number of full-time equivalents (FTEs) associated with
lt.
Dr. Ash's FY2007 Recommended School Budget includes funding for: 1) level services from FY2006;
2) new State and Federal mandates; 3) restoration of some services that are needed but have not been
implemented for many years; and, 4) the reorganization of some departments to run more efficiently. An
overview of the Superintendent's FY2007 Recommended School Budget, the revised budget voted by the
School Committee on March 21, 2006, and supporting documents are posted at the Lexington Public
School website <httpa/lps.lexin tonma.org/admin.html>.
The School Committee unanimously voted to approve the FY2007 school budget on March 21, 2006, in
the amount of $65,972,778. Subsequent to the March 29th Summit meeting, the requested budget amount
was further reduced by $280,000 and is now $65,692,778. This represents an increase of 9.4% over the
FY2006 budget. This number includes health-care benefits for proposed new positions ($262,300) that,
technically, is not part of the School Budget and will be appropriated in Shared Expenses; however, it
does not include health-care benefits for current employees since those benefits are already part of Shared
Expenses. (See discussion of Shared Expenses below.) The total funding, exclusive of benefits for new
employees, is $65,430.478. This will be funded in the tax levy by: 1) $61,655,492 that is not subject to
approval in the override, and 2) $3,774,986 that is subj ect to approval in the override.
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
The key drivers of this increase are similar to those from last year. Utility costs and special education top
the list. Since last year the cost of utilities has increased 18.3 %, and that of special education has
increased by 5 %.
The increase in the FY2007 budget for utilities is as follows:
Type FY2006 FY2007 % Increase
Fuel Oil $418,612 $483,840 +15.6%
Natural Gas $623,000 $842,500 +35.2%
Electricity $1,260,000 $1,397,377 +10.9%
Total $2,301,612 $2,723,717 +18.3%
The recommended budget includes 13.95 new positions that are not at risk in the override. Of these, 12.20
are mandated by the State and Federal governments. The latter can be divided into 9.20 FTE positions for
SPED services and 3.00 FTE positions for English Language Learners (ELL). One example of a new
position is that of the high-school Evaluation Team Leader. This position is needed to review individual
educational plans in a timely manner and insure full compliance with program and legal requirements.
The new positions are in addition to the 218.22 SPED FTE positions that are currently in the FY2006
budget and are maintained in the FY2007 budget.
Some of these new positions will allow the SPED department to be revamped to expand the school
district's capacity to keep more students within the school system. The goal is to better serve more
students with appropriate and adequate in-district programs and avoid costly out-of district placements
when possible.
when the Town is unable to meet the needs of aspecial-education student within the Lexington Public
School system, State law requires that the student be sent to a program outside of Lexington to receive
services and the Town must pay for these services. One year after the Town has incurred these out-of
district costs the State will reimburse Lexington for some of the associated expenses. (In other words, a
claim for FY2006 will be reimbursed in FY2007.) The State will reimburse Lexington for 72% of the
costs above approximately $30,000 (four times the State's foundation budget) for each child placed out-
of district. For example, an out-of district tuition that costs $150,000 would generate a reimbursement of
$86,400 in the following year. Out-of district tuitions range from $25,000 to $221,000 per year, not
including transportation. (Transportation isnot included in that State reimbursement calculation).
The part of the budget that will be funded only if approved in the June override includes 29.80 existing
FTEs and 16.55 new positions. The 29.80 existing FTEs are required primarily to retain the elementary
Spanish program, keep the high level of instruction offered at the high school and throughout the system,
and maintain the number of course selections available at the middle schools. The new positions are listed
in Appendix A as part of the School override questions. Details of all of these positions are available at
the LPS website.
Enrollment in FY2007 is currently projected to decrease by 19 students at the elementary level, the
middle schools are projecting a 28 student increase, and high-school enrollment may decrease by
1 student.
Enrollment FY2006 Projected FY2007
K-5 2,670 2,651
6-8 1,517 1,545
9-12 1,982 1,981
Total 6,169 6,177
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
Minuteman Re Tonal Hi h School Funds Requested: $1,024,817
Funds Recommended: $1,024,817
Enrollment figures for the current school year 2005-2006 (FY2006) are measured as of October 1, 2005,
and at that time there were 743 full-time high-school students, a slight decline of 3 students from the prior
year, but still a significant increase from 715 students in October 2003. The school served a total of 956
FTE (full and part-time) students, up from 939 FTE (a 2% increase). The school population is roughly
68% from the 16 in-district towns, and 32% from out-of district towns. There are no "Choice" students
attending. In-district enrollment increased 4 students (1%), from the prior year and has increased 32%
since October 2000. Out-of district enrollment levels dropped 7 students (-3%). SPED students are 51
of full-time enrollment.
The Minuteman Regional High School (MRHS) Committee has accepted an operating budget for 2006-
07 (FY2007) of $16,139,498 , a 2.8% budget increase (+$440,345) over current year (last-year's increase
was 2.3%). Salaries, which are 62% of the budget, decreased $200,049 (2%), because a large number of
retiring teachers are being replaced by lower-paid teachers and positions are being eliminated. However,
health-insurance costs and energy costs have led to an increase in the total budget. The retirements have
had an adverse effect on health-insurance costs, which have risen 12% as both retirees and new hires are
now being covered. The higher cost of energy affects heating, power and student transportation. The
school has also increased its commitment to infrastructure renewal, increasing its capital budget to
$250,000 (+$175,000). Afive-year capital plan is being developed.
Member towns' assessments are used to fund the portion of the budget that is not funded by the
combination of: (1) all other projected revenues, and (2) member-towns', State-required, minimum per-
studentpayments. Member towns are assessed for the upcoming year based on their student enrollment in
the current year.
This year's assessments are based on a MRHS budget funded with $2,204,744 of Chapter 70 money and
$760,500 in Transportation Aid. This is increased funding of Chapter 70 Aid and Transportation Aid from
FY2006. Out-of district enrollment, and its associated tuition revenue, is anticipated to continue to
decline. This is mainly due to the State's current Chapter 74 rules, which restricts the number of
nonresident students eligible to enroll. Although the State caps the nonresident-student tuition rate, it is
now set using the actual in-district average cost as a factor. The nonresident tuition rate for FY2006 was
set at $14,497 per student. Minuteman officials have lobbied both the Legislature and the Commissioner
on this very issue for years and in 2005 the Commissioner agreed and set the FY2006 rates accordingly.
The FY2007 rates have yet to be set by the State, but the formula for doing so is not likely to change so
the rate will either remain at $14,497 or increase by 2%-3 %. MRHS's budget assumes level per-pupil
funding with a decreased out-of district enrollment.
This year, as with last year, MRHS has made clear to member towns that this assessment is still an
estimate. In order for MRHS to produce accurate assessments for its member towns State Aid must be
determined, and as of press time that has yet to occur. This assessment is based on the Governor's
proposed budget, known as House-2.
The requested amount of Lexington's assessment is an increase of $194,583 (+21.9%) versus the 2005-
2006 assessment. The main source of this increase is that Lexington's FY07 Basis Enrollment (as of
October 1, 2005) for grade 9-12 regular students was 53.3 FTE students, 10.6 FTE (+24.8%) more than
last year. There was also an increase in this year's capital assessment, which is assessed to in-district
towns based on their regular grades 9-12 enrollment.
The assessment also included the Minuteman Middle School Technology Program (MMSTP) at Clarke
and Diamond Middle Schools. Last August, MRHS and Lexington Public School (LPS) administration
mutually agreed to temporarily place the MMSTP on hold as the LPS had to correct their newly
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
discovered deficits and the LPS administration wished to reevaluate that program. The LPS
administration has now decided not to reinstate the MMSTP and has so advised the MRHS
administration. Lexington's assessment, therefore, is reduced by $57,433.
A breakdown of the full assessment without the MMSTP for FY2007 is:
Minuteman's Projected Assessment-based on the unapproved House-2 budget
PROGRAM
Grades 9-12:
Regular Day Students
Special Education Assessment
State Minimums for Lexington
Totals, grades 9-12 (incl.
SPED)
Special Programs:
Middle School Technology
"Reduced Charge" Pupils
"Afternoon" Pupils
Totals, Special Programs
TOTAL OPERATING
Capital Assessment (based on enrol
Special Assessment
TOTAL ASSESSMENT
FTE BASIS
ENROLLMENT* AVERAGE PER-
PUPIL CHARGE ASSESSMENT
FY2006 FY2007 FY2006 FY2007 FY2006 FY2007
42.7
23.0
42.7 53.3
31.0
53.3 $3,657
$4,250
$12,142 $3,052
$4,250
$12,297 $156,167
$97,750
$518,484 $162,672
$131,750
$655,405
42.7 53.3 $18,089 $17,820 $772,401 $949,827
25
6.87
8.52 25
6
7.88 $2,297
$3,618
$2,532 $2,297
$4,697
$2,587 $0
$24,855
$21,569 $0
$28,180
$20,387
40.39 38.88 $2,571 $2,726 $46,424 $48,567
83.09 92.18 $10,546 $11,454 $818,825 $998,394
led 9-12) $150 $496 $6,409 $26,423
$5,000
$10,683 $11,741 $830,234 $1,024,817
* prior year's enrollment as of October 1
Shared Expenses Funds Requested: $26,757,342
Funds Recommended: $26,757,342
(which includes $202,530 contingent upon one or
more override questions)
The Shared Expenses address the costs of current and future pensions for retired employees and a portion
of the future pension liability, general insurance, health-and-dental insurance for current and retired
employees, unemployment, workers compensation, non-exempt debt service, and the Reserve Fund. This
year the benefits for both municipal and school employees are included in this section of the budget.
Furthermore, the benefits for the new employees who will be hired if override questions pass are included
in the above request.
Health insurance for current and retired employees is the gorilla of shared expenses. Not only is the
current estimate of $18,312,615 by far the largest amount, but it is also 22% above the FY2006 amount.
The increase represents: 1) a 14% increase in the cost of coverage per person, 2) a 4% increase in the
number of covered persons in FY2006 that wasn't planned for in the FY2006 appropriation, and 3) a 4%
increase in the number of covered persons in FY2007. (All percentages are approximate estimates.) We
note that the unfunded increase in the number of covered persons in FY2006 is not expected to draw
down the Health Care Trust Fund by an amount large enough to require a corresponding increase in the
FY2007 appropriation.
We have requested a breakdown of the health-insurance costs into school and municipal categories per a
request for this information at a Town Meeting Members Association Information Meeting, but have not
yet received it. The computation of the breakdown requires being able to attribute each retiree, as well as
current employees, to either the school or municipal category. It is even not clear that a precise
Page 16 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
breakdown is meaningful, since the Town has been managing health insurance and other benefits for
school and municipal employees on a combined basis for many years, but a rough estimate can be made
simply on the basis of the ratios of the total school and municipal line items ($65,430,478 and
$24,896,696, respectively). This back-of the-envelope calculation assumes that the number of covered
persons in the individual and family plans of the current and retired employees in each category is
proportional to the current budgeted amounts. The estimated amounts are $13,300,000 and $5,000,000
for, respectively, the school and municipal current and retired employees.
No funding is requested in the current budget to cover the liabilities that will be incurred in FY2007 for
the future costs of health insurance for retirees. (See also Article 39.)
This budget continues the Town's ongoing program to fund the Town's liabilities for future pension
costs. Of the appropriation for Contributory Retirement (line 2110, $3,342,331), roughly half will be used
to fund FY2007 pension payments and the other half will serve to build the Retirement Trust Fund. The
Retirement Board has set the amount in order to fully fund the future pension liabilities by the year
2015-well ahead of the State's requirement to be fully funded by the year 2028.
The amount recommended to be put into the Town's Reserve Fund (from which this Committee approves
transfers) is $400,000, which is substantially above the amount of $150,000 appropriated so far for
FY2006. For FY2005, $150,000 was appropriated at the 2004 Annual Town Meeting, but another
$150,000 was put into the Fund via a supplementary appropriation at the 2005 Annual Town Meeting.
The amount has increased for FY2007 so that individual departments do not need to include reserves in
their individual budgets. We also note that the recommended amount was increased from $300K to
$400K in conjunction with a decision to eliminate the School Committee's request fora $280,000
override question for a reserve to cover Special Education (SPED) cost increases. (See the discussion in
the Overview.) This Committee unanimously (9-0) supports $100,000 more than the originally requested
amount so that the Reserve Fund is funded at $400,000-rather than $300,000-to provide additional
capacity so as to help with any unpredictable SPED expenses in the schools.
Municipal Departments Funds Requested: $24,896,696
Funds Recommended: $24,896,696
(which includes $914,235 contingent upon one or
more override questions)
The recommended amount for the operation of municipal departments includes $914,235 that is
contingent upon approval in the June Proposition 21/~ override. A summary of the at-risk list maybe found
in Appendix A. Employee benefits in the amount of $60,200 for the new municipal positions that are at
risk (7.0 FTEs) are included in the shared-expenses line items. A more complete description of the items
may be found in the Town's budget books.
The at-risk items include many that are intended to preserve the FY2006 level of services and also some
that restore previously lost positions and services. This Committee would prefer that, during the
construction and presentation of the budget, the restorations and any program enhancements be clearly
distinguished from the items that preserve services or respond to legal mandates.
Line item 3230 (Snow Removal) includes $610,173, but there is also an overall budget revenue offset of
$300,000 which is an intentionally set aside of the projected FY2007 revenue for additional snow-
removal costs. Any snow-removal costs in excess of the $610,173 can be legally deferred into FY2008.
The Board of Selectmen has not indicated, as of the time of writing, as to how the at-risk items and
amounts will be presented to the voters in terms of a question or questions.
Page 17 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Appendix A contains a summary of the school and municipal items that will be at risk in the override. It
also cross-references the three school and one municipal categories to specific appropriations by Article
and line item.
A majority (8-1) of this Committee voted to support the operating budget. The one member who voted in
the negative did so as he is concerned that the budget is supported by too much Free Cash and that,
consequently, there will be problems in sustaining the same level of services in future years.
Article 18: Appropriate
FY20O7 Enter rise
p Funds
Requested Funding
Source Committee
Recommendation
Funds Budgets X14,509,253 EF $14,509,253 (9-0)
Water Enter rise Fund
p FY2007
Requested
Direct (excluding MWRA Assessment) $1,691,305
MWRA Assessment $4,341,830
Total Appropriated under this Article $6,033,135
Shared Costs $257,998
Indirect Costs $660,615
Total Appropriated under Article 17 $918,613
Total Water Enterprise Fund $6,951,748
Also see Articles 29 & 30 for non-cash capital requests.
Wastewater Sewer Enter rise Fund
( ) p FY2007
Re nested
q
Direct (excluding MWRA Assessment) $1,066,776
MWRA Assessment $5,782,838
Total Appropriated under this Article $6,849,614
Shared Costs $113,688
Indirect Costs $660,612
Total Appropriated under Article 17 $774,300
Total Wastewater (Sewer) Enterprise Fund $7,623,914
Also see Articles 30 & 31 for non-cash capital requests.
Recreation Enter rise Fund
p FY2007
Requested
Direct (Appropriated under this Article) $1,626,504
Shared Costs
Indirect Costs $134,400
$100,000
Total Appropriated under Article 17 $234,400
Cash Capital (Appropriated under Article 27) $75,000
Total Recreation Enterprise Fund $1,935,904
Also see Article 27 for a non-cash capital request.
The Town of Lexington has maintained Water, Sewer, and Recreation Enterprise Funds since shortly after
legislation authorizing the creation of such funds, G.L. c. 44, § 53F1/2, was enacted by the State
Page 18 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Legislature in 1986. These enterprise funds do not rely on tax-levy funds, but are wholly self funded by
user charges and fees. (Under the governing statute, enterprise funds may be subsidized by
appropriations from the General Fund, but in the case of the Water and Sewer Funds, the Town has never
elected to do so.)
What is an Enterprise Fund?
As explained by the Massachusetts Department of Revenue, "an enterprise fund establishes a separate
accounting and financial reporting mechanism for municipal services for which a fee is charged in
exchange for good or services. Under enterprise accounting, the revenues and expenditures of the service
are segregated into a separate fund with its own financial statements, rather than commingled with the
revenues and expenses of all other governmental activities. Financial transactions are reported using
standards similar to private sector accounting. Revenues are recognized when earned and expenses are
recognized when incurred, under a full accrual basis of accounting [unlike the modified cash basis of
accounting typically used for municipal accounting]. An enterprise fund provides management and
taxpayers with information to: [m]easure performance, [a]nalyze the impact of financial decisions; [and]
[d]etermine the cost of providing a service." [DOR Enterprise Funds Manual (June, 2002)]
In its final report to the Board of Selectmen dated June 3, 2005, the Ad Hoc Water and Sewer Rate Study
Committee stated, with respect to the Town's Water and Sewer Enterprise Funds: "Providing water is an
essential service. It must not be jeopardized by inconsistent and unreliable funding, such as can occur
with limits on property tax rates...Enterprise Funds are not separate entities from the Town. They are an
accounting mechanism for certain services that are funded by user fees; with its independent revenue
source, an EF is not limited by Proposition 2~/~ constraints and does not compete directly with other Town
services funded by property tax revenues. Enterprise funds also make it easier to closely monitor and
track costs and revenues...Although EF's are not the only way to accomplish the above purposes, the
Committee fully supports their use." [Final Committee Report, p. 7]
Establishing the Enterprise Fund Bud emits
At the Annual Town Meeting each year, Town Meeting establishes a budget for each of the enterprise
funds for the following fiscal year. Later in the year (generally in the late summer or early fall in the case
of the Water and Sewer Enterprise funds), rates are set that are designed to be sufficient to cover the
complete appropriations for the funds made by Town Meeting. Any surplus that remains in an enterprise
fund account at the end of the fiscal year must be retained in a separate reserve in the enterprise fund, and
the funds accumulated in that reserve may be applied only to meet the capital needs of the enterprise or to
reduce user charges. If an enterprise fund sustains a loss (after applying any cumulated reserves in the
fund), such loss must be made up in the succeeding fiscal year's appropriation.
In prior years, appropriations for the operating costs of the Town's enterprise funds-consisting of both
the direct expenses of the enterprise operations and indirect charges from other Town departments-have
been made as part of the vote on the operating budget. The various enterprise-fund appropriations have
been scattered among related line items in the operating-budget motion, making it difficult to understand
and keep track of the complete costs and operations of each of the various enterprise funds. This year, in a
laudable reform that is consistent with the Water and Sewer Rate Study Committee's recommendation to
improve the financial transparency of the enterprise-fund accounting, the Warrant contains a separate
article for the enterprise-fund budgets which clearly sets forth the major operating costs of each of the
enterprise funds. This new presentation will make it much easier to understand the operating budgets of
the enterprise funds. However, the indirect costs that are charged to these enterprise funds are still
appropriated in Article 17, and the anticipated revenues which fund these costs remain missing from the
enterprise-fund revenue projections (although they are mentioned as footnotes in the budget). (For the
complete breakdown of operating costs, including shared and indirect costs, see the tables above.) The
Committee asks that in the future the Enterprise Funds Operating Budget worksheets include the
complete budget for the enterprise funds, including a breakdown of indirect costs, and a total estimate of
all anticipated revenues, Appropriations for the capital needs of the enterprises will continue to be
Page 19 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
addressed, as they have in the past, in separate capital warrant articles. (See: Article 27-Recreation
Capital Projects, Article 29-Water Distribution Improvements, Article 30-Water Meters, and
Article 31-Sewer Improvements.)
WaterlSewer Fund Issues
The largest component of the Water and Sewer Enterprise-Funds budgets is made up of the charges
imposed by the MWRA for water and wastewater disposal. These are assessments over which the Town
has no control. The requested appropriation is based on the MWRA's preliminary estimate of its
anticipated assessments for Lexington for FY2007-about $4.3 million for water and $5.8 million for
sewer. Generally, the final assessments, which are rendered later in the spring or early summer, are lower
than the preliminary assessments, and the final budget used to set rates for FY2007 will be adjusted to
reflect the final, actual costs.
The budgets include direct costs, which are primarily for the wages and salaries of the employees in the
DPW's Water and Sewer Divisions, the expenses of the water and sewer maintenance activities and
equipment, and debt service on prior borrowings for water and sewer enterprise capital improvements.
The budgets also include indirect and shared costs of $918,613 charged to the Water EF and $774,300
charged to the Sewer EF, which are for services provided to the enterprise funds by departments
accounted for in the General Fund, such as the Engineering Department and the Revenue Department, for
insurance costs (health and liability), retirement funding, utilities, and support services such as
Comptroller, Management-Information Systems (MIS), and the Revenue Department. The Town
Manager and the new Water and Sewer Enterprise Fund Business Manager are currently conducting an
analysis, at the recommendation of the Water and Sewer Rate Study Committee, of the basis for the
indirect charges, and are expected to make their final recommendations next year. For purposes of the
FY2007 Budget, the indirect expenses have been level-funded, although the basis of their allocation has
been adjusted somewhat from prior years. The Committee recommends that, in the future, the information
on the enterprise-fund budgets (e.g., in the Town Manager's budget books) should include comprehensive
data on direct, shared, and indirect costs in one place.
This year's water and sewer enterprise budgets do not include depreciation charges, as they have in the
past, because the capital needs and costs of the enterprises needed to keep the capital equipment in up-to-
date condition have historically been funded by a combination of cash-capital appropriations and bond
indebtedness-the costs of which have been fully addressed in the rates. The depreciation charges
previously included in the rates have not been applied to capital costs, but instead have simply
accumulated in the enterprise funds as surplus, or in some cases, regrettably, may have been applied to
defray losses resulting from other enterprise-fund operations that were not adequately funded in the rates.
Although depreciation charges will not be included in the enterprise-fund budgets or as part of the rate-
setting process, the accounting records and financial statements of the enterprise funds will still include
all appropriate depreciation charges as required by applicable government-accounting standards.
For a number of years, the budgets for the Water and Sewer Enterprise Funds have included charges,
which have been recovered in the water and sewer rates, for payments in lieu of taxes (PILOTs)-
$500,000 for the Water Enterprise Fund and $250,000 for the Sewer Enterprise Fund. These are amounts
that Town Meeting has authorized to be paid from the Enterprise Funds to the General Fund for
unspecified Town services, in addition to the identified indirect costs, as though the Enterprise Funds
were separate entities subject to taxation. Because of uncertainties about the appropriateness and validity
of these charges, and at the recommendation of the Water and Sewer Rate Study Committee, the Board of
Selectmen has voted to begin phasing out these charges. The PILOT charges included in the FY2007
budget, which are included in the Expenses line item for "contractual services," are $375,000 for the
Water Enterprise Fund and $187,500 for the Sewer Enterprise Fund. These charges represent a 25%
reduction from FY2006.
Page 20 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
One issue that has been of particular concern to this Committee during the past year or so is the status of
the Water and Sewer Enterprise Funds reserves. When those reserves were certified by the Department of
Revenue in the fall of 2004, as of June 30, 2004, they had declined from approximately $4 million the
previous year to $2.5 million, a drop of about $1.5 million. The shortfall was even greater, about
$2 million, from the approximately $4.5 million in reserves that would have been expected at the end of
FY2004 based on the reported positive results of FY2004 operations (which were presented and relied
upon insetting the FY2005 rates).
The Town's auditors, Melanson Heath & Co., were engaged to conduct a special audit of the reserves, and
in the summer of 2005 reported to the Board of Selectmen that the decline had resulted primarily from the
establishment of inadequate rates and a consequent shortfall in revenue. Melanson Heath recommended
that the FY2004 water and sewer revenue be restated, and attributed the need for restatement to a variety
of factors, including declining consumption, increasing abatements, difficulties with "the initial setup" of
the Town's conversion to the MUMS accounting system several years ago, the carrying of inaccurate
accounts receivable, and changes or errors in certain billing and collection practices.
In response to the Melanson Heath report, and also at the recommendation of the Water and Sewer Rate
Study Committee, a new position of Business Manager for the Water and Sewer Enterprise Funds was
created and filled in the early fall of 2005 (the costs of which will be borne exclusively by those
Enterprise Funds). The Business Manager will oversee the data collection, accounting, and billing
functions of the Water and Sewer Enterprise Funds, and it is our hope and expectation that the
establishment of this new position, as well as other reforms that are being instituted in the accounting &
billing process (including the proposed upgrading of the Town's remaining water meters discussed under
Article 30) will substantially improve the financial performance and accountability of the Water and
Sewer Enterprise Funds. We still have some residual questions about the status of the fund reserves, and
during the coming year will continue to monitor that issue.
Recreation Fund Issues
About half of the revenue for the Recreation Enterprise Fund operating budget, $733,000, comes from
user fees for fields and registration fees for programs. The fee charged for field rentals will be increased
to cover a larger indirect charge made by the DPW for field maintenance. All programs offered by the
Recreation Department are designed to be revenue neutral with charges to users matching the program's
operating costs. The other main source of revenue, $720,000, is from golf course fees. Golf course
expenses include amanagement-contract base fee of $345,000 as well as an additional payment for course
management of 5% of collected course fees.
Other direct operating costs to the Enterprise Fund include wages and salaries totaling $558,526 for
5 full-time staff and 175+1- seasonal staff, as well as charges for utilities and supplies costs. The charge
for depreciation has also been discontinued this year.
Indirect, shared, and capital charges will total $309,400. Under Article 17, $100,000 of the Enterprise-
Fund revenue will be used to help fund the Lincoln Field debt payment, $100,000 will be used for indirect
costs to cover DPW field maintenance, and $34,400 will be used for employee benefits. $75,000 will be
appropriated in Article 27 for Recreation Capital projects.
The Committee unanimously (9-0) approves the adoption of the Water, Sewer, and Recreation Enterprise
Funds budgets, as requested.
Page 21 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Article 19• Approve Senior
Tax Relief (Accept Funds
Requested Funding
Source Committee
Recommendation
Chapter 59~ SeCtlOri 5~ None (Overlay Approve (9-0)
Clause 41C) a~~ount>
Background for all Senior-Tax-Relief Articles (#19-#22)
There are currently a number of programs, all governed by State law, that provide property-tax relief for
senior citizens and others in Lexington. These include:
• a tax deferral program, under which low-income homeowners age 65 or over may defer any or all
of their property tax, up to half the value of their house, at an interest rate of 8% per year, until the
house is sold or transferred, G.L, c. 59, § 5, cl. 41A ("the 41A Program");
• a tax exemption program, under which low-income seniors with limited assets other than the value
of their home may deduct a fixed amount (currently $750) from their property tax, G.L. c. 59, § 5,
cl. 41 C ("the 41 C Program");
• the so-called "Circuit Breaker" program, under which low- and moderate-income homeowners age
65 and over, whose homes have an assessed valuation not greater than a specified ceiling ($600,000
for tax year 2005), may obtain a tax credit on their State tax returns (up to $840 for tax year 2005)
for the amount that their property tax, plus half their annual water and sewer bill, exceeds 10% of
their annual income, G.L. c. 62, § 6(k); and
• a Senior Volunteer program under which persons over 60 may perform volunteer work for the
Town in exchange for a reduction of up to $750 in their property tax, G.L. c. 59, § SK.
Towns may vary the terms of the 41 A and 41 C programs, within certain limits, by exercising "local
options" available under those statutes. Other, more targeted, programs provide property-tax relief for
certain other categories of residents such as disabled veterans, the blind, etc.
In each of the past two years, at the recommendation of the Selectmen's ad hoc Tax Deferral and
Exemption Study Committee, Town Meeting has voted to relax the eligibility requirements for, and to
enhance the benefits available under, the 41 A and 41 C programs in several ways.
In 2004, Town Meeting adopted the following changes to the 41 C Program:
• Lowered age of eligibility from 70 to 65 (the lowest allowable under current law)
• Increased the exemption from $500 to $750 (of a maximum allowable amount of $1,000 under
current law)
• Expanded the income eligibility limits from $13,000 if single, $15,000 if married, to $20,000 if
single, $30,000 if married (the highest allowable under current law)
• Increased the asset limits from $28,000 if single, $30,000 if married, to $40,000 if single, $55,000 if
married
In 2005, Town Meeting voted to further enhance the 41 A and 41 C senior tax-relief programs as follows:
• Adopted acost-of living adjustment (COLA), available by local option under G.L. c. 59, § 5,
cl. 41 D, which annually increases the Clause 41 C income and asset limits (but not the exemption
amount) by a COLA. (In FY2006, applying the 2.8% COLA determined by DOR, the income limits
for the Clause 41 C program increased to $20,560 if single and $30,840 if married, and the asset
limits increased to $41,120 if single and $56,540 if married.)
Page 22 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
• Authorized the Board of Selectmen to seek a Home Rule Amendment that would: (a) lower the
current 8 % interest rate on the 41 A deferral program to a variable interest rate tied to Treasury Bill
rates; and (b) adjust the income limit upward from $40,000 to $50,000
After the 2005 Annual Town Meeting, on November 10, 2005, the Governor signed into law Chapter 136
of the Acts of 2005, "An Act Providing Senior Tax Relief," which enhanced the local-property-tax relief
available to seniors on a statewide basis by:
Authorizing Towns, by vote of Town Meeting, to lower the interest rate for Clause 41A deferrals
from 8% to any lesser rate (thereby obviating the need for the first part of the Home Rule
Amendment sought by Lexington), and
Increasing eligibility under the State Circuit Breaker Program by changing the base limit for
assessed home value from $400,000 to $600,000, and further providing that this home-value limit
will be adjusted in the future by a "cost of housing adjustment," based on market changes in
housing value, while the income and credit limits will continue to be adjusted by a COLA, based on
consumer prices generally.
Proposed Increase of 41 C Benefits
Against this backdrop, the Tax Deferral and Exemption Study Committee is recommending this year in
Article 19 that Town Meeting exercise its option to increase the property-tax exemption available to
qualifying seniors under the 41 C Program from $750 to the maximum of $1,000.
Financial hnpact
Applying a statutory cap based on the number of exemptions for which Lexington received
reimbursement under the preexisting Clause 41 before the Town adopted Clause 41 C in 1987, the State
will reimburse the Town for up to fifty-nine 41 C exemptions at $500 each, for a maximum of $29,500,
subject to appropriation. Exemptions beyond this amount must be funded from the Town's overlay
account, an element of the Town budget that is determined by the Board of Assessors annually to fund
anticipated exemptions and abatements that might be granted during the upcoming fiscal year. The
amount of the overlay that has already been established for FY2007 is believed to be adequate to cover
the costs of the proposed increase in the 41 C exemption without the need for further appropriation from
the tax levy. However, amounts set aside by the Assessors in the overlay account count against the
Town's annual levy limit, and therefore reduce the funds available to be appropriated for other purposes.
As the eligibility limits for the 41 C Program have been relaxed over the past two years, and the benefit
amount has been raised, the cost of the program has increased, but not dramatically. The financial impact
to the Town of prior enhancements to the 41 C program is as follows:
Fiscal Year No. Amount Value Reimbursement Cost to Town
2004 34 $500 $17,000 $17,000 $0
2005 49 $750 $36,750 $24,500 $12,250
2006 (to date) 48 $750 $36,000 $24,000 $12,000
(The final number of qualifying homeowners in FY2006 has not yet been determined, as
exemptions for any year maybe applied for any time up until three months after issuance of
the actual tax bill. This year, exemptions requests will be accepted until April 1St )
Raising the 41 C exemption to $1,000 effective in FY2007 will cost the Town an additional $250 per
participant, or a total additional amount of $12,250, if the number of participants remains at the FY2005
level of 49. If participation increases, the next ten participants, up to a total of 59, will cost the Town an
additional $500 each, at which point the maximum available State reimbursement of $29,500 will be
Page 23 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
reached. Thereafter, each additional exemption granted will cost the Town $1,000, for which no State
reimbursement will be available. The net cost to the Town of adopting Article 19, assuming a low of 49
participants and a high of 69, can be projected as follows:
Fiscal Year No. Amount Value Reimbursement Cost to Town
2007 (low projection) 49 $1000 $49,000 $24,500 $24,500
2007 (maximum reimbursement.) 59 $1000 $59,000 $29,500 $29,500
2007 (high projection) 69 $1000 $69,000 $29,500 $39,500
Given the steadily increasing local-property-tax burden, this Committee believes that it is appropriate to
maximize the available 41 C exemption at this time. The improved exemption will be significant to those
in need, and the available State reimbursement will substantially defray the cost to the Town. The prior
increase in the exemption from $500 to $750 has not dramatically increased the number of participants in,
nor materially increased the cost of, the program.
This Committee unanimously (9-0) supports adoption of this Article.
Article 20: Establish
Pro ert Tax Deferral
A Y Funds
Requested Funding
Source Committee
Recommendation
Interest Rate for FY2O07 None Not Applicable Approve (9-0)
See Background under Article 19.
The 41 A deferral program offers the most immediate and substantial property-tax relief to cash-strapped
seniors, as it permits those who qualify to defer any part or all of the property tax due their property until
it is ultimately disposed of. Lexington has adopted the maximum allowable income limit ($40,000 for
both single individuals and couples), and there is no asset limit. The program significantly facilitates the
ability of Lexington seniors to remain in their own homes as long as they choose.
Nevertheless, utilization of the 41 A Program has been limited for at least two reasons: (1) many senior
citizens who have paid off their mortgages are reluctant to place a new lien on their home and accumulate
debt, or to reduce the value of an asset that can be passed on to their heirs; and (2) the statutorily
mandated interest rate of 8% has been considered excessive, particularly given the low-interest-rate
environment of recent years. Recent participation rates in Lexington are shown below.
Fiscal Year Number of Deferrals Amount Deferred
2003 21 $80,459
2004 23 $80,459
2005 16 $75,000
2006 (to date) 16 $75,000
Recently enacted state legislation authorizes Town Meeting for the first time to change the interest rate on
deferrals to any amount less than 8%. (See the background discussion under Article 19 above.) Any new
interest rate, once established, will remain in effect until Town Meeting acts again to change it.
The Selectmen's ad hoc Tax Deferral and Exemption Study Committee has proposed that Town Meeting
adopt as the 41 A deferral interest rate the one-year constant maturity Treasury rate published for March of
Page 24 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
the preceding fiscal year, but in no event more than 8%. This is substantially the same interest rate as
Town Meeting approved for inclusion in the Home Rule Petition last year, with just a few minor
differences (use of the one-year instead of two-year maturity rate, and use of the March instead of July
rate). The designated rate, which is usually several percentage points below prime, matches as closely as
possible the interest the Town would have earned on deferred tax revenues had they been paid
immediately into the Town Treasury. (The one-year constant maturity Treasury rate for March 2006 was
4.77%.)
Adoption of this new interest rate should make deferral of taxes under Clause 41 A significantly more
attractive to seniors, and at the same time leave the Town roughly whole. Use of the published Treasury
rate obviates the need to make annual adjustments at each year's Town Meeting as the interest rate
environment changes and ensures continued fairness to both citizens and the Town.
This Committee unanimously (9-0) supports adoption of this Article.
Article 21: Rescind MGL Funds Funding Committee
Cha ter 59 Section 5K
p Requested Source Recommendation
(Property Tax Work-off 1Vone (Overlay Approve (9-0)
Program) Account)
See Background under Article 19.
The Town Manager has proposed replacing Lexington's existing senior-volunteer tax-work-off program,
adopted in 2000 by the acceptance of G.L. c. 59, § SK, with a new, locally-created program. The
proposed new program, described in the discussion of Article 22 below, would not be subject to certain
limitations imposed by the State program, and thus would provide more flexibility. In order to establish
the new program, it would be necessary first to revoke Lexington's prior acceptance of G.L. c. 59, § SK.
(Pursuant to G.L. c. 4, § 4B, a town may revoke its acceptance of a law such as this after the expiration of
three years from the date of its acceptance.)
Because this Committee believes, for the reasons set forth below under Article 22, that the new Senior
Service Program proposed by the Town Manager will be an improvement over the existing program, it
unanimously (9-0) supports this Article.
Article 22: Appropriate for Funds Funding Committee
Senior Service Pro ram
g Requested Source Recommendation
X25 000
' GF (with A rove 9-0
pp ( )
corres ondin
p g
reduction to the
Overlay Account)
See Background under Article 19.
In 1999, the Legislature authorized cities and towns to vote to accept G.L. c. 59, § SK to offer residents,
age 60 and over, the opportunity to reduce their property-tax obligation by as much as $500 in exchange
for community service. Lexington, which had earlier maintained its own program, accepted this statute
shortly after it was enacted, and in 2002 the Legislature increased the work-off credit limit to $750.
Participants may receive property-tax reductions under this program in addition to any other personal
exemption, such as the Clause 41 C exemption, for which they qualify. They may also defer the balance of
their taxes under Clause 41 A if they are eligible to do so.
Page 25 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
The statute provides that the hourly credit for the work performed may not exceed the State's minimum
hourly-wage rate, currently $6.75 per hour. The statute does not require towns to impose any limitations
on income, assets or the number of persons who may participate in the program. However, as long as
cities and towns comply with the age, credit limit and minimum-wage provisions, they "have the power to
create local rules and procedures for implementing this section in any way consistent with the intent of
this section."
Lexington's Social Services Department, which has administered the senior-volunteer program, has
applied the following policies for participation:
• Income Limits: $36,750 if single, $42,000 if married
• Asset Limits: None
• Number of Participants: No limit
• Participants per Household: Up to two per household if qualified
Participation in the program over the past several years has been as follows:
Fiscal Year Participants Hours Credits Average Credit
2004 31 2968 $20,034 $646
2005 37 3257 $21,985 $594
2006 37 3512 $23,706 $640
The costs of the existing program are charged to the Town's overlay account, and the Assessors are
required to make adequate provision for the anticipated costs when they establish the overlay.
The purpose of replacing the existing senior-volunteer program would be to free the Town of the
restrictions imposed by the State statute on age, wage rate, and credit amount. This would give the Town
the flexibility to:
Allow participation by persons under 60, such as the disabled or handicapped, who might be able to
benefit from the program
Pay a wage higher than the minimum wage, and
Allow more than $750 to be credited against a participant's annual property-tax bill
The detailed policies that would govern the new program have not yet been finalized. It is expected that
further details of the proposed program, which ultimately must be approved by the Board of Selectmen,
will be presented at Town Meeting.
Under this Article, the Senior Service Program would be funded by direct appropriation from the tax levy,
rather than through the Town's overlay account. This year's appropriation request is for $25,000, which
represents a modest increase over the historical costs of the program which have been charged to the
overlay account. The terms of participation in the program (e.g., wage rate, amount of credit, and number
of participants) will have to be tailored to assure that the program's costs can be met within the budgeted
amount.
There will be some legal and practical consequences of the Town's revocation of its prior acceptance of
G.L. c. 59, § SK and adoption of its own, independent program. Section SK expressly provides that the
reduction in tax liability offered to participants under the State-sponsored program is not considered
wages for purposes of State taxation,l and that the provision of volunteer services is not considered
employment for the purposes of workers' compensation or "any other applicable provisions of the
General Laws." 2 Under the proposed new program, participants will be treated as part-time employees
receiving wages. It is expected that they will receive a check for their services, from which all required
Page 26 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
State and Federal tax-withholding amounts will be deducted, and that the check will then be assigned to
the Town as a credit against their tax bill.
Loss of Section SK's exemption from State taxation of the credits awarded to volunteers will result in
some additional cost as State taxes will now have to be withheld, but the amounts in question are
considered to be insubstantial. It will also mean that the Town will be obligated to provide Workers'
Compensation coverage for participants, but as the Town is self insured, such coverage should not result
in any material additional cost, and should be beneficial for both the participants and the Town. Finally,
because all employees of the Town are considered to be "public employees" under the State tort claims
statute, even if their employment is part-time or temporary, participants wi11 continue to be shielded from
liability for negligence while acting within the scope of their employment as they were under the express
terms of Section SK.
The $25,000 cost of the proposed program is amply justified, indeed a bargain. Not only does it provide
participating residents a productive way to become involved in the community, while at the same time
alleviating some of the burden of their local property taxes, it also provides the Town with valuable and
necessary services. The Town Manager has made a persuasive case that substituting alocally-created
program for the existing State-regulated program will provide needed flexibility in the operation of the
program without substantial additional cost. Making a direct appropriation for this program, rather than
funding it through the overlay account, will increase transparency and give Town Meeting more control
over the budget.
The Committee unanimously (9-0) supports adoption of this article.
1However, the IRS has ruled that the property-tax reduction must be treated as income for purposes of Federal
income taxation, withholding requirements, and Medicare.
Section SK does expressly provide for one exception: Participants are deemed to be `public employees" for
purposes of the State tort claims statute, which means that they are shielded from liability for negligence as long as
they are acting within the scope of their duties for the Town.
Article 23: Continue
De artmental Revolvin
A g Funds
Requested Funding
Source Committee
Recommendation
Funds X705,073 RF $705,073 (9-0)
Authorized Maximum
Program or Purpose Representative or Departmental Receipts FY2007
Board to Spend Authorization
DPW Burial Containers Public Works Sale of Grave Boxes and $33,000
Director Burial Vaults
DPW Compost Operations Public Works Sale of Compost and Loam, $197,073
Director Yard-Waste Permits
CATV Board of Selectmen License Fees from Cable-TV $400,000
Operation/Community and Town Manager Providers
Access (Lexington
Community TV)
Lexington Tree Fund Board of Selectmen Voluntary Contributions & $75,000
Mitigation Contributions
under the Tree By-Law
(Code of Lexington, Chapter
120
Page 27 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Departmental revolving funds are an important part of the Town's overall finance structure that allow for
flexibility in budgeting for certain revenue-generating operations of the Town. Ordinarily, revenue
received by any municipal department must be deposited in the General Fund, and cannot be expended
for any purpose without further appropriation by the legislative body-in Lexington's case, Town
Meeting. The revolving fund is a form of "special fund" that allows Town Meeting to dedicate in advance
a specific source of revenue from operation-generated fees and charges to pay, on an ongoing basis and
without the need for further appropriation, expenses for rendering the service for which those payments
are made.
Revolving funds managed by municipal departments are generally governed by G.L. c. 44, § 53E1/2.
(There are also a number of revolving funds managed by the School Department, but these are governed
by other statutes and are not within the control of Town Meeting.) Under Section 53E1/2, a municipal
revolving fund can be established only by vote of Town Meeting. That authorization must be renewed
prior to each succeeding fiscal year. The authorization must specify the purpose for which monies
deposited in the fund may be used; the source of funds to be deposited in the fund; the board, department
or officer authorized to expend monies from the fund; and a limit on the total amount that may be
expended from the fund in the ensuing fiscal year. Expenditures may not be made, nor liabilities incurred,
in excess of the balance of the fund.
If a revolving fund is reauthorized, any balance in the fund maybe carried over to the next fiscal year. If a
revolving fund is not reauthorized, or if the purposes for which the money in the fund may be spent are
changed, the balance in the fund reverts to the General Fund at the end of the fiscal year unless Town
Meeting votes to transfer the funds to another duly established revolving fund.
In the past, Lexington's Town Meeting has been asked to reauthorize various departmental revolving
funds as part of the vote on the operating budget. The specific terms of reauthorization for each fund have
been scattered among related line items in the operating-budget motion, making it difficult to keep track
of the various funds. This year, in a laudable reform, the Warrant contains a separate article that clearly
sets forth the identity of each revolving fund to be reauthorized, the purpose of the fund, the source of
funds, the person authorized to spend the funds, and the proposed spending limits.
There are currently four municipal revolving funds (see the above table), all of which are proposed to be
reauthorized this year. (The Lexington Tree Fund, whose creation was authorized at last year's Annual
Town Meeting, was inadvertently omitted from the table contained in the Warrant, but is expected to be
included in the motion presented at the Annual Town Meeting.) The spending limit proposed for each of
the funds is based on a reasonable estimate of the fees and charges likely to be received, as well as of the
expenditures likely to be required. The spending limit maybe increased during the year, if necessary, with
the approval of the Board of Selectmen and this Committee. Any such increase, however, would not
affect the defined purpose of the fund, who is authorized to spend from the fund, its allowed source of
receipts, or the requirement that fund expenses and liabilities may not exceed the fund balance.
The Committee unanimously (9-0) supports the reauthorization of each of the designated revolving funds
on the terms specified.
Article 24: Accept Chapter
157 Of the Acts Of 2005 Funds
Requested Funding
Source Committee
Recommendation
None Retirement Trust Approve
Fund (Section 1: 8-1;
Section 2: 7-2)
In November of 2005, the Massachusetts Legislature amended the provisions of Section 7 of
Chapter 32 of the Massachusetts General Laws. Chapter 32 provides for and defines the benefits available
Page 28 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
to governmental employees who retire. In that statutory scheme, retired governmental employees who are
veterans are entitled to some additional benefits. A veteran is defined as a person who was honorably
discharged from active service in one of the branches of the United States Armed Forces and whose
active service was for at least 90 days (unless he was disabled, wounded or killed prior to the expiration
of that period), at least one day of which was "wartime service" or its statutory equivalent.
Under Chapter 32, a veteran who has retired from governmental employment is entitled to receive, in
addition to "regular" retirement benefits, a yearly allowance of $15 for each year of his governmental
employment, up to a maximum annual payment of $300. In November of 2005, Chapter 32 was amended
to permit this same additional benefit to be made available to veteran governmental employees who are
forced to retire prematurely because of a personal injury sustained as a result, and while in the
performance, of their duties as governmental employees.
The Lexington Retirement Board has requested that town Meeting accept that amendment,
Chapter 157 of the Acts of 2005. If Town Meeting does not accept the amendment, then Lexington
employees who are veterans and who must take early retirement because of an injury sustained while
working for the Town will not be entitled to the additional benefit authorized by the amendment.
There are two independent sections of the amendment. Section 1 is prospective, permitting each
veteran employee who has been or will be compelled to retire early from the Town's employment because
of an accidental disability to receive a yearly retirement allowance of $15 for each year of governmental
service, the total amount of the yearly allowance not to exceed $300. If Town Meeting accepts this
section, the additional benefit will be paid, on an annual basis, to qualifying employees.
Section 2 of the amendment, which can only be considered for acceptance if Section 1 is accepted,
operates retroactively, permitting the additional allowance to be paid to already retired employees for
each year of their retirement prior to Town Meeting's acceptance of the amendment. If accepted by Town
meeting, it will result in a one-time payment to those qualifying retired employees who are living at the
time of the acceptance. The payment is not automatic; to be eligible for it, a qualifying veteran must file
an application within 120 days of the Town's acceptance of Section 2 of the amendment.
According to the Retirement Board's records, there are currently 14 veterans whose early retirement
was compelled because of accidental disability. The projected cost of accepting Section 1 for FY2007 is
approximately $3,SOO.That figure will change in future years, depending upon the number of living
veteran employees who have retired early because of accidental disability.
Accepting Section 2 of the amendment will result in a one-time payment to all eligible, living, veteran
retirees. Should all retirees who qualify apply within the 120-day period, the total amount of the payments
will approximate $64,000.
If Town Meeting accepts the amendment, all payments will be made from the Town's Retirement Trust
Fund, which is administered by the Retirement Board. Last year that Fund made mandated payments
approximating $8 Million to retired employees and currently has approximately $100 Million in assets.
As required by law, the Town pays annual assessments into the Fund. Under that law, the Fund must be
fully funded by 2028; however, based on the annual payments being made by the Town, the Fund is
projected to be fully funded by 2015. Accepting the amendment will minimally affect the Town's annual
assessment-amortizing the additional expected prospective and retroactive payments would increase the
Town's annual assessment by approximately $14,000.
This Committee supports (8-1) Section 1 and supports Section 2 (7-2).
Page 29 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Article 25: Appropriate the
FY2007 Communit Funds
Requested Funding
Source Committee
Recommendation
Preservation Committee $2,040,000 CPA Approve (9-0)
Operating Budget
The Community Preservation Act (CPA) tax surcharge is anticipated to raise over $2,300,000 in FY2007,
and the Community Preservation Committee (CPC) is recommending to Town Meeting a $2,040,000
operating budget which will be voted on under this article, and $260,000 of project funding which will be
voted on under Article 28. In October 2007 the Town will receive matching funds for the surcharge
amount raised in FY2007, and it is anticipated that it will be matched at 100%.
In spring 2007 the CPC must make a recommendation to Town Meeting to appropriate or reserve both the
State matching funds, to be received in October 2007, and the Town's 3% property-tax surcharge,
anticipated to be collected in FY2008. Any amounts not appropriated or reserved will, at the close of the
fiscal year, be closed to the Undesignated CPA Reserve fund and be available for future appropriation by
Town Meeting.
As this is the first year of our dealing with CPA funding, this narrative will address some of the rules in
regard to Town Meeting's interaction with CPA funds and the CPC.
1) The CPC is required to prepare a needs study and plan, and to update it annually. Public hearings are
required on the original plan and on the annual update.
2) The CPC will prepare an annual Community Preservation operating budget and present it to Town
Meeting for appropriation.
3) Town Meeting's responsibility is to annually appropriate CPA money as requested by the CPC budget.
By a majority vote, the motion for use of funds as recommended by the CPC may only be approved,
rejected, or the amount requested can be reduced. Town Meeting cannot amend the CPC's motion in
order to increase funding for a particular item, nor may Town Meeting initiate a motion to use CPA funds
for a purpose not specified by the CPC. If the CPC requests using bonding for a purchase, then atwo-
thirds maj ority vote is required.
4) At a minimum, the annual CPC request must include an appropriation of 10% of anticipated revenue to
each of 3 areas: Affordable Housing, Open Space and Historic Preservation. The appropriation maybe in
the form of a specific project or may be "banked" in Specific-Purpose Reserve funds for each of the 3
purposes. To fulfill this obligation, it is anticipated that the CPC motion will include requests for at least
$230,000 for each of the three areas.
5) The CPC can also use up to 5% of annual revenues for direct administrative-and-operating expenses of
the committee and Town Meeting is also called upon to appropriate these funds. Thus up to $115,000 can
be available for CPC expenses in FY2007. (CPA funds cannot be used for general indirect costs of
assessors, tax collector, treasurer or accounting officer in implementing the Act.)
6) The estimated amount of CPA funds to be received in a fiscal year can be appropriated to one of the 3
specific-purpose reserve funds (as noted above); to a specific CPA project, including a Recreation project;
for the CPC's direct administrative-and-operating expenses; or to the Undesignated CPA Reserve. All
CPA funds received and not appropriated are automatically closed to the Undesignated CPA Reserve at
the end of the fiscal year and may be appropriated by Town Meeting in a subsequent fiscal year.
7) A motion under this Article is for an appropriation for FY2007 and the money cannot be spent until
the fiscal year begins on July 1.
8) Unappropriated funds are available for appropriation only until the tax rate is set for the fiscal year. In
order to maintain maximum access to CPA funds, it is best to appropriate all available funds (after
Page 30 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
appropriating for specific projects and the CPC's administrative-and-operating expenses) to either a
Special-Purpose Reserve or to the Undesignated CPA Reserve.
9) If the CPA is revoked by Town Meeting and the voters, a CPA surcharge sufficient to pay any
outstanding debt service continues until the bonds are paid off.
Under this Article the CPC requests appropriations of $230,000 to each of the Open Space and Affordable
Housing Reserve Funds, $25,000 to the Historic Preservation Reserve Fund, $25,000 for administrative
costs and $1,530,000 to the Undesignated Reserve Fund. The administrative costs include $5,000 for a
town-wide mailing and $20,000 for an open-space study which will serve as the basis for future decisions.
The reason for the minimal request for the Historic Preservation Reserve Fund is that all $260,000 of the
CPC FY2007-requested projects are classified as Historic Preservation, and thus more than meet the
statutory requirement of a 10% annual allocation to that area. The details of these projects are found in
this report under Article 28 and are: $100,000 for the Fire Station roof, drainage, and apparatus floor
(subsection c); $100,000 for the qualified portions of the Upgrade/Replace Dispatch Center (subsection
g); and $60,000 for Archives Environmental Controls (subsection i).
This Committee unanimously (9-0) supports the request.
Article 26: Appropriate for
Outdoor Sound S stem
y Funds
Requested Funding
Source Committee
Recommendation
(Citizens' Petition) $0 GF Indefinitely Postpone
Provides for enhancements to the Town's outdoor sound systems. Included would be additional
equipment, training on its use in conjunction with the Town's existing sound-system assets, and guidance
on how best to deploy the Town's outdoor sound-systems assets for specific events. while the primary
concern is with events on the Lexington Battle Green, the enhancements would benefit events at other
outdoor venues which use the Town's sound systems.
It is contemplated that the following would constitute the primary items in the equipment purchase:
1-Shure SM58S Microphone
1-Shure SCM268 Mixer
1- Toa IP450D Dual Channel Power Amplifier
2 - Toa MT450M Transformers
8 - AtlaslSoundolier BIA100 Horns
8 - AtlaslSoundolier PD60AT Compression Drivers
8 -AtlaslSoundolier SSA Adapters
8 - AtlaslSoundolier SS-SOOE Speaker Stands
8 -Custom Dual Female i/4" Pigtails
6 -Custom Speaker Cables 1212, Each End w/ 114"' M Connectors (3 X-175,1-150,1-125,1-200)
1- Tec Nec G-Shock 8L 8U Rack Case
1-Custom Rear Panel wlinputs & outputs
The total cost to supply the equipment and training was originally priced at $8,279.63 with the balance of
the $10,000 request (i.e., $1,720.37) to provide funding for contingency consulting/support during
FY2007 if that is found to be needed.
Once the warrant had been published, Mr. Richard Michelson, a member of the Executive Board of the
Lions Club of Lexington (which has previously funded sound-system equipment for the Town),
approached the Article's primary sponsor, Mrs. Dawn McKenna, about paying for the equipment,
training, and guidance. The Board of Selectmen has now agreed to accept that as a gift from the Club to
Page 31 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
the Town-and the equipment is on order. (As the purchase is now being made by anon-profit
organization, the vendor agreed to reduce the cost to $8,000.00.) Similarly, Mr. Norman Cohen, Chair of
Board of the Fund for Lexington, came forward regarding covering whatever portion of a $2,000
contingency expense would be used during FY2007.
Based on the above, it's anticipated that Mrs. McKenna will move to Indefinitely Postpone of this Article.
(If needed as an offset to the Fund for Lexington gift, she would offer an amendment under Article 17
[FY2007 Operating Budget] to increase by $2,000 Line Item 8330 [Public Celebrations Committee].)
This Committee unanimously supports Indefinite Postponement and commends the Lions Club of
Lexington and the Fund for Lexington for funding the enhancements to the Town's outdoor sound
systems.
Article 27: Appropriate for Funds Funding Committee
Recreation Ca ital
p Requested Source Recommendation
Pro ~ eCtS
~ X300,000 $225,000 GF Approve
Debt + X75 000 Part a : 7-2• Parts b
( () ~ ()
Project Description Amount
Requested Funding
Source Committee Recommends
(a) Center Playground $225 000 GF Debt $225 000 7-2
( )
Im rovements
p
Funds are requested to remove and replace the existing Robert Leathers Wooden Play Structure located at
the Center Playground, which was built in the late 1980's using private contributions by a volunteer
community group. The current structure is at the end of its expected 15-20-year life and is potentially
hazardous due to splintering, protruding nails, loose boards and questions about the wood preservatives.
Replacement of the structure will reduce the amount of time that the DPW spends responding to
maintenance issues and will allow this popular play area to be more accessible for the disabled
community. The estimated breakdown of the project costs are $80,000 for labor, $135,000 for the
playground equipment and $10,000 as a contingency. Estimated life of the new play structure is 20 years.
This Committee (7-2) approves the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(b) Engineering Study of the
Infrastructure of the Center $50,000 EF $50,000 (9-0)
Pool Complex
Funds are requested to hire a consultant to evaluate and provide a written report with a detailed list of
recommendations and cost estimates to repair and upgrade the existing facility. The report will allow the
Town to create a realistic repair and long-range capital plan addressing the needs of the complex. The last
infrastructure update was done in 1980. Funding is requested from the Recreation Enterprise Fund.
This Committee unanimously (9-0) approves the request.
Page 32 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
(c) Equipment for Pine $25 000 EF $25 000 9-0
~ ~
Meadows Golf Course
Funds are requested to purchase a new Fairway Core Aerator. It will replace a similar piece of equipment
bought in 1993, and taken out of service last year due to equipment failure. This machine is necessary to
maintain the quality and the drainage of the turf, and ultimately affects the financial success of the Golf
Course-the main revenue stream for the Recreation Enterprise Fund. In addition, this particular machine
is borrowed by the DPW to core aerate the Town`s athletic fields in order to increase their useful life.
Golf Course net revenues (after the course-operator's contract) were $308,000 in FY2005, and estimated
to be $345,000 in FY2006. Funding is requested from the Recreation Enterprise Fund.
This Committee unanimously (9-0) approves the request.
Page 33 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Article 28: Appropriate for
Munici al Ca ital
p p Funds
Requested Funding
Source Committee
Recommendation
Projects $3,627,000 X690,000 GF + $3,527,000 0690,000 GF
X2,217,000 GF + $2,167,000 GF Debt +
Debt + $460,000 $460,000 Chapter 90 +
State Aid $210,000 CPA)
(Chapter 90) + (Unanimous) + Pending
X260,000 CPA (see details)
Summary Table
Project Description Amount Funding Committee Recommends
Requested Source
(a) Sidewalk Improvements $300,000 GF Debt $250,000 (9-0)
(b)Lincoln Field Methane Gas $200,000 GF Debt $200,000 (9-0)
Mitigation
$290,000
(includes $240,000 (which includes
$150,000 $190,000 GF $150,000 contingent upon an
(c) Building Envelope contingent + $100,000 override question)
upon an CPA (Unanimous); Balance
override Pending
question)
(d)DPW Equipment Replacement $435,000 GF Debt $435,000 (9-0)
$500,000 GF
(FY2001
(e) Street Improvements $960,000 Override) +
$460,000 $960,000 (9-0)
State Aid
(Chapter 90)
(~ Street Drain Improvements $160,000 GF Debt $160,000 (9-0)
$742,000 GF
(g)Police Dispatch Center $g42,000 Debt + $g42,000 (9-0)
Renovation $100,000
CPA
(h)Replace Fire Engine 1 $380,000 GF Debt $380,000 (9-0)
(i) Archives Environmental Control $60,000 CPA $60,000 (9-0)
Page 34 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
(a) Sidewalk Improvements $300,000 GF Debt $250,000 (9-0)
The Selectmen-appointed Sidewalk Committee has inventoried the sidewalks in Town and found
approximately 56 miles of them. That Committee then developed an initial list of work that they believe
should be done first-while pointing out there's much more that needs to be done. Factors they applied
included providing safe routes to schools, paths most often used by the public, access to the Town Center,
access to frequently used facilities, and safety for children and all walkers. That list included 26 projects
totaling about 9.4 miles in length-most calling for asphalt overlay (about 8.3 miles); the rest, in
descending order by length, for new concrete, rebuilt asphalt, and new asphalt. Here are summary data for
the whole list:
Data on A1126 Proj ects on the Initial Project List from Selectmen's Sidewalk Committee
Length % of Cost per
(Running Total Running % of
Feet @ 4- Running Foot Estimated Total
T e foot width Feet 4 s ft Cost Cost
Overla As halt 43,776 83.9% $5.50 $240,768 54.7%
Rebuild As halt 2,100 4.0% $15.00 $31,500 7.2%
New Concrete standard 1,100 2.1 % $19.00 $20,900 4.7%
New As halt 1,600 3.1 % $15.00 $24,000 5.5%
Subtotal 48,576 93.1 % $6.53 $317,168 72.1
avera e
New Concrete (brushed w/brick 3,600 6.9% $25.83 $93,000 21.1
border ~` normalized
Subtotal 52,176 100.0% $7.86 $410,168 93.2%
avera e
Misc Tree Work (trim roots, $30,000 6.8%
install root barrier) (aggregate
allowance for all ro'ects
Total 52176 100.0% $440168 100.0%
Length originally cited as 1,200 running feet, but the proposed project (Massachusetts Ave from the
Library to Waltham St), is much wider than 4 feet; the estimated project cost was based on the area being
~l, 600 sq yd. That area, normalized to the 4 foot width used for the other types, equates to the running feet
length entry shown.
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
From that initial list, the Sidewalk Committee chose to recommend just 15 of the projects for funding in
FY2007. Here are the summary data for just those recommended projects:
Data on the 15 Projects Recommended for FY2007 by Selectmen's Sidewalk Committee
Length Cost per
(Running % of Total Running % of
Feet @ 4- Running Foot Estimated Total
T e foot width Feet 4 s ft Cost Cost
Overla As halt 28 891 82.7% $5.5 $158 901 53.0%
Rebuild As halt 0 0.0% $15.0 $0 0.0%
New Concrete standard * 850 2.4% $19.0 $16,150 5.4%
New As halt 1600 4.6% $15.0 $24 000 8.0%
Subtotal 31,341 89.7% $6.35 $199,051 66.4%
avera e
New Concrete (brushed w/brick 3,600 10.3% $25.83 $93,000 31.0%
border ~` * normalized
Subtotal 34,941 100.0% $8.3 $292,051 97.4%
avera e
Misc Tree Work (trim roots, $7,950 2.6%
install root barrier) (aggregate
allowance for all ro' ects ~` * ~`
Total 34 941 100.0% $300 000 100.0%
The length may need to be adjusted to 900-an increase of 50 ft. If so, the estimated cost for that line would
increase by X950-which would, for now, come out of the Nlisc Tree Work line and keep the overall total at
$300, 000. (In the absence of formal bids, none of these estimated costs are known that precisely.)
~*Lnngth originally cited as 1,200 running feet, but the proposed project (Massachusetts Ave from the
Library to Waltham St), is much wider than 4 feet; the estimated project cost was based on the area being
~l, 600 sq yd. That area, normalized to the 4 foot width used for the other types, equates to the running feet
length entry shown.
*~*Dollar amount arbitrarily reduced from the $30,000 shown in the "all projects" data to make the overall
total for the "recommended projects" be $300,000.
Because of limited available funds, it would still take the Town many years to address all the sidewalk
needs, but to date there has not been ongoing funding to both restore and sustain an appropriate condition
level of the sidewalk infrastructure. (Appropriations for sidewalks were zero in FY2004, $100,000 in
FY2005, and $50,000 in FY2006.) For that reason, the question each year will be not only how much can
the Town afford to do, but also how the amount available should be allocated for the Town Center versus
the residential areas. Out of the $300,000 requested this year, 31 % of that dollar amount is for the
sidewalk replacement in the Town Center, as brushed concrete with brick border, on Massachusetts
Avenue from the driveway east of the Cary Library to Waltham Street, but that one project is only just
over 10% of the total running feet (at a 4-foot width) for the recommended list. (If only the regular length
were considered, it's just 4%.)
while it's not the purview of this Committee to make judgments on the value of esthetics, the above
tables show by the "cost per running foot" that accommodating Town Center esthetics can severely crimp
how much can be accomplished with each dollar of funding for sidewalks-notwithstanding the added
width of many of the sidewalks in the Town Center. (Concrete with brick border [for that specific project]
is 36% more than just concrete, 72% more than new or rebuilt asphalt, and 470% more than asphalt
overlay.)
The Capital Expenditures Committee (CEC) felt it prudent-in the context of the overall capital program
and their wish to limit new debt-to limit the amount for this item to $250,000-leaving it for the Board
Page 36 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
of Selectmen, in coordination with the Sidewalk Committee, to decide which recommended project(s) to
defer for reconsideration for afuture-year funding.
This Committee acknowledges there is neither a "right" amount to spend on sidewalks versus other
capital projects, nor for what to do in the Town Center versus the residential areas within the appropriated
amount. VUe generally defer to the balancing responsibility held by the CEC regarding the
recommendation to Town Meeting for the former and to the Board of Selectmen for the latter-and do
defer to both this year. This Committee, therefore, unanimously (7-0) recommends the $250,000 amount.
Project Description Amount
Requested Funding
Source Committee Recommends
(b) Lincoln Field Methane Gas $200 000 GF Debt $200 000 9-0
( )
Miti anon
g
For the design & permitting ($20,000), and construction ($180,000) of a subsurface methane-gas
mitigation system for Lincoln Field. The Town must comply with a Consent Order from the State's
Department of Environmental Protection (DEP) or incur penalties of up to $4,000/day. The Town
determined this would not fall within the scope of the FY2002 debt exclusion under which the
construction of Lincoln Field was funded. (Future monitoring, sampling, and maintenance of the system
is projected to cost approximately $25,000 annually from the Operating Budget after the system is
operational-which is projected to occur after FY2007.
Late in February of this year, the Town submitted its proposals for this system to the State's DEP-which
has 90 days to respond. If the State hasn't approved a proposal before the end of the 2006 Annual Town
Meeting, it is anticipated that it will be proposed to indefinitely postpone will be proposed for this Article
with the expectation it will be re-introduced at the next Town Meeting. (The time crunch was explained to
the DEP in the Town's transmittal with the hope the State would understand the delay in being able to
begin the project if the State's response isn't received in time to permit presentation to the 2006 Annual
Town meeting.) It is also appreciated that the State's response may well materially affect whether the
requested $200,000 would be sufficient to implement aState-approved system. (If that were to be the
case, more of any requested amount may be needed for the design & permitting and supplemental funding
may be required to complete the system.)
This Committee views this project as mandated and unanimously (9-0) supports the request so the Town
has an appropriation under which to begin to move toward being in full compliance with the Consent
Order.
Project Description Amount
Requested Funding
Source Committee Recommends
(c 1) Westview Cemetery Office $40 000 GF $40 000 9-0
( )
Buildin Heatin S stem
g gY
To replace the entire oil-fired heating system with anatural-gas system for both the office (1,186 sq ft)
and the garage/workshop (1,170 sq ft) at the Westview Cemetery. (The garage is included as work is done
in it during the winter.) This is being done to minimize future maintenance costs, and to eliminate the risk
of leaks and other issues associated with the installation of a double-wall oil tank. It is also planned to
replace the existing air-conditioning unit that is at the end of its useful life. Of the total estimated cost,
$13,000 is for bringing in new gas service; the balance ($27,000) is for the equipment and installation
(including a 15% contingency). The Town is working with KeySpan to see whether that gas-service cost
can be reduced. Engineering design-and-construction administration will be done by in-house staff
(saving $4,000-$6,000).
Page 37 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(c2) Fire Station Floor $50,000 CPA Pending
To address the problem where the Fire-Station Headquarters vehicle-equipment (apparatus) floor is
cracked and appears to have marginal structural strength. The Town is awaiting a formal engineering
study (about to be awarded at press time) with a recommended solution. This project is eligible, and
expected to be proposed by the CPC, for funding using CPA funds.
while stabilizing the floor is a must-do project, in the absence of an accepted solution-with an
accompanying cost-this Committee unanimously agrees to defer any recommendation.
Project Description Amount
Requested Funding
Source Committee Recommends
(c3) Fire Station Drainage & $50 000 CPA A rove 8-0
pP ( )
Roof Re airs
P
To repair the ground-level drainage of the downspout flows at the Fire-Station Headquarters and the flat
roof of the repair shed at the Headquarters. This project is eligible, and expected to be proposed by the
CPC, for funding using CPA funds.
This Committee unanimously (8-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(c4) Town Office Building
withdrawn
Front Handica ed-Access
pP GF Not A licable
pP
Ramp (Design)
Design of an additional handicapped access to the Town Office Building via a ramp to the front door.
This would supplement the existing access to the ground-floor level at the rear of the building-and from
there directly to the elevator-from handicapped-reserved parking that also exists at the rear.
Even if not withdrawn, this Committee unanimously would not support a request for two reasons: (1) We
have not been shown that adding an additional handicapped access to this Town building is the highest
priority for any Americans with Disability Act (ADA) requirement to any Town building and, without
such information, cannot support any expenditure for the ramp; and (2) We have not been shown that
adding the ramp wouldn't be eligible for CPA funding and, in the light of our first reason, would not want
any General Funds used until CPA eligibility has been determined as CPA funds cannot reimburse
already expended General Funds-even if the project is later presented by the CPC to, and approved by,
Town Meeting.
Page 38 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
c5 Other Buildin Envelo e
~ ~ g p $150 000 GF ~ 150,000 (Contingent on
Override 8-0
)~ )
This request for the Building Envelope Program is on the At-Risk List. If the voters approve the override
question containing this request, these funds would be available during FY2007 for at-this-point-in-time
unspecified Building-Envelope need(s) and, if any balance of these funds remains at the end of FY2007,
that balance would carry over to, and be available for use in, a subsequent fiscal year. While it's
understood that if funded in the override, this tax-levy capacity for the Building-Envelope portion of the
cash-capital program is only constrained to that purpose for FY2007, the Board of Selectmen looks to the
Board to apply that capacity toward the Building-Envelope Program in future years, if practical to do so.
As this would be a small, but positive, contribution toward adequately funding the Building-Envelope
Program in future years, this Committee unanimously (8-0) supports this request as an at-risk item.
Project Description Amount
Requested Funding
Source Committee Recommends
(d) DPVU Equipment $435 000 GF Debt $435 000 9-0
~ ~
Re lacement
p
Page 39 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
The 7 items for the Department of Public Works (DPW) are as follows:
Proposed Purchase Replacing
Description Cost ID Year Description Comments
F450 Dump Body $50,000 16 1994 Chevrolet Over 135,000 miles; used daily;
with Plow 3500 badly corroded; too small for
1-Ton intended work; will soon need a
Dump replacement transmission.
F450 Dump Body $50,000 39 1994 Chevrolet Over 93,000 miles; used daily;
with Plow 3500 badly corroded; several frame &
1-Ton chassis parts have been welded to
Dump hold it together.
Navistar 6-Wheel $120,000 34 1988 IH Dump Over 72,000 miles; critical to
Dump with clearing snow & ice; badly
Plow/Underscraper corroded. Stainless-steel sander
(wing blade) body will be moved to new cab &
chassis.
1-Ton HD Pickup $50,000 36 1990 Chevrolet Over 111,718 miles (hand-down
with Plow Package Blazer from Police Dept); major rot;
frame no longer safe.
F450 Rack Body with $50,000 58 1994 Chevrolet Over 80,366 miles; used daily;
Plow & Power 3500 badly corroded; several frame &
Tailgate Dump chassis parts have been welded to
hold it together.
F3501-Ton HD Pick- $50,000 52 1997 Chevrolet Over 70,000 miles; major cab &
up with Plow Package 2500 chassis rot; engine & transmission
Pickup already rebuilt once; undersized for
work.
Toro Grounds Master $65,000 100 1997 Toro Engine has over 8,764 hours; decks
Grounds have been rebuilt multiple times.
Master One of the major grass-
maintenancemachines.
This is an annual request to replace equipment used by the DPW. Their inventory of 146 pieces of
equipment includes sedans, SUVs, construction vehicles, and specialized equipment including pumps,
rollers, sprayers, and movers. The systematic replacement program is updated annually with the goal of
preventing any unexpected emergency purchases. Vehicles scheduled for replacement based on
manufacturers' recommendations (which vary from 5 to 25 years) are assessed as to mechanical condition
and work requirements before funding is requested for replacement.
This Committee unanimously (9-0) supports the request.
Page 40 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
$500,000 GF
(FY2001
e Street Im rovements
O p $960 000 Override) +
$460 000 State $960 000 9-0
( )
Aid (Chapter
90)
This provides for the annual street resurfacing program-which focuses on the arterial and feeder streets
in Town-and includes an annual update to the Pavement Condition Database. The $500,000 continues
the annual allocation of that amount-which was first committed in response to passage of the FY2001
operating override; the balance represents the projected FY2007 allocation by the State of Chapter 90
funding. (This is in addition to the $7,000,000 provided by the 2002 debt-exclusion program that will
begin its fourth phase this summer. That program is focused on upgrading the quality of the residential
streets.)
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(f7 Street Drain Improvements $160,000 GF Debt $160,000 (9-0)
Funding to repair drainage systems in streets scheduled for resurfacing, to replace/repair existing
deteriorated drainage structures, and to map all drainage structures Town-wide. (The drainage system
survey and mapping project is a requirement of Lexington's National Pollutant Discharge Elimination
System Phase II storm-water management plan. ($100,000 is for construction; $60,000 for mapping.)
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
Police Dis atch Center
(g) p $742,000 GF
Renovation $842 000 Debt + A rove 9-0
Pp ( )
$100,000 CPA
This project is the 2nd stage in the upgrade to remodel the dispatch center to accommodate the new
equipment and upgrade the police radio network. The existing space will be enlarged into the Police
Station front desk & lobby areas in order to provide sufficient floor area for new consoles and Enhanced
9-1-1 equipment. (During construction, the dispatch, desk, and commanding-officer operations will be
moved to the Police Guard Room with access through a temporary rear door.) Of the $842,000, the
communications-equipment cost is $226,000, and the space-renovations cost (including new phone
system, alarms, contingency, etc.) is $616,000. $100,000 of the space-renovations cost is eligible, and
expected to be proposed by the CPC, for funding using CPA funds.
This Committee unanimously (9-0) supports the request.
Page 41 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
(h) Replace Fire Engine 1 $380,000 GF Debt $380,000 (9-0)
Replace current Engine 1 (1990 KME 1250 gpm pumper) with a 1500 gpm Class A pumper that has a
750-gallon tank. The current unit fails to meet any of the current safety and operational requirements for
fire apparatus and is being maintained in a reserve-ready condition. (Replacement was originally
scheduled for FY2002 based on a 12-year life expectancy.) The new engine is expected to come on line
during calendar year 2007.
This Committee unanimously (9-0) supports the request.
Project Description Amount Funding Committee Recommends
Requested Source
(i) Archives Environmental $60 000 CPA A rove 9-0
Pp ( )
Control
To upgrade the air quality and fire-protection systems in the main vault for archiving Town records,
located in Cary Memorial Building. The current conditions in that vault do not meet the State standards.
This project is eligible, and is proposed by the CPC, for funding using CPA funds.
This Committee unanimously (9-0) supports the project.
Article 29: Appropriate for
Water Distribution Funds
Requested Funding
Source Committee
Recommends
Improvements X900,000 EF Debt $900,000 (9-0)
This article addresses proposed capital expenditures to be made during FY2007 as part of a continuing
program to upgrade and keep current the assets of the Water Enterprise Fund. For general background on
the enterprise funds, and the relationship between the budget process and the water rate-setting process,
please see the discussion under Article 18, which addresses the enterprise-fund operating budgets.
A total of $900,000 is requested this year as part of athree-year project to reline or replace approximately
8,000 linear feet of water line. The details of the project, including the locations where work is expected
to be done in FY2007, can be found in the "Brown Budget Book" at page 6-10. The entire $900,000 is
proposed to be funded by borrowing. The costs of the debt service for this borrowing will be borne by the
operating budgets for the Water Enterprise Fund in FY07 and future years until the debt is retired (see the
debt service schedule contained in the "Brown Budget Book" at page 6-11), and will be included each
year as an element of the water rates.
Capital appropriations of a similar magnitude, and for similar purposes, have been made in most years
since the Water Enterprise Fund was established, with the exception of last year. At the 2005 Annual
Town Meeting, no appropriations were made for FY06 for water-distribution system improvements
because engineering studies of future project phases were not expected to be completed in time to
commence work during the fiscal year. The goal is to keep the system current so that the Town can assure
"dependable and high water quality, pressure, and volume for domestic needs, commercial needs, and fire
protection." Generally, the capital expenditures have been funded by a combination of enterprise-fund
cash capital and borrowing, as illustrated by the following table:
Page 42 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Fiscal Year Purpose Cash Borrowing Total
2003 Water Dist. Improvements $340,000 $560,000 $900,000
2004 Water Dist. Improvements $400,000 $500,000 $900,000
2005 Water Dist. Improvements $400,000 $450,000 $850,000
2006 None $0 $0 $0
2007 (rec.) Water Dist. Improvements $0 $900,000 $900,000
The use of borrowing only to fund this-year's capital appropriations will increase the future debt-service
costs of the Water Enterprise Fund, as illustrated in the table at page 6-11 of the "Brown Budget Book."
However, it will also help to mitigate against a potential "spike" in the FY2007 water rates resulting from
the fact that the rates set for FY2006 did not include any new capital-expenditure costs.
This Committee unanimously (9-0) approves adoption of this article.
Article 30: Appropriate for
Water Meters Funds
Requested Funding
Source Committee
Recommends
X500,000 EF Debt $500,000 (9-0)
(250,000 each in
Water &
Wastewater EFs)
This article proposes a capital expenditure of $500,000, the costs of which will be shared equally by the
Water and Sewer Enterprise Funds, to purchase and install 3,392 water meters to complete the upgrading
of all water meters on lines 1-inch or smaller in the Town. (Meters on larger lines are normally the
responsibility of the owner.) For general background on the enterprise funds, and the relationship between
the budget process and the water rate-setting process, please see the discussion under Article 18, which
addresses the enterprise-fund operating budgets.
As the result of an ongoing program that has been conducted over a number of years, most of the Town's
small-line water meters have been upgraded with a sending unit on the outside of the building that permits
the meter reading to be downloaded at that unit directly to ameter-reader's hand-held device. Having this
capability has significantly improved the efficiency and accuracy of the meter-reading process because it
avoids the need to make return visits if occupants are not present, to rely on customer-supplied meter
readings, to manually transcribe the readings by the Town's meter readers at the building, or, in most
cases, to make estimated readings based on prior usage. However, there are still 3,392 small-line water
meters that have not yet been upgraded, and this has been a contributing factor in some of the difficulties
that have been experienced during the past several years in making the usage projections necessary to set
properly the water-and-sewer rates, and also in rendering accurate and timely water-and-sewer bills, both
of which are based on metered water usage. (The Town has a total of 12,615 billable meters. The major
categories are 9,722 residential, 2,430 irrigation [water-charges only], 268 commercial or industrial, and
186 municipal/public.)
The proposed capital expenditure would allow the Town promptly to complete the water-meter upgrade
program. As in the case of the water-distribution improvements addressed by Article 29, the entire
expenditure would be funded by borrowing. The debt-service requirements, which will be divided equally
between the Water and Sewer Enterprise Funds, and which are set forth on pages 6-11 and 6-13 of the
"Brown Budget Book," will not add significantly to the existing debt costs, and should not be a material
Page 43 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
factor in setting water-and-sewer rates. The Town expects that this investment will enable it to begin
saving money within 3-5 years, and that it will also facilitate an eventual transition to quarterly billing, as
recommended by the Water and Sewer Rate Study Committee, if that is ultimately determined to be
desirable. Quarterly billing would smooth payments for customers and would also improve the Water and
Sewer Enterprise Funds' cash flow; however, it would also require additional expense and resources,
particularly if the additional quarterly bills must be based on actual meter readings, as opposed
to estimated readings.
This Committee unanimously (9-0) approves adoption of this article.
Article 31: Appropriate for
Sewer Im rovements
p Funds
Requested Funding
Source Committee
Recommends
X300,000 EF Debt $300,000 (9-0)
This article addresses proposed capital expenditures to be made during FY2007 as part of a continuing
program to upgrade and keep current the assets of the Sewer Enterprise Fund. For general background on
the enterprise funds, and the relationship between the budget process and the water rate-setting process,
please see the discussion under Article 18, which addresses the enterprise-fund operating budgets.
A total of $300,000 is requested this year to conduct a survey of the Sewer Enterprise Fund assets and to
begin afive-year sewer-rehabilitation program that will involve the rehabilitation of 35,000 feet of pipe
and the installation of 1,500 feet of new pipe and associated manholes. The details of the project,
including the locations where the earliest work is expected to be done, can be found in the "Brown
Budget Book" at page 6-12. The entire $300,000 is proposed to be funded by borrowing. The costs of the
debt service for this borrowing will be borne by the operating budgets for the Sewer Enterprise Fund in
FY2007 and in future years until the debt is retired (see the debt-service schedule contained in the
"Brown Budget Book" at page 6-13), and will be included each year as an element of the sewer rates.
Capital appropriations of varying amounts have been made from the Sewer Enterprise Fund in most years
since the Sewer Enterprise Fund was established, with the exception of last year. As noted in the table
below, some of the appropriations in past years have been for storm-sewer improvements, which are not
assets of the sewer enterprise fund. At the 2005 Annual Town Meeting, no appropriations were made for
FY2006 for sewer-distribution-system improvements because engineering studies of future project phases
were not expected to be completed in time to commence work during the fiscal year. Generally, the
capital expenditures have been funded by funds raised directly in that year's sewer rates.
Fiscal Year Purpose Cash Borrowing Total
2003 Storm Sewer Improvements $100,000 $0 $100,000
2004 Sanitary/Storm Sewer Impts. $225,000 $0 $225,000
2005 Sanitary/Storm Sewer Impts. $750,000 $0 $750,000
2006 None $0 $0 $0
2007 (rec.) Sewer Improvements 0 $300,000 $300,000
The use of borrowing-only to fund this year's capital appropriations will increase the future debt-service
costs of the Sewer Enterprise Fund, as illustrated in the table at page 6-13 of the "Brown Budget Book."
However, it will also help to mitigate against a potential "spike" in the F20Y07 sewer rates resulting from
the fact that the rates set for FY2006 did not include any new capital-expenditure costs.
Page 44 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
This Committee has some concerns about the seemingly sporadic nature of past capital funding for sewer-
improvement projects. With the expectation that amore-consistent capital plan will be followed in the
future, it unanimously (9-0) supports adoption of this article.
Article 32: School Capital
Pro'ects and E Ul ment
J q p Funds
Requested Funding
Source Committee
Recommendation
$2,011,000 GF Approve (9-0)
X2,056,000 Debt + $45,000
GF
Summary Table
Project Description Amount
Requested Source of Funds Committee Recommends
a Strate is Ca ital Plan for
O g p Redirect Unused
Remaining 4 Elementary Funds from 2005
Schools (Bowman, Bridge, Withdrawn Annual Town Not A licable
Pp
Estabrook & Hastin s
' g) Meeting Article
30 h
()
(b) Replace High School Gym and
Science Building & Diamond $310,000 GF Debt $310,000 (9-0)
Auditorium Roofs
(c) Replace High School Univents & $493 000 GF Debt $493 000 9-0
( )
Pi es
P
(d) Upgrade High School &
Diamond Building-Control $350,000 GF Debt $350,000 (9-0)
Systems
(e) Replace 2 Domestic Hot-Water Withdrawn GF Debt Not A licable
Pp
Heaters at High School
(~ Replace Bleachers at Clarke (233 $45 000 GF Debt
seats) & High School Field $90,000 +' 45 000 GF
$ ' $90,000 (9-0)
House 250 seats
( )
$293,000
(g) Auditorium Repairs at High Adds to
(
School includin HVAC and
( g $165 000 GF Debt $293 000 9-0
( )
controls ri in s stem aint
' gg g y ' p from
and replace dimmer board) FY2005
(h) Lockers at Bridge $120,000 GF Debt $120,000 (9-0)
(i) Upkeep & Upgrade of School $400 000 GF Debt $400 000 9-0
( )
Technolo
gY
Page 45 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
Redirect
(a) Strategic Capital Plan for Unused Funds
Remaining 4 Elementary Schools Withdrawn from 2005 Not A licable
pP
(Bowman, Bridge, Estabrook, & Annual Town
Hastings) Meeting
Article 30(h)
This would be a contracted effort to revisit the plan for addressing the four elementary schools that
haven't been rebuilt. The plan would include, but not necessarily be limited to, integrating the
programming, population projections, redistricting, project scheduling, and logistics. While originally
requested as a new appropriation from the General Fund, it's our understanding that Town Meeting now
will be advised the Schools instead will use $40,000 of the $58,700 of still-available funds originally
appropriated at the 2005 Annual Town Meeting under Article 30(h),White House Extraordinary Repairs
($60,000, GF Debt) for this plan.
Project Description Amount
Requested Funding
Source Committee Recommends
(b) Replace High School Gym
and Science Building & $310,000 GF Debt $310,000 (9-0)
Diamond Auditorium Roofs
Following the failed override, these had been deleted from the scope of work in the 1999 renovations.
There is a history of patches and repairs. Three independent inspections (2004-2006) have confirmed the
need for this work and it's an opportunity to improve the building's thermal efficiency. (The High-School
roofs are estimated at $250,000; the Diamond roof at $60,000.)
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(c) Replace High School $493 000 GF Debt $493 000 9-0
( )
Univents & Pi es
P
(This applies to both this item and the next.) Following the failed override, these had been deleted from
the scope of work in the 1999 renovations. This is the first year of a multi-year effort to replace/convert
all steam equipment-which is over 10 years beyond its expected useful life-to a hydronic system for
increased efficiency and control. The current equipment condition prevents maintaining reasonable
comfort levels and indoor air quality. Planning is currently underway with TMP Consulting engineers.
The overall, multi-year, effort is currently estimated at about $1.3 million.
This Committee unanimously (9-0) supports the request.
Page 46 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
(dl) Upgrade High School $200 000 GF Debt $200 000 9-0
( )
Buildin -Control S stem
g Y
(See previous item for explanation.)
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(d2) Upgrade Diamond $150 000 GF Debt $150 000 9-0
( )
Buildin -Control S stem
g Y
The current design makes temperature control inefficient and time-of-day scheduling impossible. Multiple
stand-alone control devices preclude integrated management. (Return on investment is estimated at 1.5
years.)
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(e) Replace 2 Domestic Hot- Withdrawn GF Debt Not A licable
pP
Water Heaters at High School
This was to replace the 2 domestic hot-water heaters at the High School, but additional maintenance has
substantially extended their useful life so no capital expenditure is required at this time.
Project Description Amount
Requested Funding
Source Committee Recommends
(fl) Replace Bleachers at High $45 000 GF Debt $45 000 9-0
( )
School Field House 250 seats
( )
They are now a code issue (inspection report, Nov 2005) and need to be replaced.
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(f2) Replace Bleachers at $45 000 GF $45 000 9-0
( )
Clarke 233 seats
( )
Following the failed override, this had been deleted from the scope of work in the 1999 renovations. They
are now a code issue (inspection report, Nov 2005) and need to be replaced.
This Committee unanimously (9-0) supports the request.
Page 47 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Project Description Amount
Requested Funding
Source Committee Recommends
Auditorium Re airs at Hi h
(g) p g $293,000
Adds to
(
School includin HVAC and
( g $165 000 GF Debt $293 000 9-0
( )
controls ri in s stem aint
' gg g y ' p from
and replace dimmer board) FY2005
This is the first year of a 3-year program to correct problems with the auditorium. See the above
description for the components being addressed in FY2007. In FY2008, a request for $288,000 is
anticipated to replace the sound system, lighting instruments, lighting supports, seat backs [for acoustics],
acoustic study, & install balcony light ladders. In FY2009, a request for $370,000 is anticipated to
resurface the main stage, reconfigure (if not relocate) the piano lift, install forestage, & redesign the
balcony. It was considered whether to try to do the program in fewer increments, but it was determined
that these non-conflicting increments made sense.
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(h) Lockers at Bridge $120,000 GF Debt $120,000 (9-0)
This is first of a 3-year program, developed in conjunction with the Lexington Fire Department, to install
student lockers to correct firelsafety deficiencies. (Note: They are not code violations.) In FY2008, a
request for $110,000 is anticipated for the Hastings School; and in FY2009, requests for $100,000 each
are anticipated for the Bowman & Estabrook Schools-subject to their reconstruction status.
This Committee unanimously (9-0) supports the request.
Project Description Amount
Requested Funding
Source Committee Recommends
(i) Upkeep and Upgrade of $400 000 GF Debt $400 000 9-0
( )
School Technolo
gY
This is an annual expense to upkeep and upgrade the schools' computer and other technology. The
objective is to reduce the age of the computers to not more than 6 years old by 2014 and to provide
enhanced technology (e.g., such as computer-driven, ceiling-mounted, projectors). It is recognized,
however, that the current level of funding-even at the requested level-is not sufficient to accomplish
the objective of that computer-age criterion. The plan for the requested funding is:
$140,000 to upgrade all school local-area-network (LAN) equipment
$40,000 for network servers
$165,000 for desktop computers
$15,000 for printers
$40,000 for LCD projectors
This Committee unanimously (9-0) supports this Article.
Page 48 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Article 33: Appropriate for
School Administration Funds
Requested Funding
Source Committee
Recommendation
Building TBD TBD Pending
For the renovation and expansion of the "white House" to be able to continue to house the Lexington
Public Schools Administration. At press time the status of the design & engineering is unknown and it is
also unknown if any funding request will be presented at this Annual Town Meeting. It is anticipated that
some part of this project will qualify for CPA funding with the balance to be presented to the voters as a
debt-exclusion override.
This Committee is deferring any recommendation until more information is available.
Article 34: Appropriate for
Fiske School Funds
Requested Funding
Source Committee
Recommends
Construction X250,000 GF Free Cash $250,000 (9-0)
(Advance NSTAR
Energy Rebate)
Last May, Town Meeting approved an additional bond authorization under the original elementary school
(Harrington and Fiske) debt exclusion. This was required because bids for the Fiske School construction
project received in April 2005 came in above estimates. The additional authorization of $1.575M was net
of an anticipated NSTAR energy-efficiency grant of $250,000 for the Harrington School. The Harrington
grant proceeds have been received and will be part of the next certified Free-Cash balance (July 1, 2006).
This article asks Town Meeting to appropriate available Free Cash as an "advance" against those grant
proceeds to be applied to construction costs for the Fiske School. (A similar, but smaller, grant is
anticipated for the Fiske School.)
This Committee unanimously (9-0) supports this request.
Article 35: Appropriate for
Munici al Parkin Lot
p g Funds
Requested Funding
Source Committee
Recommends
(Owned by NSTAR) X125,000 Parking Meter Pending
Fund
This article seeks to use funds from the Parking Meter Fund in order to create a municipal parking lot on
the unused portion of the NSTAR property, located between Grant Street and Edison way. If the town is
successful in its attempts to negotiate with NSTAR for a lease on this land, this money would pay for that
lease as well as the costs to design, level, pave and landscape the area. As of press time this project is only
in the conceptual design phase.
In the absence of more specifics regarding the total cost (including lease costs), this Committee defers any
recommendation.
Page 49 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Article 36• Appropriate for
Senior.Center Funds
Requested Funding
Source Committee
Recommends
Design/Conceptual Study $0 GF Indefinitely Postpone
This Article seeks the appropriation of $40,000 in additional funding for conceptual design studies "to
provide additional and/or enhanced space for meeting the programmatic needs of the Council on Aging
[COA]." The Senior Center Action Plan Committee Report has recommended maintaining and renovating
the existing Senior Center space at Muzzey for Supporting Day Care programs and social services and
utilizing the Munroe School for social and recreational activities.
The Committee has concluded that the Munroe School is the location most likely available and best-
suited for meeting Senior Center needs. It was one of the potential sites for a Senior Center previously
identified by the Senior Center Siting Committee in 2001. For at least the past 15 years, the Munroe
School has housed the Munroe Center for the Arts.
In 2003, Town Meeting appropriated $50,000 to fund a feasibility study for a Senior Center, but
conditioned use of the funds on the requirement that a location could only be studied if the owner or
person in control of the location had agreed that it could be used by the COA. In response to subsequent
requests of the COA, a portion of those funds, $15,000, was authorized to be used for studies of the
Senior Center's current and potential programs, uses and users. $35,000 of the 2003 appropriation thus
remains. The $40,000 appropriation requested by this Article will increase the funds available for the
proposed conceptual study to $75,000.
There as yet is no agreement that the Munroe Center for the Arts will, or should be directed to, vacate the
Munroe School so that it can be made available for the use contemplated by the COA. Accordingly, since
the condition imposed on the COA's utilization of the remaining 2003 appropriated funds has not been
met, this Article is likely to be indefinitely postponed.
This Committee supports Indefinite Postponement.
Article 37: Appropriate for
Public Works Facilit
y Funds
Requested Funding
Source Committee
Recommends
TBD Pending
For the reconstruction of the DPW facility at 201 Bedford Street, which is now preliminarily estimated to
be about 87,000 sq ft in floor area. As, at press time, it is not known whether the planning phase will be
sufficiently complete to warrant a funding request.
This Committee unanimously supports deferring any recommendation until more information is available.
Article 38: Appropriate for
Munici al Electric
p Funds
Requested Funding
Source Committee
Recommendation
FeaSlblhty Study X150,000 Indefinitely Postpone
This Committee unanimously supports Indefinite Postponement.
Page 50 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Article 39: Appropriate for
Post Em to ment
pY Funds
Requested Funding
Source Committee
Recommendation
Benefits $0 Indefinitely Postpone
Retired Lexington employees receive two types of post-employment benefits: a pension and health
insurance. Annual appropriations to the pension fund and to the health-care trust fund (under the Shared-
Expenses portion of the municipal operating budget article) cover the costs of current retirees' benefits
(with the exception of teachers, who receive their pension from the State pension fund; their health
benefits, however, are provided by the Town). In the case of both types of benefits, there is a future
liability (for current and past employees who have not yet reached retirement age) that is being incurred.
The annual appropriation for the pension fund includes an amount for the funding of the future pension
liability, but no similar provision is currently being made for the future health-benefit liability.
Recent changes to the Government Accounting Standards Board (GASB) requirements dictate that
municipalities begin reporting the unfunded liability for retiree health benefits. This is not a requirement
to begin funding the liability, but simply to determine the amount of the liability and record it as part of
the annual audit. The Town is engaging an actuary to measure the liability in order to be in compliance
with the GASB standard.
This article is a placeholder for the eventual funding of this liability and no funds are requested at this
time.
This Committee unanimously supports Indefinite Postponement.
Article 40: Appropriate for
Stabilization Fund Funds
Requested Funding
Source Committee
Recommendation
X2,650,000 $2,000,000 Free
Cash + $650,000 Approve (8-0)
GF
Under the Town Manager's original budget proposal, an appropriation of $650K to the Stabilization Fund
was proposed to supplement prior-years' appropriations. The additional $2M appropriation from Free
Cash represents a policy recommendation supported by both the Town Manager and the Selectmen's Ad
Hoc Fiscal Policy Committee to keep a minimum balance in Free Cash and instead accumulate reserves in
one or more stabilization funds. Town Meeting approves appropriations into and out of stabilization funds
by atwo-thirds vote. This has the advantage of providing better segregation and protection of reserves
and sets a higher bar (the two-thirds vote) for use of such funds.
(See Appendix C for further discussion of reserves and the Town's current reserves position.)
This Committee unanimously (8-0) supports this request.
Article 41: Appropriate for
Prior Years' Un aid
p Funds
Requested Funding
Source Committee
Recommendation
Bills $0 GF Free Cash Indefinitely Postpone
Each year an article is placed in the warrant to allow Town Meeting to dispense with any unpaid bills
from the prior fiscal year (in this case, FY2005). Because of the magnitude of the unpaid School
Department bills discovered at the close of FY2005, the Superintendent and School Committee made a
Page 51 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
number of budget cuts and adjustments and at a Special Town Meeting in November, 2005, an
appropriation of $528,177 was made to cover the balance. There are no remaining School or Municipal
unpaid bills from FY2005, so no funds are requested.
This Committee unanimously supports Indefinite Postponement.
Article 42: Amend FY2006
Operating Budget Funds
Requested Funding
Source Committee
Recommendation
TBD GF Free Cash Pending
This is an annual placeholder in the warrant (formerly "Supplementary Appropriations for Current Fiscal
Year") to allow Town Meeting to fund unforeseen expenses in the current fiscal year budget (in this case,
FY2006). At the November 2005 Special Town Meeting, an appropriation of $847,397 was made to fund
new estimates of School expenses for FY2006. There are no requests for School budget appropriations
under this article, but there are expected to Municipal budget requests (amounts yet to be determined).
This Committee unanimously agrees to defer any recommendation until more information is available.
Article 43: Appropriate for
Authorized Ca ital
p Funds
Requested Funding
Source Committee
Recommendation
Improvements $0 Free Cash Indefinitely Postpone
This is an annual placeholder in the warrant (formerly "Supplementary Appropriations for Authorized
Capital Improvement Projects") to allow Town Meeting to fund unforeseen cost increases in already-
approved/authorized capital projects. There are no anticipated requests under this article.
This Committee unanimously supports Indefinite Postponement.
Article 44: Use of Funds to
Reduce the Tax Rate Funds
Requested Funding
Source Committee
Recommendation
~0 GF Free Cash Indefinitely Postpone
In prior years, this Article has been the vehicle for appropriating any Free Cash necessary to balance the
operating budget. This year, all appropriations of Free Cash have occurred under the relevant budget
articles: Articles 17, 34, 40, & 42. Please refer to those articles for further information. Accordingly, no
funds are requested under this article.
This Committee unanimously supports Indefinite Postponement.
Page 52 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Appendix A: At-Risk List
At-Risk Information
The table shown below are the items reviewed by the Board of Selectmen and the School Committee and placed at-risk in the budget
process. This list was last reviewed and approved on Apri13, 2006.
# De t. Item Amount
... Cumu. Amt.
~,
,
1 Education Lexin ton Public Schools -Basic Bud et $ 2,631,709 $ 5,041,751
2 Education Lexin ton Public Schools -Needs-Based Bud et $ 551,607 $ 2,410,042
3 Education Lexin ton Public Schools -Maintenance $ 734,000 $ 1,858,435
Education Sub-total $ 3,917,316
4 Ca ital Ca ital Pro'ects Buildin Envelo e $ 150,000 $ 1,124,435
Ca tial Sub-total $ 150,000
5 Communit Dev. Reduce hours, Sealer of Wei hts & Measures $ 4,000 $ 974,435
6 Communit Dev. Eliminate Conservation Assistant osition $ 48,860 $ 970,435
Communit Develo ment Sub-total $ 52,860
7 DPW Eliminate CRT Rec clin CollectionlPro ram $ 25,000 $ 921,575
8 DPW Not restore Hi hwa Su erintendent osition $ 66,100 $ 896,575
9 DPW Reduce Lex ressl 10 hours er week $ 50,000 $ 830,475
10 DPW Reduce buildin maintenance serviceslre airs $ 25,000 $ 780,475
11 DPW Eliminate and waste ick-u ro ram $ 72,000 $ 755,475
12 DPW Purchase four fewer ins ectional services vehicles $ 78,000 $ 683,475
13 DPW Do not urchase dia nostic a ui ment for vehicle maintenance $ 6,000 $ 605,475
14 DPW Eliminate Tree lantin ro ram $ 5,000 $ 599,475
DPW Sub-total $ 327,100
15 Eco. Devo. Not restore Economic Develo ment Officer osition $ 67,100 $ 594,475
Eco. Devo. Sub-total $ 67,100
16 Fire Reduce urchase of su lies, materials & e ui ment $ 44,812 $ 527,375
Fire Sub-total $ 44,812
17 Librar Eliminate Sunda Hours-Car Librar ;Close E. Lexin ton Branch librar $ 120,000 $ 482,563
Librar Sub-total $ 120,000
18 Police Reduce urchase of su lies, materials & e ui ment $ 21,000 $ 362,563
19 Police Not restore administrative clerk $ 37,503 $ 341,563
20 Police Not restore School Resource Officer-Middle School $ 54,014 $ 304,060
21 Police Purchase one less olice atrol cruiser $ 26,000 $ 250,046
Police Sub-total $ 138,517
22 Soc. Serv. Eliminate Town su ort for senior nutrition ro ram $ 5,125 $ 224,046
23 Soc. Serv. Reduce urchase of su lies & materials $ 4,000 $ 218,921
Social Services Sub-total $ 9,125
24 TMIFin. Not restore Human Resource Director osition $ 76,100 $ 214,921
25 TMIFin. Eliminate Information Technolo Director osition $ 80,700 $ 138,821
26 TMIFin. Reduce Audit su ort services $ 11,121 $ 58,121
27 TMIFin. Reduce urchase of materialslsu ort for Town committees $ 12,000 $ 47,000
28 TMIFin. Reduce em to ee trainin ro rams $ 14,000 $ 35,000
Town Mana erlFinancelMlS Sub-total $ 193,921
29 Town Clerk Do not fund art-time archivistlrecords mans ement ro ram $ 20,000 $ 21,000
30 Town Clerk Print fewer Annual List of Residents book $ 1,000 $ 1,000
Town Clerk Sub-Total $ 21,000
Breakouts: School Benefits $ 142,330
School Programs $ 3,774,986
Municipal Programs $ 914,235
Municipal Benefits (7.0 FTE) $ 60,200
Capital $ 150,000
Total $ 5,041,751
Page 53 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
LEXINGTON PUBLIC SCHOOLS AT-RISK LIST (Page 1 of 2)
Basic Budget
FTEs* Amount
Existin Pro rams at Risk
Preserve 3 - 5 S anish Pro ram 5.75 $385 377
Preserve Social Studies Curriculum S ecialist 1.00 $84 929
Preserve Earl Intervention Secialist -Clarke 0.70 $35 907
Preserve Social Worker -Clarke 0.30 $15 388
Retain 1.2 FTE for Grade 7 & 8 electives at each middle school 2.40 $112 000
Preserve needed Clarke & Diamond eneral su lies $50 000
Preserve EDCO PD/Teachers as scholarship/primary source contract
services $19,228
Avoid reducin K-12 teachin assistants 90.5 to 87.5 FTE 3.00 $66 000
Retain 0.2 FTE K-5 Curriculum Secretar 0.20 $4 900
Avoid increasin LHS teachin load 4 to 5 classes SS/Math/FL 9.35 $416 750
Preserve Grade 9 Teamin En /SS 1.00 45 000
Preserve middle school instructional technolo s ecialist 1.00 80 233
Preserve elementar school instructional technolo s ecialist 1.50 $105 109
Avoid reducin honors & levels 1 & 2 science classes 6 to 5 /week 3.40 $153 000
Preserve full LHS German ro ram 0.20 $12 613
Preserve Lincoln/Dou las Debate travel bud et $20 000
Preserve Polic Debate travel bud et $10 000
Avoid havin to hire new teachers at lower ste M6 to M5 $94 850
New Critical Pro rams at Risk
Preserve one unallocated elementar osition 1.00 $50 000
Im lement new teacher indution ro ram $181 600
Add new osition Evaluation Team Leader at LHS 0.50 $25 000
Add new osition Social Worker at LHS 0.60 30 000
Add new osition unallocated seconder teacher 1.00 50 000
Add one new unallocated elementar teacher 1.00 $50 000
Add new osition K-12 Health Curriculum S ecialist 0.50 $25 000
Add new osition seconds PE/Health teacher 0.25 $12 500
Add new osition re-school nurse 0.50 $30 000
Add new osition rades 3 - 8 coordinator of forei n Ian ua a 1.00 $83 000
Benefits for new 6.35 ositions $54 610
Existin Pro rams to Risk Substantial Fee Increases
Preserve rades 4 & 5 elementar instrumental music $121 500
Preserve JV middle school s orts $30 000
Existin Pro rams TBD at Risk
Additional cuts to be found 177 216
Total Basic Budget 36.15 $2,631,709
*Full-Time Equivalents
Page 54 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
LEXINGTON PUBLIC SCHOOLS AT-RISK LIST (Page 2 of 2)
Needs-Based Budget
FTEs Amount
Instructional expenses -books, educational supplies (above 3%
inflation $255,887
Additional Debate travel ex ense 15 000
New K-12 Coordinator Visual Arts for a total of 0.4 FTE 0.20 16 000
New To be allocated Secondar teachers 4.00 200 000
Restore Lan ua e Lab Aide 1.00 20 000
Benefits for 5.20 new ositions 44 720
Total Needs-Based Budget 5.20 $551,607
Maintenance
FTEs Amount
Preventive Maintenance Pro ram 543 000
HVAC/Ener Mana er 1.00 65 000
Custodians amount to be offset b custodial overtime 3.00 28 000
Facilities Mana er 1.00 55 000
Benefits for new 5.00 ositions 43 000
Total Maintenance Budget 5.00 $734,000
Page 55 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Below we give our understanding of where the proposed requests for new revenue on the override will be
included in the actual motions for appropriation. The line items are those in the operating budget,
Article 17.
Lexington Public Schools
Basic Budget
Line 1100 $2,577,099
Line 2130 (Health Insurance) $54,610
Total X2,631,709
Needs-Based Budget
Line 1100 $506,887
Line 2130 (Health Insurance) $44,720
Total X551,607
Maintenance
Line 1100 $691,000
Line 2130 (Health Insurance) $43,000
Total X734,000
Schools Total X3,917,316
Recapitulation of Schools Total By Line
Line 1100 $3,774,986
Line 2130 $142,330
Schools Total X3,917,316
Municipal
Line 2130 $60,200
Lines 3000-8999 $914,235
Capital-Article 28(c5) $150,000
Municipal Total X1,124,435
~~ Recauitulation of Override Total by Line ~~
Line 1100 $3,774,986
Line 2130 $202,530
Lines 3000-8999 $914,235
Capital-Article 28(c5) $150,000
Override Total X5,041,751
Page 56 of 64
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APPROPRIATION COMMITTEE REPORT-APRIL 2006
Appendix C: Financial Forecasts with Reserves Projections
for FY2007-FY2008
A draft of this appendix was presented to a meeting of the Budget Collaboration Group (a joint meeting
of the Board of Selectmen, the School Committee, the Capital Expenditures Committee, and the
Appropriation Committee) on April 3ra. At that time, the Appropriation Committee unanimously
advocated for ensuring the preservation of current reserve levels when constructing the FY2008 budget,
and presented two different override options for achieving this minimal goal.
INTRODUCTION
This appendix provides:
A) A description of the imbalance between revenue and expenditure increases in FY2007 and a projection
of this gap for FY2008.
B) A projection of the Town's financial condition in terms of reserves from June 2006 through June 2008
and two scenarios for utilizing operating overrides to close the gap in FY2007 and FY2008 while
preserving reserve levels;
C) A discussion of some of the issues surrounding the two scenarios introduced in (B); and
D) Other possible strategies for addressing the revenue/expenditure gap.
Accompanying exhibits include:
G1: FY2007-FY2008 Projections, which presents the proposed FY2007 budget (based upon information
available at press time) and Appropriation Committee projections for FY2008
C-2: FY2008 Projected Reserve Balance-Scenarios 1 & 2
C-3: Town Manager's February 9, 2006 Reserves Analysis
A) The tau between revenue and exuenditure increases:
We continue to experience a number of expenditure drivers which exceed typical annual growth in
revenues. These include the following level-service growth factors, as estimated by the Appropriation
Committee:
^ School cost of living and step increases: 4.5% (less approximately $650K salary differential)
^ Municipal cost of living and step increases: 4%
^ Municipal expenses: 5% (6-year trend plus recent steep increases in energy costs)
^ School expenses: 6.5% (6-year trend plus recent steep increases in energy costs)
^ Medical & Dental increase: 14% (estimated for increases in cost of coverage per insured
individual)
^ Other drivers include increases inunder-funded State-mandated education expenses, like SPED
More detailed discussion of the FY2007 increases appear earlier in this report in the discussion of the
operating budget in Article 17.
Page 58 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Meanwhile, revenue growth (without a Proposition 21/~ override) in FY2007, which is typical of recent
years, is limited to:
^ 2.5% of the tax levy excluding exempt debt ($2.2467M)
^ Tax growth from newlimproved real estate and personal property-projected to be $1.675M
^ Local receipts: projected growth of 5.3% (This reflects a trend towards some modest economic
recovery.)
^ State Aid: projected growth of 3.16% (State Aid still falls well below the 2001-2003 levels.)
Together, this adds up to an annual imbalance between available revenues and expenses for level service
which must be addressed by raising revenue, reducing expenses through new efficiencies, cutting
programs, or drawing on reserves (or some combination of these).
The proposed FY2007 budget is predicated upon a $5,041,751 operating override (Line 4 of Exhibit C-1)
in order to close the gap between revenues and level-service expenses AND provide funding for a limited
number of service restorations and improvements. Regardless of the outcome of that override and the
resulting service level, we anticipate annual revenue/expense gaps for the foreseeable future simply to
maintain services at FY2007 levels (as determined by the voters in the June 2006 override) without
diminishing reserves beyond present levels. We have estimated this gap for FY2008 at $2.79M, shown on
line 41 of Exhibit C- l . This figure is net of a $1.9M appropriation of Free Cash in FY2008 and is
discussed in more detail in the next section.
B) Preserving reserves and services-two scenarios:
As described earlier in this report, the Town has made progress towards improving its reserves position.
The Selectmen's Ad Hoc Financial Policy Committee has just released a report outlining a series of
reserve policies and targets, which, if implemented, will require an even greater accumulation of reserves
than we have at present. Therefore, the Appropriation Committee believes that our planning for FY2007
and FY2008 should, at a minimum, preserve current reserve levels as the Selectmen and boards and
committees review the Ad Hoc Committee's recommendations and develop an implementation plan. We
describe here two scenarios for addressing the FY2007 and FY2008 shortfalls while preserving reserve
levels.
In February, the Town Manager provided an analysis of reserves to the Budget Collaboration Group,
which is reproduced for reference here as Exhibit C-3. Reserves are estimated for the end of each fiscal
year and are equal to the sum of Free Cash and the Stabilization Fund. (The Appropriation Committee has
excluded the Reserve Fund balance from reserve totals since the monies appropriated to this account are
typically spent in full each year.) On June 30, 2006, reserves are projected to total $5.57M ($5,719,611-
$150,000 Reserve Fund balance), and on June 30, 2007, are projected to total $6.22M ($6,524,611 -
$300,000).
Referring now to Exhibit C-2:
Line l: The $5.57M projected reserve total as of June 30, 2006 represents the starting reserves balance as
we analyze and present two scenarios for addressing the gap in FY2007 and in FY2008.
Line 2: The $6.22M projected reserve total as of June 30, 2007 (one year later) from Exhibit C-3.
Line 3: The Town Manager's projections assume $750K of expense reversions and revenue receipts
above estimates when the books are closed on FY2006. This line shows the additive affect of an
additional $250K of reversions and/or excess receipts (in the nominal case), $0 addition (in the
pessimistic case), and $SOOK (in the optimistic case). For the closeout of FY2007, we propose no
additions to the Town Manager's proj ection of $1 M in expense reversions and/or excess receipts.
Page 59 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
Line 4: Similarly, we are projecting the nominal case of $1 M in reversions and/or excess receipts at the
close of FY2008.
Line 5: This is the total of Lines 2, 3, and 4 and represents a preliminary projection of our reserve balance
on June 30, 2008.
Line 6: If we only achieve the minimum goal of preserving reserve levels at the June 30, 2006, level of
$5.57M, we have $1.9M of Free Cash available for appropriation (in the nominal case). This represents
the difference between Line 5 and Line 1. If this Free Cash is used, the nominal reserve balance reverts to
$5.57M (Line 7).
Line 8: Scenario 1 assumes a combination of (a) utilizing $1.90M in Free Cash in FY2008 and
(b) seeking annual overrides for both FY2007 and FY2008. The nominal size of an operating override in
June 2007 required to balance the FY2008 budget is $2.793M. This assumes that all questions on the
prior year's (FY2007) June 2006 override pass; however, the impact on the FY2008 gap of failure of
some or all of the June 2006 override questions is nominal (on the order of $20K - $SOK per $1 M of
override lost) IF one assumes that we will preserve level service in FY2008 at whatever level the voters
choose for FY2007. Any plan to restore or introduce items in the FY2008 budget which were lost in
the June 2006 override will increase the size of the gap for FY2008.
Line 9: Scenario 2 assumes, instead of annual overrides, that we address the gap by (a) utilizing $1.90M
in Free Cash in FY2008 and (b) adding an additional $1.38M stabilization fund question to the upcoming
June 2006 operating override. If this question were to pass, it would allow us to accumulate in FY2007
and FY2008 a total of $2.79M in a stabilization fund which could be drawn down in FY2008 to help
balance that year's budget. Just as in Scenario 1 above, this assumes that all questions on the June 2006
override pass. If any portion of that override for FY2007 fails, any plan to restore or introduce items in
the FY2008 budget which were lost in FY2007 will increase the gap for FY2008.
Line 10: Both scenarios will leave overall reserve levels intact at the $5.57M maintenance goal, but will
achieve no progress towards increasing reserves.
Line 11: This shows the impact of rejecting both Scenarios 1 & 2 and instead further drawing down
reserves to close the FY2008 gap of $2.79M. The nominal result is a reserves balance as of June 30, 2008
of $2.78M. This would require not only using all available Free Cash, but appropriating from the
stabilization fund, as well.
C) Questions to consider with each scenario:
This list is by no means exhaustive, but is meant to spur discussion:
^ Is one approach more straightforward, or "transparent," than the other?
^ what sort of promises are we making to voters? Can we keep them?
^ what happens in the event that one or more of the other override questions fails? How does this
impact plans to come back the following year (or not) for an override?
^ what do we do in the event of significant deviations from projections?
^ which of the two scenarios offers more service/staffing stability?
^ what amount of Free Cash can reasonably be considered to be recurring in subsequent years? The
Town Manager's projections suggest approximately $1M; therefore what adjustments should be
made to Scenarios 1 and 2 to mitigate the impact of using $1.9M to balance the FY2008 budget?
^ Instead of simply preserving reserve levels, should we be aggressively building reserves further?
what is the right balance among preserving services, maintaining reserves, and stabilizing taxes?
Page 60 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
D) Other options:
There is little opportunity at this point to make structural changes that will have a significant impact on
the FY2007 budget. But what opportunities should we consider pursuing for FY2008 and beyond? Here
are a few to consider:
^ Examine the total compensation package provided to employees relative to peer towns
^ Examine class size and course load throughout the school system relative to peer towns
^ Lobby at the state and national level to obtain more funding for education mandates
^ Lobby the governor and state legislature to restore State Aid to pre-2003 levels
^ Pursue energy conservation measures to reduce energy costs
^ Examine potentially redundant services (East Lexington Library, etc.)
^ Explore additional fee opportunities
At the conclusion of the Budget Collaboration Group discussion on April 3Y°, the Selectmen expressed
their preference to NOT add a stabilization fund question to the FY2007 override and instead consider
this June's override to satisfy one year's requirements only. (This will need to be communicated clearly
to voters.) There was general agreement about the wisdom of preserving reserve levels and the likelihood
of another revenue gap requiring an override in FY2008. It was also noted that there are efforts
underway to address some of the structural options described in (D) above.
Page 61 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
C-1: FY2007 - FY2008 Projections (Maintaining Reserves at $5.57M as of 6130108)
Revenue Summary FY2006 FY2007 FY2008
Restated Praec~ed Projected
Tax Levy
1 Property Ta~c Levy $ 85,867,574 $ 89,868,580 $ 98,832,056
2 Allunrable2l/2% inc. $ 214689 $ 2246.715 $ 2470.801
3 Ne~vTa~c Levy C~anrth $ 1,85,326 $ 1,67000 $ 1,746,871
4 VoterAppraved Ovemde
_ $ - $ ~0~1,752 $ -
_.
_
5 Ta~clevylimit $ ~,~~ $ ~,~~ $ 1~~9,~
6 Exempt Debt $ 4,9x3,313 $ X564,651 $ 4,187,638
7 sub tcta~ T~ Levy $ 9,811,902 $ 10~,3~,707 $ 107,237,366
8 St~eAid $ 8,603;524 $ 8,87774 $ 8;875,774
9 Local Reoeiats $ 9.674.610 $ 10.187.644 $ 10076.914
10 Available Finds $ 1,382,484 $ 4,746,000 $ 2,395,000
11 ReverYae Offse#s $ (3.14x4381 $ (29190191 $ (2906.6731 .
12 Total General Fund $ 111,327,082 $ 125,277,105 $ 125,676,381
Othe-Rev
13 REVdvirg Fuxls $ 612,899 $ 630,073 $ 633,115
14 Carts $ 168,873 $ 173,390 $ 190,3
15 Enterprise Fuzis (Directl $ 13.32251 $ 14.476:523 $ ~,~,~
16 Enterprise Finds (Ir~irect) $ 1,78913 $ 1,827,313 $ 1,97,068
17 scbtotaf OtF~Re~erx~ $ 1~8~ 196 $ 17,107,299 $ 18~36~882
18 Total Revenues.......
F~ense Summary
Educatirn
19 Lex. P~bSchodsCamp~-~tion
20 Le~c. Pr1~ Sd-mis Exi
$ 127,221,278 $ 142,384x404 $ 144,042,262
FY2006 FY2007 FY2008
Restated Recommended Praected
$ 47,242,262 $ 51,061,471 $ 52,708,237
21 scb total Lex. Pu+~ Sdxxls
22 MrY.teman Rea Schod
23 sub-tofa~ Earn
$ ~~~ $ ~~~
$ 6~ ~ 2x`3 ~ 6~5Z3,OZ8 $ 69,1.31917
Nlx~iaaal
24 M.x~idpal Camper~rn $ 15,518028 $ 16,692,925 $ 17,390,642
25 Mrranel Exna~lses $ 7.439617 $ 8.377.161 $ 8:796.019
26 subtcta~ Mcrrau~ $ 22/.645 ~ ~~.~ ~$ ~.~.~1
Shared Expenses
27 Ber>e(its & Irsl.rar~ce $ 19,128260 $ 22,374,981 $ 2x,801,568
2~3 Debt(~nathinlevy) $ 3,49750 $ X720,061
...... $ 3,91,333
29 Reserve Fuxl $ 150,000 $ 400,000 $ 400,000
30 subtcta~ Sha~adExper-sers ~ 2~~9,010 ~ 2495,042 $ .~14~931
31 Revd virx~ Fins $ 612 8~ $ ~ 073 $ ~ 073
Capital & R
32 Cash Capital.. (nc of roads+ 150K i n O R) $ 1,153;000 $ 98,5,000 $ 1,485,000
33 Otl-~r-Stabiliz~onFuxldeposits $ 603,647 $ X650,000
34 su~tota~ C~a~ta~ & Reserves $ 1,756,647 $ 3,6~5,G1~7 $ 1,~S,L1~
35 Er7er~xise Fug $ 13~~541 $ 14,47F524 $ 1~5~ 776
36
37 Exempt Debt
Mriiapel
Sd-~od
$
$
771,013
4,172,300
$
$
1,219,388
4,33263
$
$
1,186,29;1
3,001,375
38 sc.~tcta~ Exempt Debt $ 4,9313 $ X564,661 $ 4,187, ~
39 u~'p~r~jfiealPXper~jp~S $ (500,000)
40 Total Fie rises $ 127,221,278 $ 14~384y404 $ 14f 834y996
41 Balance (Gap) $ - ,; $ 0 $ (2,792,733)
Page 62 of 64
APPROPRIATION COMMITTEE REPORT-APRIL 2006
C-2: FY2008 Projected Reserves Balance -Scenarios 1 & 2
.Reserves ($Millions) ____ ____ ____ ____ ____ ____ ____
1 Town Manager's estimate June 2006 (less AC reserve fund}
2 Town Manager's estimate June 2007 (less AC reserve fund}
Expense reversions, excess receipts
3 June 30, 2007 increase (beyond T. Mgr's projections)
4 June 30 2008 increase (extrapolating T. Mgr's projections)
5 Preliminary projected June 2008 balance (sum of Lines 2, 3, 4)
(assuming no unpaid bills, other crises)
6 Available for appropriation for FY2008 (Line 5 -Line 1)
(nominal case)
7 Projected J une 2008 balance (Line 5 -Line 6}
(nominal case)
8 Scenario 1: June'07 override needed to achieve level
service in FY08 and maintain $5.57M reserve balance
(nominal case)
9 Scenario 2: June'06 Override addition for stabilization
needed to avoid a June'07 override and still achieve
level service in FY08 while maintaining $5.57M reserve
(nominal case)....
10 Projected June 2008 balance (all cases)
11 Projected June 2008 balance if no override in June '07
and no stabilization override addition in June '06
(Line 1 D - "the gap" shown on Line 8)
Optimistic Nominal Pessimistic
5.570 5.570 5.570
6.222 6.222 6.222
0.500 0.250 0.000
1.250 1.000 0.750
7.972 7.472 6.972
1.902
5.570
2.793
1.379
6.070 5.570 5.070
3.28 2.777 2.277
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