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HomeMy WebLinkAbout2022-10-27 FY2024 Budget Summit II-min Budget Summit II Select Board, School Committee, Appropriation Committee Capital Expenditures Committee October 27, 2022 The remote participation Budget Summit II meeting was called to order by Select Board Chair Jill Hai at 7:02 p.m. on Thursday, October 27, 2022 via hybrid meeting services. Present for the Select Board (SB): Ms. Hai, Chair; Mr. Lucente, Vice Chair; Mr. Pato; Ms. Barry; and Mr. Sandeen as well as Mr. Malloy, Town Manager; Ms. Axtell, Deputy Town Manager; Ms. Katzenback, Executive Clerk. Present for the School Committee (SC): Ms. Cuthbertson, Chair; Ms. Jay; Ms. Lenihan; Ms. Sawhney, Vice Chair; Mr. Freeman; Dr. Hackett, Superintendent of Schools; and Ms. Reinholm, Assistant Director of Finance for Lexington Public Schools. Present for the Appropriation Committee (AC): Mr. Parker, Chair; Mr. Padaki, Vice Chair; Mr. Ahuja; Mr. Bartenstein; Mr. Levine; Mr. Michelson, Ms. Yan; Mr. Osborne \[7:10 arrival\]. Present for the Capital Expenditures Committee (CEC): Mr. Lamb, Chair; Mr. Kanter, Vice Chair and Clerk; Mr. Cole; Ms. Rhodes; Ms. Beebee; Mr. Boudett \[8:10 arrival, 8:32 departure\]. Also present: Ms. Kosnoff, Assistant Town Manager for Finance; Ms. Lebrecque, Town Budget Officer Ms. Hai stated that the meeting was being conducted via Zoom as posted, with the agenda on the Town’s website. Public comments were not taken during the meeting. ITEMS FOR INDIVIDUAL CONSIDERATION Ms. Jay (SC) noted that she will be recusing herself from all discussions relating to the high school project. 1. FY2024 Budget Summit II  School Enrollment Projections and FY2024 Budget Drivers Dr. Hackett, Superintendent of Schools, reviewed the FY22 financial sustainability. She explained that there was approximately $6.6M worth of turnbacks for FY22. There was an unexpended allocation of $2.5M and an unexpended circuit breaker from FY21 of approximately $2.6M. There was a Medicaid reimbursement of approximately $954,000, and homeless student transportation reimbursements of an additional $160,000. Regarding the budget overview for FY24, the projected operating budget is approximately $133.5M. For ARPA funds, approximately $1.5M is still available. Dr. Hackett stated that the FY24 budgetary drivers include special education, union contract negotiations, Chapter 70 impacts, traditional budget driver and the lingering impacts of the pandemic. The Operational Services Division has an anticipated 14% tuition increase. There are three types of private school tuitions, out of state, private day, and collaboratives. Totaling up these tuitions leads to approximately $15M. With the projected increases of approximately $2,037,862, this could lead to a total of $17.9M. Dr. Hackett stated that, regarding special education enrollment, there are approximately 60 students st overall. These needs have significantly increased from previous years. As of the October 1 enrollment date, the total enrollment number is 6,845, which is up 55 from last year. Much of this increase occurred at the high school level. The Lexington High School enrollment is well over the building’s planned operating capacity. Mr. Kanter (CEC) asked if there is a factor in the budgeting for training for staff to deal with children coming back into the schools after the pandemic. Dr. Hackett explained that many educators have had to learn the past years’ curriculum and a lot of cross training has occurred. Mr. Cole (CEC) noted that additional support may be needed in the schools, if there seems to be a significant number of high schoolers moving from the district. Dr. Hackett explained that she will be meeting with the Department of Elementary and Secondary Education next Wednesday to find out more about that information and data. Dr. Hackett stated that the projected FY24 budget shows a total percentage change of 4.16%. The total approved budget for FY23 was approximately $128M, and so for FY24 is estimated at $133M. Anticipated increases for bargaining units are factored into these projections. In response to a question from Mr. Bartenstein (AC), Dr. Hackett stated that nearby communities are also receiving more students, although it is unclear if those communities are receiving students from in-state or from out of the country. There has been a large influx of international students from China specifically. In response to a question from Mr. Sandeen (SB), Dr. Hackett stated that the district has a total of 925 special education students this year, which equates to 13.5% of the student population. Historically, the percent of special education students enrolled has remained consistent at approximately 13%.  Preliminary FY2024 Revenue Estimates Ms. Kosnoff reviewed the revenue projections for FY24. The total property tax levy, which is by far the most significant part of the Town's revenue, is going up by $8.4M, or approximately 3.9%. This is based off a per student increase of $30/student, which is the projection that has been used for the past couple of years. There is a 1.2% increase projected for State Aid, which is mostly Chapter 70. Available Funds is projected to decrease by approximately $3.2M, or 17%. This is primarily due to free cash. Regarding Revenue Offsets, each year $400,000 is set aside to handle bad winter weather. Enterprise Receipts, which is a transfer from the Enterprise Funds to cover some shared services is projected to go up approximately 2.9%. Overall, the total General Fund Operating Revenues are projected, when taking into account the negative free cash amount, to increase approximately $5.7M or 2.17%. Ms. Kosnoff explained that the tax levy is mostly increasing due to additional commercial development in Town. New Growth is estimated at $3M; this will not be dedicated elsewhere. This amount is projected to increase over past years, mostly due to residential growth. In response to a question from Mr. Bartenstein (AC), Ms. Kosnoff explained that it will be staff’s recommendation at Town Meeting to dedicate that new growth revenue into the Capital Stabilization Fund. Personal Growth amounts will also need to be appropriated to the Pension Fund; this will occur through the Operating Budget Warrant Article. Ms. Kosnoff reviewed the local receipts. She noted that this is one area which was impacted by the pandemic. There seems to be a lingering impact on the motor vehicle excise tax. Regarding Other Excise tax items, the Hotel/Motel tax is estimated to be approximately 70% of prepandemic levels. Jet fuel is back up. Mr. Kanter (CEC) asked about gas permits and the potential for Town buildings off using gas in the future. Ms. Kosnoff stated that this could be further explored. The Town is encouraging large commercial developments to be as green as possible. Regarding Available Funds, Ms. Kosnoff explained that the Free Cash estimate is $14.25M. The Health Claims Trust Fund has dropped down from $750,000 to $230,000. FY24 is the last year that this money will be available. The PEG Access Fund has been experiencing lower revenues. It is expected that, at some point within the next five years, that revenue and fund balance is going to be very much dwindled, if not completely run out.  Preliminary FY2024 Revenue Allocation Model and Set-Asides Ms. Kosnoff explained that the Town's overall revenue projection so far for FY24, was $270,000,702. From this, all of the expenses that are considered shared between the Town and the School Department are removed. The Minuteman budget is anticipated to increase by approximately 15% from last year. The Contributory Retirement, line item which covers all Town employees and non-teaching staff in the School Department, is estimated at $10,087,000, which is reflective of the existing pension funding schedule. Debt service is proposed to be reduced from last year by approximately $1M. The Facilities Department budget has an increase of over 12% compared to the prior year. The most significant portion of that is due to increased energy costs. After reviewing all of the proposed set-aside amounts, the projected surplus revenue amount is $5.297M. This will be allocated in the same way it has been in previous years, with 26% going to the Town, and 74% going to the schools. This will essentially give the Town an extra $1.377M to allocate for new programs and additional costs in the budget, and the School Department an extra $3,92M. These are 3.1% increases over the prior year. In order to cover expected costs and increases in the budget, the Town likely needs to find an extra $1.8M, either through additional revenues and/or shaving off shared expenses. In response to a question from Mr. Kanter (CEC) regarding the proposed $1M reinstatement to the Special Education Stabilization Fund, Ms. Kosnoff explained that one option would be to appropriate $500,000 of free cash back into the School's budget for FY24. She will work with the School Department for potential options for this item. In response to a question from Mr. Pato (SB), Ms. Kosnoff explained that the personal property new growth is wrapped into the Contributory Retirement line. Ms. Kosnoff reviewed the revenue set-asides for designated expenses. She noted that it will be important to continue to increase cash capital, due to current interest rates. In response to a question from Ms. Cuthbertson (SC) regarding if any of the smaller one-time funds could potentially be eligible for ARPA funding, Ms. Kosnoff stated that ARPA funds could be dedicated to capital items. This is at the discretion of the Select Board.  FY2023 Budget Update for Special Town Meeting 2022-3 Ms. Kosnoff explained that she and the assessors have finalized the reports to the Department of Revenue. The last item associated with those reports is preparing the TIF agreement updates at Takeda. The assessors reviewed the property and found that there was 36,000 new square feet added at 400 Shire Way. th As part of the 20-year tax agreement with this property, now that this agreement is in its 15 year, the Town is allowed to capture some of that market growth. This has added another $699,000 to the new growth estimates for the year. This will be proposed to be placed into the Capital Stabilization Fund at Special Town Meeting. Ms. Sawhney (SC) suggested that the circuit breaker for the School Department could be placed into the Special Education Stabilization Fund. Ms. Kosnoff agreed that this could be up for discussion. Ms. Sawhney (SC) also suggested that the Minuteman Tech be more involved throughout the budgeting process, in order to have a deeper discussion regarding their projected budget.  Confirm Date: FY2024 Budget Summit III Ms. Kosnoff stated that Special Town Meeting 2022-3 will start on November 1,2022. Budget Summit III meeting is proposed to be on November 16, 2022. FY2024 Budget presentations with the Select Board from the municipal departments are scheduled for November 30, 2022, December 1, 2022 and December 6, 2022. It is anticipated for the White Books to be available in January 2023. DOCUMENTS: Presentation - LPS Enrollment Budget Drivers, Presentation - FY2024 Budget Summit II ADJOURN Upon a motion duly made and seconded, the Select Board voted 5-0 by roll call to adjourn the meeting at 9:01 p.m. The other committees followed suit. A true record; Attest: Kristan Patenaude Recording Secretary