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APPROPRIATION COMMITTEE
TOWN OF LEXINGTON
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REPORT TO THE
2024 ANNUAL TowN MEETING
RELEASED MARCH 13, 2024
APPROPRIATION COMMITTEE MEMBERS
Glenn P. Parker, Chair• Sanjay Padaki, Vice Chair• Alan M. Levine, Secretary
Carolyn Kosnoff(ex officio; non-voting) • Anil A. Ahuja • John Bartenstein
Eric J. Michelson • Sean D. Osborne • Lily Manhua Yan
2024 ATM APPROPRIATION CONMTTEE 13 MARCH 2024
Table of Contents
Summary of Warrant Article Recommendations iii
Preface v
Introduction 1
Warrant Article Analysis and Recommendations 5
2024 ANNUAL TOWN MEETING
Article 4 Appropriate FY2025 Operating Budget 5
Article 5 Appropriate FY2025 Enterprise Funds Budgets 15
Article 6 Appropriate for Senior Services Program 20
Article 7 Appropriate for Sustainable Capital Projects 20
Article 8 Accept Tucker Ave (Westernmost Portion) 21
Article 9 Establish and Continue Departmental Revolving Funds 21
Article 10 Appropriate for the FY2025 Community Preservation Committee Operating Budget and CPA
Projects 22
Article 11 Appropriate for Recreation Capital Projects 27
Article 12 Appropriate for Municipal Capital Projects and Equipment 27
Article 13 Appropriate for Water System Improvements 28
Article 14 Appropriate for Wastewater System Improvements 30
Article 15 Appropriate for School Capital Projects and Equipment 31
Article 16 Appropriate for Public Facilities Capital Projects 31
Article 17 Appropriate to Post Employment Insurance Liability Fund 32
Article 18 Rescind Prior Borrowing Authorizations 33
Article 19 Establish,Amend, Dissolve and Appropriate To and From Specified Stabilization Funds 33
Article 20 Appropriate for Prior Years' Unpaid Bills 33
Article 21 Amend FY2024 Operating, Enterprise and CPA Budgets 34
Article 22 Appropriate for Authorized Capital Improvements 34
Article 23 Appropriate Opioid Settlement 34
Article 24 Appropriate Funding for Semiquincentennial Commission 35
Article 25 Appropriate for Pine Meadows Clubhouse Renovation 35
Article 26 Appropriate for Design Funds for LHS Construction Project 35
Article 27 Appropriate for Renovation of 173 Bedford Street 36
Article 29 Amend the General Bylaw -Noise Control 37
Article 33 Authorize the Select Board to Seek Affordable Housing 38
Article 34 Amend General Bylaws -Tree Bylaw -Tree Protection Plan 40
Article 35 Amend General Bylaws -Tree Bylaw -Require Mitigation Planting in Certain Instances 41
Article 36 Amend General Bylaws -Tree Bylaw -Exemptions 41
APPENDICES
Appendix A: 5-Year Budget Projections 42
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Appendix B: Enterprise Funds 49
Appendix C: Revolving Funds 50
Appendix D: Tax Relief Programs 51
Appendix E: Specified Stabilization Funds 53
Appendix F: Other Post Employment Benefits 56
2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Summary of Warrant Article Recommendations
Abbreviations
EF Enterprise Fund RE Retained Earnings
CPF Community Preservation Fund RF Revolving Fund
GF General Fund SF Stabilization Fund
IP A motion to Indefinitely Postpone is expected SRF Special Revenue Fund
2024 ANNUAL TOWN MEETING
Art Funds Funding Committee
icle Title Requested Source Recommendation
4 Appropriate FY2025 Operating Budget See below See below Approve(8-0)
$13,249,071 Water EF
5 Appropriate FY2025 Enterprise Funds Budgets $12,878,599 Wastewater EF Approve(8-0)
$3,131,959 Recreation EF
$272,708 Tax Levy
6 Appropriate for Senior Services Program $15,000 Tax Levy Approve(8-0)
7 Appropriate for Sustainable Capital Projects $65,000 Free Cash Approve(8-0)
8 Accept Tucker Ave (Westernmost Portion) $30,000 Free Cash Approve(8-0)
9 Establish and Continue Departmental Revolving See below RF Approve(8-0)
Funds
Appropriate for the FY2025 Community CPA, GF, a-c,e-k: Approve
10 Preservation Committee Operating Budget and See below GF Debt (8-0)
CPA Projects d: Pending
11 Appropriate for Recreation Capital Projects $110,000 Recreation EF RE Approve(8-0)
12 Appropriate for Municipal Capital Projects and $10,253,686 See below Approve(8-0)
Equipment
$1,288,900 Water EF RE
13 Appropriate for Water System Improvements $1,000,000 Water User Rates Approve(8-0)
$2,288,900
$50,000 Wastewater EF RE
14 Appropriate for Wastewater System $561,210 Wastewater Debt Approve 8-0
Improvements $500,000 Wastewater User pp ( )
Rates
$1,111,210
15 Appropriate for School Capital Projects and $1,323,050 Free Cash Approve(8-0)
Equipment
$3,874,345 Free Cash
16 Appropriate for Public Facilities Capital Projects $980,655 Tax Levy Approve(8-0)
$4,855,000
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
2024 ANNUAL TOWN MEETING
Art Funds Funding Committee
icle Title Requested Source Recommendation
$1,997,451 Free Cash
$32,270 Tax Levy
17 Appropriate to Post Employment Insurance $3,045 Water EF Approve(8-0)
Liability Fund
$609 Wastewater EF
$2,033,375
18 Rescind Prior Borrowing Authorizations None N/A Approve(8-0)
19 Establish,Amend, Dissolve and Appropriate To $4,036,373 Tax Levy Approve(8-0)
and From Specified Stabilization Funds
20 Appropriate for Prior Years' Unpaid Bills None N/A IP (8-0)
21 Amend FY2024 Operating, Enterprise and CPA None N/A IP (8-0)
Budgets
22 Appropriate for Authorized Capital None N/A IP (8-0)
Improvements
23 Appropriate Opioid Settlement None N/A Approve(8-0)
24 Appropriate Funding for Semiquincentennial $500,000 GF Approve(8-0)
Commission
25 Appropriate for Pine Meadows Clubhouse $2,575,000 GF Debt Approve(8-0)
Renovation
26 Appropriate for Design Funds for LHS $10,000,000 GF Debt Approve(8-0)
Construction Project
$334,155 Free Cash
27 Appropriate for Renovation of 173 Bedford $30,000 Bond Premiums Approve 7-1
Street $5,635,845 GF Debt pp ( )
$6,000,000
29 Amend the General Bylaw -Noise Control None N/A —
33 Authorize the Select Board to Seek Affordable None N/A —
Housing
34 Amend General Bylaws -Tree Bylaw-Extend None N/A —
Tree Bylaw to All Private Property
35 Amend General Bylaws -Tree Bylaw-Require None N/A —
Mitigation Planting in Certain Instances
36 Amend General Bylaws -Tree Bylaw- None N/A —
Exemptions
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Preface
This preface describes the structure and stylistic conventions used in this report. It is followed by an introduction
discussing changes in the Town's financial status since the previous annual town meeting, along with issues
pertinent to the Town's general financial situation. The main body of this report contains article-by-article
discussions and recommendations on those articles that, in our opinion, have substantial financial relevance. The
report references several appendices at the end of this document that provide a deeper explanation of particular
financial topics.
The discussion for each article presents the prevailing view of the Committee, as well as any other considerations or
cautions that we feel Town Meeting should be informed of If one or more Committee members are strongly
opposed to the majority position, we summarize the opposing perspective. Each article discussion concludes with
the most recent vote of the Committee prior to publication. The vote is summarized by the number of members in
favor, followed by the number of members opposed, and lastly (when applicable) the number of members
abstaining, e.g., "(6-2-1)"indicates six members in favor,two opposed, and one abstaining. It is not always possible
to collect a complete vote for every article from nine voting members. In such instances, the total number of votes
and abstentions published will be less than nine. For convenience, Committee votes are also summarized on the
preceding pages.
This report does not replicate information readily available to Town Meeting members elsewhere. Key documents
that inform our analysis and provide a more thorough picture of the Town finances are:
• The Town Manager's Fiscal Year 2025 Recommended Budget & Financing Plan (the "Brown Book"),
dated February 20, 2024 fully describes the annual budget of the Town. The Brown Book also summarizes
budget laws and bylaws (Appendix B)and includes a glossary of financial terms (Appendix D).
• The Level Service and Recommended Budget of the Superintendent of Schools, dated January 4, 2024
(hereafter the "LPS Budget Book") details the budget plan for Lexington Public Schools.
• The Capital Expenditures Committee (CEC) Report to the 2024 Annual Town Meeting, which provides
recommendations on appropriation requests for capital projects, and an analysis of the Town's long-term
capital planning.
• The Community Preservation Committee (CPC) Report to the 2024 Annual Town Meeting, which details
requests approved by the CPC that can be funded from the Community Preservation Fund.
The LPS Budget Book is available online at:
https://sites.google.com/lexingtonma.org/lps-finance-and-operations/fy-25-budget
All other reports for this Town Meeting will be available online at:
https://www.lexingtonma.gov/1934/2024-Annual-Town-Meeting
Acknowledgments
The content of this report, except where otherwise noted, was researched, written and edited by Committee
members who volunteer their time and expertise, and with the support of Town staff. We have the pleasure and the
privilege of working with Town Manager James Malloy; Assistant Town Manager for Finance Carolyn Kosnoff(an
ex officio member of our Committee); Budget Officer Rosalyn Impink; the Capital Expenditures Committee; the
Community Preservation Committee; the School Committee; the Permanent Building Committee; the Planning
Board; Superintendent of Schools Dr. Julie Hackett; Assistant Superintendent for Finance and Operations David
Coelho; and the Lexington Select Board. We thank the municipal and school staff, Town officials, boards and
volunteers who have contributed time and expertise to help us prepare this report.
This report was authored using Wdesk, a cloud-based application from Workiva that the Town licenses for use in
producing financial documents. This allows the report to be integrated directly with the Town's internal finance
database, so that budget figures and projections are updated and presented in a timely fashion.
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Introduction
The Appropriation Committee is required to create a report with a review of the budget as adopted by the Select
Board, including an assessment of the budget plan and a projection for future years' revenues and expenses. This
report includes the Committee's analysis and recommendations regarding all anticipated appropriations of funds,
and other financial matters that may come before Town Meeting. This report is distributed as an electronic
document via the Town website. The Committee also makes presentations during Town Meeting, including
recommendations on appropriations and other matters for which the Committee's formal position was pending at
the time of publication.
The Committee's goal is to publish its report at least one week prior to the start of the Annual Town Meeting
(ATM), with the understanding that financial articles could be taken up on the first night of the ATM. In addition to
the timing of this report,the Town's practice has been to publish the Brown Book at least four weeks in advance of
town meeting taking up financial articles. The Brown Book was published on Tuesday, February 20, and therefore
financial articles cannot be considered before Wednesday, March 20.
Committee Membership and Meeting Practices
There have been no changes in membership. Current members are listed on the cover of this report.
The Committee currently has eight members with one unfilled seat.
On March 20, 2023, Governor Healey signed legislation to allow remote and hybrid meeting options for public
bodies through March 31, 2025. The Committee has continued to meet remotely using the Zoom application.
Reserve Fund
The appropriation to the Reserve Fund in FY2024 was $750,000. The Committee has not yet received any requests
for Reserve Fund transfers during FY2024. Any unused balance will flow to free cash at the end of the fiscal year.
Note that the requested appropriation for the Reserve Fund in FY2025 has been increased to $850,000.
Developments Since Adoption of the FY2024 Budget
On July 10, 2023, the Committee reviewed final budget adjustments for FY2023 as recommended by Town staff.
The end-of-year(EOY)budget adjustments were to:
• Transfer$12,800 from "Town Manager-Professional Services"to "Property&Liability Insurance"
• Transfer $13,000 from "Select Board - Contractual Services" to "PEG Access - LexMedia Contractual
Services"
• Transfer$187,000 from the Salary Adjustment Account to "Police -Regular Wages"
• Authorize an increase to the spending limit of the Health Programs Revolving Fund by $10,000 from
$45,000 to $55,000.
The Committee approved the first two EOY transfers and the increase for the Health Programs Revolving Fund.
The transfer from the Salary Adjustment Account was approved by the Select Board and did not require the
Committee's approval.
The November 2023-1 Special Town Meeting included the following actions:
• Article 2 appropriated $402,987 from the tax levy for an unpaid bill from FY2023,the final payment of the
FY2023 annual assessment for the Minuteman Regional High School. This did not seriously impact the
FY2024 budget, as the unexpended funds from FY2023 had become available as free cash.
• Article 3 appropriated an additional$2,699,381 from the tax levy into the Capital Stabilization Fund (CSF),
of which $2,303,236 will become a recurring appropriation per the Town Manager's Capital Stabilization
Funding Framework.
• Article 4 made minor adjustments to the FY2024 operating budget and enterprise funds. Line 2600
Facilities - Building Maintenance was increased by $85,000 to cover maintenance expenses for several
small buildings that were not previously managed by the DPF. Appropriations for the Water and
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Wastewater Enterprise Funds were reconciled with the final MWRA assessments, resulting in decreases of
roughly$500,000 for each enterprise fund.
• Article 6 appropriated $187,927 from the Statewide Opioid Settlement into the General Fund. These funds
may only be used to fund opioid prevention, harm reduction, treatment and recovery programs, and will be
managed by the Health Department.
FY2025 Budget
Here we discuss some of the overarching factors that affect our Town finances and the proposed budget for the
upcoming fiscal year.
Budget Overview
The first two tables below are based on the Town Manager's Report in the FY2025 Recommended Budget and
Financing Plan (the "Brown Book"). They provide a comprehensive overview of the estimated revenue and
proposed budget for the coming fiscal year.
Revenue Source FY2024 FY2025 $ % %of
Tax Recap Projected Change Change Revenue
Property Tax Revenue $ 227,334,427 $ 236,032,572 $ 8,698,145 3.8% 80.0%
Tax Levy Dedicated to CSF $ 2,303,236 $ 4,036,373 $ 1,733,137 75.2% 1.4%
Tax Levy Dedicated to Pension $ 1,086,500 $ 1,113,663 $ 27,163 2.5% 0.4%
State Aid $ 19,633,417 $ 19,943,523 $ 310,106 1.6% 6.8%
Local Receipts $ 14,771,452 $ 16,115,992 $ 1,344,541 9.1% 5.5%
Available Funds $ 17,328,585 $ 18,473,850 $ 1,145,265 6.6% 6.3%
Revenue Offsets $ (1,890,555) $ (2,348,657) $ (458,102) 24.2% (0.8)%
Enterprise Receipts $ 1,894,067 $ 1,835,478 $ (58,589) (3.1)% 0.6%
Gross General Fund Revenues $ 282,461,129 $ 295,202,794 $ 12,741,665 4.5% 100.0%
Less -Revenue Set-Aside for $ 21,958,142 $ 20,475,778 $ (1,482,364) (6.8)% 6.9%
Designated Expenses
Net General Fund Revenues $ 260,502,987 $ 274,727,016 $ 14,224,029 5.5% 93.1%
The gross General Fund Revenue for FY2025 is projected to increase by 4.5%. State aid is estimated to grow by
only 1.6%this year. State aid in FY2024 grew by 7.1%, but the lower growth rate for the coming fiscal year was
anticipated.
Once the Town's "new growth" tax revenue is certified in the fall, the tax levy may increase resulting in higher
gross revenue, and creating free cash that may be appropriated at a subsequent special town meeting.
The following table summarizes the FY2025 recommended budget in comparison to FY2024.
Budget Program FY2024 FY2025 $ %
Appropriated Recommended Change Change
Education 1000 $ 138,232,221 $ 143,914,762 $ 5,682,541 4.1%
Shared Expenses 2000 $ 68,868,939 $ 72,296,815 $ 3,427,876 5.0%
Municipal Departments 3000-8000 $ 47,117,941 $ 49,056,323 $ 1,938,382 4.1%
Subtotal- Operating Budget $ 254,219,101 $ 265,267,900 $ 11,048,798 4.3%
Cash Capital $ 16,342,464 $ 16,775,891 $ 433,427 2.7%
Other(Approp.to reserves,misc.) $ 8,106,841 $ 8,008,968 $ (97,873) (1.2)%
Total - General Fund $ 278,668,406 $ 290,150,632 $ 11,482,225 4.1%
Tax Levy Dedicated to the Capital Stabilization Fund (CSF)
The Town continues to follow a budget guideline recommended by the Town Manager's Financial Guideline
Working Group, making annual appropriations into the CSF. The size of the appropriation is based in part on the
cumulative new growth in the tax levy from developments approved by town meeting in accordance with a
Preliminary Site Development and Use Plan or in the Hartwell Ave. commercial district since FY2022, and will top
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
$4 million for FY2025. In addition, any unused free cash that is available at special town meetings is usually
earmarked for the CSF. The CSF will play a crucial role in mitigating debt service for the Lexington High School
project.
ARPA Funds
Since the start of the pandemic, the Town has budgeted conservatively in order to be prepared for unexpected
financial shocks. While there have been some reductions in local receipts, driven largely by the downturn in
tourism and restaurant industries, commercial and residential development have continued at a strong pace. This
development has been responsible in large part for Lexington's continued fiscal growth. On top of that, Lexington
was granted about $9.9 million in federal funds under the American Rescue Plan Act (ARPA). These funds are
intended to support the local businesses and residents who were most negatively affected by the pandemic. The
ARPA grant is administered by the Select Board and is not subject to appropriation by Town Meeting. The
Committee has discussed the use of ARPA funds with the Select Board and we have raised no objections.
All remaining ARPA funds must be committed by December 31, 2024, and paid out no later than December 31,
2026. In this case, "committed" means "under contract". This has made it difficult to deploy ARPA funds for
certain purposes, such as the Lex250 Celebration, which is expected to require a lot of overtime pay for public
safety employees.
Lexington High School Project
The Town expects to present the results of the Feasibility Study for the replacement or renovation of Lexington
High School to the Massachusetts School Building Authority (MSBA) in late 2024. This is the third module of the
MSBA process which will "develop and evaluate alternatives, and recommend the most cost effective and
educationally appropriate preferred solution to the MSBA Board of Directors". An initial appropriation of
$1,825,000 for this work was approved at the April 2022-2 Special Town Meeting, and another appropriation for
$10 million will be requested under Article 26. This will fund at least three architectural designs to be presented to
the Town and the MSBA.
Program Improvement Requests
A Program Improvement Request (PIR) is part of the Town's process to develop an annual operating budget. The
Town first develops a "level service" operating budget that supports existing services at rates comparable to those
of the prior year. Each PIR is a proposal from a Town department to update or initiate new services funded by the
operating budget.
The Town Manager reviews and approves PIRs for the recommended municipal operating and shared expenses
budgets, and the Superintendent of Schools does likewise for the LPS operating budget. Once the complete
operating budget is approved by Town Meeting, the successful PIRs become part of the "level service" operating
budget in subsequent years. Thus, PIRs offer a transparent view into the growth of the budget beyond the core
economic drivers.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Below is a summary of recommended PIRs for the municipal budget using the General Fund. PIRs funded from
other sources, such as revolving funds, are not included. PIRs for the LPS are covered in the school budget and are
not listed here. The Brown Book's Appendix A provides a complete list of submitted PIRs, including those not
incorporated into the recommended operating budget.
Recurring General Fund Expenses
Line Program Description Funding
2600 Facilities AV Technician Upgrade $ 9,937
3100 Public Works Expanded Food Waste Collection Program * $ 396,000
3300 Public Works Assistant Superintendent for Public Grounds $ 103,023
4100 Law Enforcement Code Enforcement Officer $ 16,232
4200 Fire &Rescue Lieutenant Fire Inspector $ 113,009
7110 Building &Zoning Mechanical Inspector $ 68,555
8200 Town Manager's Office Chief Equity Officer Annual Budget $ 50,000
8200 Town Manager's Office Sustainability&Resilience Officer Annual $ 25,000
Budget
Energy Intelligence Dashboard and BEU-D
8200 Town Manager's Office $ 10,000
Reporting Support
8600 Innovation&Technology Applications & Systems Administrator Upgrade $ 6,499
TOTAL Recurring Expenses $ 798,255
*This project is not recommended from the General Fund in the FY2025 budget, but is a one-time expense that is being
recommended to be funded from ABPA funds.Funding in future years is expected to come from the General Fund.
We note the creation of two new positions that would facilitate the implementation of bylaws that may be updated
or expanded via articles on the warrant. The Assistant Superintendent for Public Grounds will help to enforce
bylaws governing the removal of trees, and the Code Enforcement Officer will help to enforce noise control bylaws
while also informing residents and businesses about the requirements imposed under these bylaws. The Lieutenant
Fire Inspector will improve responsiveness for inspections of new commercial construction, which has endured a
backlog during a recent period of more intense construction.
Updates
This report presents the official positions of the Committee as of the date of publication. The Committee will
continue to meet as necessary prior to and during Town Meeting and it may revise its official positions based on
new or updated information. The Committee also reports orally to Town Meeting on each article. The oral report
summarizes the Committee's final recommendation.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Warrant Article Analysis and Recommendations
2024 ANNUAL TOWN MEETING
Article 4 Appropriate FY2025 Operating Budget
Funds Requested Funding Source Committee Recommendation
See below See below Approve (8-0)
The Operating Budget is broken out by major categories based on budget line numbers below.
Education (1000)
Lexington Public Schools (1100)
Per the revised revenue allocation for the Lexington Public Schools (LPS) operating budget, an appropriation of
$140,508,367 is recommended for FY2025. The request represents an increase of 4.29% over the FY2024
appropriation.
The appropriation under this article does not include:
• The school portion of Shared Expenses (2000), below, including public facilities, employee & retiree
benefits,pension, debt service, liability insurance, and reserve funds.
• Revenue from federal, state, local, and private grants, or revolving and donation fund activity, none of
which are subject to appropriation by town meeting.
In those fiscal years when the requested budget is intended to support an increase in the total number of LPS
personnel,the revenue allocation process includes amounts for health insurance, Medicare, worker's compensation,
and other employee benefit costs associated with the new positions. Those funds are then appropriated in the shared
expenses part of the operating budget. The requested LPS budget for FY2025 is intended to support 8.61 fewer full-
time-equivalent (FTE) positions than in FY2024. Hence the requested amount for this line item reflects the full
amount from the revenue allocation process.
Further information about the budget request may be found in the "Education" section of the Brown Book and in
the LPS Budget Book (this refers to the "Lexington Public Schools Fiscal Year 2025, The Level Service and
Recommended Budget of the Superintendent of Schools"). Note, however, that since the Superintendent's
Recommended Budget book went to press in early January, it is not up to date in regard to the final amount
allocated to LPS in the revenue allocation process.
A breakdown of this operating budget into salaries and wages, and expenses is shown below.
Category FY2024 FY2025 $ %
Budget Recommended Change Change
Salaries &Wages $ 112,791,505 $ 120,852,942 $ 8,061,437 7.1 %
Expenses $ 21,938,740 $ 19,655,425 $ (2,283,315) (10.4)%
1100 Lexington Public Schools $ 134,730,245 $ 140,508,367 $ 5,778,122 4.3 %
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
School enrollments
The student population that the district serves includes the following categories:
• Pre-K in-district including special education and tuition-paying general education students;
• K-12 in-district general education and special education(including METCO);
• Pre-K-22 out-of-district placement.
The following table shows student enrollments for the past three years and the projected enrollment for the fall of
2024 (since we do not have a projection of pre-K enrollment,the entry with an asterisk is simply assumed to be the
same as on October 1, 2023). In the first year or two after the beginning of the pandemic, it was difficult to put
enrollment projections on a sound basis. However, as the following table shows, the student enrollment changes in
the last few years have been modest, which suggests that the projection for next year is unlikely to be very high or
low. It should be noted that the preschool program at Lexington Children's Place is more or less at capacity; several
pre-K students have been sent out-of-district due to space limitations.
Oct. 1,2021 Oct. 1,2022 Oct. 1,2023 Projected FY2025
Enrollment Enrollment Enrollment Enrollment
Early Childhood 67 75 76 76*
Elementary 2,702 2,702 2,674 2,644
Middle School 1,748 1,765 1,737 1,723
High School 2,273 2,303 2,318 2,341
Total 6,790 6,845 6,805 6,708
Salaries and Wages
In FY2025, salaries and wages are recommended to increase by $8,061,435 (7.15%) as a result of cost of living
adjustments, lane changes, and step increases. Salaries and wages make up 86% of the FY2025 request. The net
decrease of 8.61 full time equivalent (FTE) positions results from the elimination of 28.53 existing positions and
the creation of 8.20 positions due to enrollment changes, 10.73 positions to satisfy legal requirements or contractual
obligations, and 1.00 positions for physical education/wellness (all numbers are FTEs). Of the increase of 8.20
FTEs due to enrollment changes, eight (8.00) are system-wide unallocated slots held open for unpredictable shifts
in enrollment. Most of the 10.73 new positions are intended to level the teaching loads of the teachers at the High
School, a contractual obligation. The elimination of a net total of about 17 special education positions would occur
following significant increases in the numbers of positions for special education in fiscal years 2023 and 2024, and
was proposed following a detailed review of the current special education programs and projections of the numbers
and characteristics of the special education enrollment in FY2025. About 8 of the FTEs eliminated in the requested
budget would come from middle school staff—the middle school overall enrollments do not appear to be
rebounding from decreases that occurred several years ago. See the LPS Budget Book for a list of positions that will
be eliminated or created.
Salary and wage changes result from changes in the number of employees, step increases, cost of living adjustments
(COLA), and position reclassifications. The FY2025 budget includes both anticipated collective bargaining unit
settlements and increases for non-union positions. The effective dates of the most recent collective bargaining
agreements may be found in the LPS Budget Book on page 9 of the Executive Summary.
Expenses
Expenses make up 14% of the FY2025 budget request. Special education out-of-district tuition is the largest single
line in the expense budget (see the table on page 12 of the LPS Budget Book). Transportation costs for special
education students and the transportation costs for regular day students are the next two largest expense lines. After
these three expense lines, each of the others is much smaller,though there are many of them. We note that both this
and previous school appropriated budgets are based on projected net expenses after the application of revenue that
is not appropriated. Such revenue includes "Circuit Breaker" special education reimbursements and substantial
special education grant funds.
Funding Sources Not Subject To Appropriation
A large fraction of the School Department's annual budget is funded by appropriations made by town meeting.
However, LPS also receives substantial funding from state, federal and other sources that are not subject to
appropriation and are therefore not included in the request under this article. The amounts of these funds vary year
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
to year. Detailed information on grant revenue may be found on pages 165-184 in the LPS Recommended Budget.
The following is a brief summary of FY2025 grants.
• Federal Grants — In previous budget years (FY2023 and FY2024), the Town and schools benefited from
Covid-19 related aid through the federal CARES and ARPA acts. For FY2025,the School Department does
not expect to receive such funding again; however, a balance of $102,445 that is expected to remain
available from the ESSER III (part of ARPA) grant will expire on September 30, 2024 and must be fully
expended by the end of FY2025. The School Department also expects to receive $2,403,366 in other
federal grants.
• .State Grants—The School Department projects that it will receive $1,748,947 in FY2025 from the METCO
program, which represents no change from FY2024. The METCO enrollment is not quite at the target of
240 students. The projected METCO grant represents $7,287 per METCO student, based on 240 students.
Cherry-sheet local aid for education, i.e., Chapter 70 aid, is treated as General Fund revenue and is not
included in state grants. The School Department also expects to receive $100,000 from the "Comprehensive
School Health Services"grant.
• "Circuit Breaker"Reimbursements—We list Circuit Breaker funds here even though they are considered to
be reimbursements rather than grants. Circuit Breaker reimbursements are received from the state when the
costs of special education services for an individual student, whether in-district or out-of-district, exceed a
multiple of four times the statewide foundation budget. In the past, reimbursement rates have varied
between 35% and 75% of the tuition cost. Circuit Breaker reimbursement funds are paid to the district
quarterly based on the prior year's approved claims. Funds received go into the Circuit Breaker Revolving
Account, do not require further appropriation, and must be expended by June 30 of the following fiscal
year. The Lexington Public Schools' current practice is to apply a large fraction of the funds received in a
given fiscal year (based on SPED expenses in the prior fiscal year) as a revenue offset in the following
fiscal year. A detailed exposition of the LPS Circuit Breaker funding may be found in the LPS
Recommended Budget on pages 33-35 and 79-80.
• Other Grants — The School Department also receives a number of modest-size grants from the Lexington
Education Foundation and one from the Boston University Consortium.
Fee Programs
Fees for participation in certain programs, such as preschool, athletics, and transportation, support those programs
in whole or in part. Detailed information about the fees and proposed fee changes may be found on pages 32-33, 36,
and 194-195 of the LPS Recommended Budget.
Commentary
We note that this proposed budget may be significantly tighter than the school budgets in recent fiscal years. This
budget tightness is partly justified because the Special Education Stabilization Fund, with a balance of about $1
million, and the Special Education Reserve Fund, with a balance of about$750,000, provide backup in the event of
an unexpected large increase in special education costs. Even if no supplementary appropriation will be needed
during the course of the school year, the apparent reduction in budgetary margin suggests that any turn back from
unexpended funds at the end of the year may be smaller than in recent years. A smaller turn back would, in turn,
contribute less to the free cash that flows from the net results of the fiscal year.
Regional High School (1200)
Lexington's FY2025 projected assessment for the Minuteman Regional High School (MRHS) of $3,406,394
represents a decrease of $95,584 (-2.7%) from FY2024. It follows on the prior year's increase of 8.6% and an
increase of 3.0% from FY2022 to FY2023. Lexington's four year rolling average enrollment, the enrollment
number that our assessment is based on, grew from 69.5 to 74.75 students, and our assessment increase is lower
than the increase in the District budget because Lexington's four year rolling average enrollment has grown slower
than that of other in-district towns.
The District's Budget Overview
This budget is submitted by the new Interim Superintendent-Director Kevin Mahoney. The Minuteman Regional
High School (MRHS) Committee has approved a FY2025 budget of$31,517,219, a $1,200,894 increase (3.96%)
over FY2024. The increase is the net effect of a 4.7% increase in the cost of operations and a $76,375 increase in
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
the School Building Project debt costs. Debt service is 23.4%of the total budget, and salaries comprise over 47%of
the budget. Unlike the Lexington Public Schools operating budget, this budget includes debt service for major
capital projects.
According to FY2022 state data, MRHS continued to have the highest average per-pupil operating costs of any
Massachusetts regional vocational district (RVD). The cost drivers include a low FY2022 student/teacher ratio of
8.8 (the lowest, compared to an average of 10.66 for all RVDs), a very high enrollment rate in special education of
41%(the highest rate across all RVDs in the state), and a high average teacher compensation of$106,079 (the third
highest across all RVDs, compared to an overall average pay of$92,171).
District Developments
Due to unique financial circumstances, for this year only, the total member town assessment will grow at a slower
rate (0.82%)than the budget. This is occurring due to the current year's, FY2024, actual revenue being higher than
anticipated and actual expenses being lower than budgeted. FY2024 saw an unforeseen increase in per student
Chapter 70 aid, and lower than budgeted utilities and health insurance costs. These changes carry forward into the
FY2025 budget and additionally debt service grows at a lower than anticipated rate as the Athletic Facility debt
payments are shifted onto the new Facilities Revolving Fund instead of member assessments. Unfortunately, the
FY2026 and FY2027 assessments are anticipated to resume growth at higher rates more typical to prior years. This
is due to the continued decrease in out of district students, which in turn decreases the out of district tuition and
capital fees that Minuteman receives from these students.
This will be the sixth year of operations in the new school building, which was designed for an enrollment of up to
628 students. Current high school enrollment is 686 students. Of the total, 649 students come from the nine member
towns of the school district, and the remaining 37 students come from out-of-district communities. While the
number of applications for the incoming freshman class from in-district towns has stabilized, in-district students
seeking admission continue to far exceed the available seats for the incoming freshman class,meaning that some in-
district applicants and all out-of-district students will be waitlisted. Out-of-district enrollment in FY 2025 is
estimated to be 16, made up of just currently enrolled students. Based on applications received to date, total school
enrollment is expected to approach 698 students in September 2024.
Enrollment at Minuteman Regional High School
Enrollment FY 20* FY 21 FY 22 FY 23 FY 24 FY25 est.
In-district 395 467 538 610 649 682
Out-of-district 207 167 117 82 37 16
Total 602 634 655 692 686 698
*new school occupied
The School Committee reviewed space utilization and decided on limiting enrollment to accommodate graduating
classes of up to 175 students, for a total of 700 students, to match school building and learning space. The School
Building was not designed for their Animal Science program, which is currently located in a temporary space in an
adjacent building on campus. Minuteman posted a Request for Information (RFI) on February 9th, seeking a
partnership to build an Animal Science Clinic with 50% of the investment from the partnership to build out the
space. The scope of work is approximately $7,000,000 to renovate 6,000 square feet. State grant funding may be
available to support Minuteman's share. A similar partnership was attempted in 2022, but an agreement was not
reached. The current RFI submission deadline is in March, 2024, and a followup RFP may be posted soon
thereafter. The district has increased the contribution to their Capital Stabilization Fund to $850,000 in order to
position the District to maintain the potential use of the other on-site buildings without incurring any additional debt
and to save for future maintenance needs as the building ages.
The District has agreed to move forward with negotiations with Lesley University as its partner in the Athletic
Facility. Lesley uses the facility as its "home field", has first priority on booking the facility after the District uses
it, will pay a reduced rental fee for its use of the facility, and will have a financial stake in the Phase 2 development.
The contract for Phase 2 of the District's athletic facilities project, a $15 million construction of a field house, six
tennis courts, stadium seating (approx. 1,200 seats) with a press box, a building containing locker rooms,
bathrooms, a concession stand with a kitchen, storage spaces, and mechanical rooms, has been awarded. The RFP
calls for the construction and lease management of the athletic complex. Phase 2 will be done at no cost to the
District members. Rental income will be posted to the district's Facilities Revolving Fund and the revolving fund
revenue will be used to pay the debt service and maintenance of the athletic facility.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
The district's long-term capital and debt obligations last through FY2050 and are summarized in the chart below.
MRHS District Debt Service -FY2024-FY2051
$7,500,000
$5,000,000
$2,500,000
$0
't W) P,..... UJ O'v n e^1 m •-t u) 1,0 P'..... UJ O'v n e11 M •-t W) 1,0 P X O'v (n -•-+
1 1 1 1 1 1 e e e e e e e e e e y 1 1 1 1 1 '-h W) W)
T.., I::.T.., I::.r..., I::.T, I::.T.., I::.T.., I::.T.., I::.T.., I::.r..., I::.r..., I::.T, I::.T.., I::.T.., I::.T.., I::.T.., I::.T.., I::.r..., I::.T, I::.T.., I::.T.., I::.T.., I::.T.., I::.r..., I::.r..., I::.T, I::.T., I::.r...,
❑ School Bldg ❑ Athletic Facility 0 ESCO Lease
The obligations comprise three components with differing terms. The debt on the school building ends in FY2050,
that on the athletic facility ends in FY2041, and the ESCO Lease ends in FY2025. The annual ESCO Lease,with
annual payments of over$550,000, is a lease of energy saving equipment used in the prior school building and is
paid with assessments from the 16 member towns that were in the district when the lease began. Additionally,
member towns will not be assessed for the Athletic Facility debt, as revenue from the facility rentals will be used to
pay that debt.
District Budget Details
The FY2025 budget continues efforts to moderate member assessment growth while dealing with reductions in
revenue from out-of-district tuition and fees, all while addressing student education and wellness needs in the post-
pandemic world. The district is now able to accurately budget for the facilities needs of the new building after a few
years of actual costs.
The teachers' contract was settled in FY2024 with a 3.5%increase plus step and lane changes. Three grant-funded
positions are being brought back into the budget and,together with the elimination of 2 administration FTEs, yields
a net payroll decrease of approximately$35,000. Additionally, Minuteman is recommending continued funding of a
Foreign Language Teacher to support increased enrollment in Spanish classes and an Athletic Trainer to invest in
the Athletic Program to support training, weight-room management, and Massachusetts Interscholastic Athletic
Association regulations.
Utilities and heating expenses decreased $152,000. The Pupil Transport budget increases by $180,000 to cover a
5% CPI increase and to add a late bus for one more afternoon that will allow more students to access after school
activities.While health insurance rates are projected to rise,the health insurance budget is level funded because the
actual FY2024 total premiums were lower than budgeted. Cybersecurity enhancements are a major part of a
$152,000 increase in the Building Technology budget. A $315,000 payment (+$85,000) will be made toward the
funding of the district's $23,685,851 Other Post-Employment Benefits (OPEB)unfunded liability.
Roughly 18.5%of the revenue in the MRHS FY2025 budget comes from a combination of state aid, reserves, and
fees shown in the table below,up from 15.9%in FY2024,mainly due to increased Chapter 70 aid. In total,this non-
assessment revenue increases by $992,882 in FY2025. Chapter 70 funds and transportation aid are estimated based
on the Governor's H-2 budget. MRHS's Chapter 70 aid is projected to increase by 36.4% over the FY2024
budgeted amount due to increased per-student reimbursement. However, as stated above, actual FY2024 Chapter 70
aid came in at $2,978,763, so the FY2025 increase is only $20,000. Transportation Aid is expected to increase by
20.0%.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Revenue Sources FY2024 FY2025 Change
Chapter 70 $ 2,197,552 $ 2,998,383 $ 800,831
Transportation Aid $ 807,615 $ 969,305 $ 161,690
Prior Year Tuition $ 805,817 $ 818,824 $ 13,007
Excess and Deficiency(E&D)Funds $ 650,000 $ 650,000 $ -
Current Year Nonresident Capital Fee $ 373,430 $ 277,084 $ (96,346)
Facilities Revolving Fund $ - $ 113,700 $ 113,700
Assessments $ 25,481,911 $ 25,689,923 $ 208,012
TOTAL $ 30,316,325 IS 31,517,219 IS 1,200,894
Since Minuteman received $781,211 more in Chapter 70 aid for FY2024 than estimated for their FY2024 budget,
Minuteman officials will request permission at the April Minuteman School Committee meeting to apply
approximately $615,000 ($565,000 Principal + $50,000 Interest) of the $781,211 to pay down a portion of a
$2,800,000 building project Bond Anticipation Note (BAN). Minuteman officials have met with the town managers
from all of the member towns;the managers support the proposal. The remainder of the BAN, i.e., $2,235,000,will
be paid off in October 2024. This will result in savings over 5 years of approximately $145,000 in interest and will
allow a transfer of approximately$166,000 to the Minuteman Capital Stabilization fund.
The positive FY2024 budget developments of increased revenue and decreased expenses are expected yielded a
higher than expected Excess and Deficiency (E&D) balance of$1,571,861. The typical request of$650,000 from
the E&D Fund will be used to fund the FY2025 budget.
Lexington's Assessment
The revenue not raised through other sources, $25,689,923, will be raised through assessments on member towns.
Member towns are assessed a share of the District's total costs for the upcoming year, net of the District's non-
assessment revenue,based on four components:
1. The State Minimum Required Contribution(MRC) set annually by the DESE,
2. Transportation costs that are allocated based on the four-year average student enrollment,
3. An additional charge for operating costs in excess of the MRC and Transportation that is also allocated
based on the four-year average student enrollment,
4. Debt service costs from capital projects.
The first three assessment components fund the member's share of the school's operating costs. Debt service is
charged to member towns using a three-part formula. One percent of the debt service cost is assessed equally to
each of the nine member towns, and the remaining 91% is apportioned based on 50% of the most recent four-year
rolling average of student enrollment and 41%of the State's "combined effort" factor as determined by the Chapter
70 formula.
A breakdown of the Town's FY2024 and FY2025 MRHS assessments is shown below. The projected assessment
for FY2025 is $3,406,394, a decrease of$95,584 (-2.7%)from the final FY2024 assessment.
Projected Lexington Assessment-Based on Unapproved House-1 Budget Bill
Enrollment Basis Assessment Components Per-Student
FY2024 FY2025 FY2024 FY2025 FY2025
State-Required Minimum 78 82 $1,310,022 $1,395,070 $ 17,013
Regular Day Students* 69.5 74.75 $1,182,766 $968,913 $ 12,962
Transportation 69.5 74.75 $79,620 $85,012 $ 1,037
Total Operating Costs $ 2,572,408 $ 2,448,995
Debt Service 69.5 74.75 $ 929,570 $ 957,399 $ 12,808
TOTAL ASSESSMENT $ 3,501,978 $ 3,406,394
Annual%increase (decrease) 8.6% -2.7%
*Starred rows in this table use average enrollment over the prior 4 years, while non-starred rows use current
enrollment. The respective per-student amounts cannot be combined arithmetically.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
The FY2025 operating cost assessment per student (excluding debt service) works out to $29,866 (based on
Lexington's October 2023 enrollment of 82 students), a decrease from last year's per-student cost of$32,980. This
is comparable to the $31,234 average assessment for in-district students. Due to the assessment formula, during
periods of growing enrollment the assessed per-student amount lags behind short-term enrollment trends.
Enrollment from other member towns can also affect this figure, as Lexington's percentage of the total member
enrollment changes.
Changes to the projected revenues and budgeted expenses in the MRHS budget may follow publication of this
report. It is possible that the assessment will be adjusted prior to being presented to Town Meeting.
Shared Expenses (2000)
Shared Expenses covers appropriations for various activities that serve multiple departments but are managed or
carried out by a single office. Although these amounts do not appear in the budgets of LPS or individual municipal
departments, most are driven primarily by the complement of employees of or the facilities and capital equipment
used by the various departments. Others, including insurance premiums and payments related to solar energy
facilities, concern the overall operation of the Town.
As shown in the table below, 65%of shared expenses fund employee benefits,which are administered by municipal
staff, but which are driven by current and past staffing decisions made by both LPS and the municipal departments.
The second largest line item supports facilities managed by the Public Facilities Department for use by LPS and
municipal departments. The third largest line item is within-levy debt service,which is administered by the Finance
Department. Debt service is driven by current and past capital expenditures and financing decisions.
For FY2025, the appropriation for the Reserve Fund has been increased from $750,000 to $850,000. For a longer-
term history, see Brown Book Appendix C, "Summary of Reserve Fund Transfers."
Program FY2024 FY2025 % of $
2000 Description Restated Budget Shared Change Change
Expenses
2100 Employee Benefits &Insurance $ 45,622,435 $ 48,921,971 67.8 % $ 3,299,536 7.2 %
2200 Property&Liability Insurance $ 1,192,000 $ 1,340,800 1.9 % $ 148,800 12.5 %
2300 Solar Producer Payments $ 390,000 $ 390,000 0.5 % $ %
2400 Within-Levy Debt Service $ 6,854,101 $ 6,123,352 8.5 % $ (730,749) (10.7)%
2500 Reserve Fund $ 750,000 $ 850,000 1.2 % $ 100,000 13.3 %
2600 Facilities $ 14,060,403 $ 14,565,854 20.2 % $ 505,451 3.6 ON
Total $ 68,868,939 $ 72,191,977 100.0 % $ 3,323,038 4.8 %
The recommended total Shared Expenses budget for FY2025 is $72,191,977, representing an increase of
$3,323,038 or 4.8%from the restated amount for FY2024.
Employee Benefits & Insurance (2100)
As shown in the table below, Line 2100 includes costs for retirement; health, dental, and life insurance; workers'
compensation, unemployment insurance, and the Medicare tax. The total request for Employee Benefits and
Insurance is $48,921,971, a$3,299,536 (7.23%) increase over the FY2024 appropriation. The table below provides
a breakdown of the benefits budget by category.
Benefits Category Amount Percent of Total
Retirement $ 10,743,076 21.96 %
Medicare $ 2,305,030 4.71 %
Health Insurance $ 33,947,889 69.39 %
Dental Insurance $ 1,200,976 2.45 %
Life Insurance $ 25,000 0.05 %
Unemployment $ 200,000 0.41 %
Workers Compensation $ 500,000 1.02 %
Total $ 48,921,971
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
All of the appropriation for retirement will go toward the contributory retirement (pension) program, i.e., into the
Retirement Fund; as of FY2024, there are no retirees who receive non-contributory retirement benefits. The
appropriation will address both current year payouts from the Retirement Fund and an amount that moves the Fund
toward full funding of the Town's pension liabilities. To fully fund these liabilities, the Retirement Board has
increased the planned appropriations into the Retirement Fund and has stretched out the funding schedule by two
years, i.e., to 2030. For FY2025, the recommended contributory retirement appropriation is increasing by 7.6%to
$10,743,076. Of that amount, $400,000 will be funded from Free Cash, as was done for FY2024. In the Retirement
Board's present plan the appropriations under this line item will increase by about $750,000 per year until 2030.
Once the full funding goal is reached, and, assuming the full-funding status is maintained, the annual costs for
contributory retirement will be significantly lower.
Health insurance costs make up the bulk of the Employee Benefits budget. The FY2025 request for health insurance
is $33,947,889, which represents a 7.4% increase over the revised appropriation for FY2024. The Town remains a
member of the State's Group Insurance Commission (GIC) health insurance program, which has helped hold down
the rate of cost increases. Since joining the GIC program in FY2016, the split of healthcare premiums between
employer and subscribers has been 82/18 or 75/25 depending on the health plan chosen by the employee (the town
pays a larger share for employees who choose a lower cost plan). The Brown Book, on pp. IV-6 and IV-7, contains
a discussion of health-benefit costs,including changes in the numbers of subscribers since FY2020.
Solar Producer Payments (2300)
This line item reflects payments for the installation and operating costs of the solar array at the Hartwell Ave
compost facility. Against the annual cost of$390,000, which covers both the initial capital cost and maintenance
costs, staff estimates that the array will generate net-metering credit payments from the electric utility Eversource,
payments in lieu of taxes, and a small amount of lease income. Netting out expenses, the array is projected to
generate a positive contribution to the General Fund of$366,400.
Note that this budget item does not include the Town's rooftop solar arrays and payments in lieu of taxes for the
solar operations, which are recorded under personal property taxes per requirements of the Massachusetts
Department of Revenue. The Brown Book tables on p. IV-11 present a more complete set of estimates for the
Town's solar installations,with projected net revenues of$570,400 in FY2025.
Debt Service (2400)
Line item 2400 covers annual payments for within-levy debt service. Gross within-levy debt service is projected to
be $6,123,352, a ($730,749) decrease from the FY2024 appropriation. With the goal of saving interest costs, the
Town In recent years has reduced the issuance of new within-levy debt and increased the cash capital program.
The Town must also make annual payments for the debt service on excluded debt, i.e., debt exempted by Town-
wide referendum from the limits of Proposition 2'V. The funds for these payments are not appropriated by Town
Meeting but are set by the Select Board to provide sufficient funding when it sets the tax levy. The Town has drawn
on the Capital Stabilization Fund to mitigate the impact of exempt debt service when it reaches peak levels,
effectively providing tax relief by lowering the total tax levy that must be collected.
Reserve Fund (2500)
The Reserve Fund is a small fund reserved for time-critical, extraordinary and unforeseen expenses. Once
appropriated, it can be used during the fiscal year without further approval from town meeting. Requests for
transfers from this fund are generally initiated by Town staff, LPS staff or the Select Board but require approval by
the Appropriation Committee.
The FY2025 requested appropriation for the Reserve Fund is $850,000.
At the end of the fiscal year any unused funds in the Reserve Fund flow to Free Cash.
Public Facilities (2600)
The Department of Public Facilities manages the operation, maintenance, utilities, and custodial services for
Lexington's municipal and school buildings. It also manages the maintenance of roofs, building envelopes, and all
building systems, including HVAC, as well as other priority facility-related projects. Finally, the Department
supports the planning of major renovations, building replacement, or new building construction. The FY2025
Public Facilities General Fund operating budget of$14,565,854 represents a 3.59%increase over FY2024.
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Municipal (3000-8000)
The municipal operating budget comprises all line items from 3000 to 8999. As shown in the table below, the
FY2025 recommended budget of$49,056,323 represents a $1,938,382 or 4.11% increase. The largest components
within the municipal budget are Public Safety, Dept. of Public Works, and General Government.
Municipal Budgets FY2024 FY2025 $ %
Restated Recommended Change Change
3000 Public Works $ 12,717,509 $ 13,015,106 $ 297,597 2.34%
4000 Public Safety $ 17,144,601 $ 18,826,223 $ 1,681,622 9.81%
5000 Culture &Recreation $ 3,385,820 $ 3,460,565 $ 74,745 2.21%
6000 Human Services and Health $ 2,229,011 $ 2,059,087 $ (169,924) (7.62)%
7000 Land Use,Housing &Development $ 2,399,116 $ 2,442,606 $ 43,490 1.81%
8000 General Government $ 9,241,884 $ 9,252,736 $ 10,851 0.12%
Total $ 47,117,941 $ 49,056,323 $ 1,938,382 4.11%
Public Works (3000)
This article covers the portions of the Public Works budget lines 3100-3500 that are supported through the General
Fund. Spending for Public Works operations in these areas is also covered by several revolving funds, with
authorization provided under Article 9. The budgets for the Water and Sewer Divisions, lines 3600 and 3700,which
are part of the respective enterprise funds,will be acted on under Article 5.
The recommended appropriation of$13,015,106 for Public Works under this article represents a 2.34% increase
over FY2024. Of the total, $11,963,944 is covered by the tax levy, $652,612 is covered by payments from the
enterprise funds for services rendered, and the remainder, i.e., about$400,000, comes from other sources, primarily
fees and the Cemetery Trust Fund. About 40% of the recommended budget is for compensation, i.e., salaries and
wages, while the remaining 60% is for expenses. The FY2025 request includes funding for a new full-time,
benefited Assistant Superintendent of Public Grounds position.
The net increase in compensation of$221,139 (4.41%) from FY2024 is attributable to the cost of contractually
obligated step increases and cost of living adjustments.
The net increase in expenses is $76,458 (0.99%)from FY2024.
Public Safety (4000)
Public Safety covers Law Enforcement(4100) and Fire and Rescue (4200). Of the total recommended appropriation
of$18,826,223, about 51%is for Law Enforcement and 49%for Fire and Rescue.
The recommended FY2025 appropriation for Law Enforcement is $9,536,323 which is a 5.46% increase over the
FY2024 budget. About 87% of the budget is for compensation and approximately 13% is for expenses. The net
increase in compensation of $464,464 (5.90%) meets contractually obligated step increases, cost of living
adjustments, stipend increases and education incentives for contracts that recently settled. Compensation also
includes funding for a new part-time, non-benefited, non-uniformed Code Enforcement Officer position in FY2025
who is expected to respond to complaints including those related to the gas powered leaf blowers amendment to the
noise bylaw. The net increase in expenses is $29,329 (2.50%) reflects costs of moving to hybrid and electric
vehicles as well as a number of minor other changes.
The recommended FY2025 appropriation for Fire and Rescue is $9,289,900, which is a 14.66% increase over the
FY2024 budget. About 90% of the budget is for compensation while approximately 10% is for expenses. The net
increase in compensation of $1,116,745 (15.33%) reflects three years of contractually obligated cost of living
adjustments, new steps and education incentives that were included in the recently settled collective bargaining
agreement. Also included is the new full-time, benefited Lieutenant Fire Inspector position to address the backlog
in inspections which exists due to the growth in commercial development. The recommended budget for expenses
has increased by $71,084 (8.71%) due to anticipated increases in contract services,mileage costs, equipment repair,
and EMS supplies.
13
2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Culture and Recreation (5000)
Culture and Recreation covers Cary Memorial Library and Recreation and Community Programs. The FY2025
recommended appropriation of$3,460,565 represents a 2.21%increase over the FY2024 budget. About 79%of the
recommended budget is for compensation while the remaining 21% is for expenses. Note that the budget to be
appropriated under this article is only for the Cary Memorial Library. The Recreation and Community Programs
budget is funded under Article 5 by the Recreation Enterprise Fund and,to a lesser extent,by the tax levy.
Human Services and Health (6000)
The recommended appropriation for Human Services and Health of$2,059,087 represents a(7.62)%decrease from
the FY2024 budget. The Human Services General Fund appropriation request is $1,513,939 which is made up of
50% for compensation and 50% for expenses. In addition to this appropriation, Human Services is funded by a
Massachusetts Office of Elder Affairs grant, Veteran's Services Regional Funding, an MBTA Suburban
Transportation grant, and the Senior Services Revolving Fund(see Article 9).
The net increase in compensation for Human Services is $1,699 (0.23%). The net decrease in expenses of
$(189,458) or (19.88)%reflects the receipt of a one-time Community Transit grant of$200,000. If this grant is not
received in future years that cost will return to the General Fund. The current Lexpress contract has been extended
through June 30, 2025.
In FY2024,the Health Department was moved from inside the Land Use, Health, and Development Department to
a stand-alone department alongside Human Services.
The recommended appropriation for Health of $545,148 represents a 3.38% increase from the FY2024 budget.
About 84% of the recommended budget is for compensation while 16% is for expenses. The increase in
compensation of $31,585 (7.41%) is due to the cost of contractually obligated step increases and cost of living
adjustments.
The Health Department's work on vaccine clinics, etc., is also funded through the Health Programs Revolving Fund
and its regulatory work is partly funded through the Lab Animals Permits Revolving Fund.
Land Use, Housing, & Development (7000)
The recommended appropriation of$2,442,606 represents a 1.81%increase over the FY2024 budget. About 84%of
the recommended budget is for compensation while 16% is for expenses. The net increase in compensation of
$31,076 (1.53%) is driven by contractual step changes and cost of living adjustments. The net increase in expenses
of$12,414 (3.31%)is due to the addition of a new position of Mechanical Inspector in Building and Zoning, and an
increase in contract expenses for the Economic Development Office.
General Government (8000)
General Government covers six different budgeting units. The recommended appropriation of $9,252,736
represents a 0.12%increase from the FY2024 budget.
Program 8000 General Government FY2024 FY2025 $ %
Restated Budgeted Change Change
8100 Select Board $ 1,334,327 $ 1,388,634 $ 54,307 4.07%
8200 Town Manager $ 2,210,252 $ 1,839,019 $(371,233) (16.80)%
8300 Town Committees $ 66,208 $ 72,910 $ 6,702 10.12%
8400 Finance $ 2,115,172 $ 2,147,178 $ 32,006 1.51%
8500 Town Clerk $ 597,360 $ 680,819 $ 83,459 13.97%
8600 Innovation&Technology $ 2,918,565 $ 3,124,175 $ 205,610 7.04%
Total $ 9,241,884 $ 9,252,736 $ 10,851 0.12%
The Select Board budget increase is primarily due to increased expenses for LexMedia, the Town's public access
television provider as well as an increase of$3,000 in the contracted expense for the Town's annual financial audit.
Line 8200 Town Manager includes $294,179 for the Salary Adjustment Account, line 8230. The amount budgeted
for this item varies from year to year depending on the status of collective bargaining settlements, other anticipated
14
2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
wage increases, and compensated leave payments due certain employees at retirement. This year's increase is
substantially less than prior years as many of the Town's bargaining units are under contract through FY2025.
Line 8500 Town Clerk has an increase of$83,459 or 13.97% increase from the FY2024 budget. This increase is
due to the number of elections during FY2025; there will be four in total, including the Presidential election, all of
which allow for early voting by mail.
Line 8600 Innovation & Technology has an increase of $205,610 or 7.04% to cover a number of changes in
technology purchases. Please see the Brown Book (page X-24)for details.
Article 5 Appropriate FY2025 Enterprise Funds Budgets
Funds Requested Funding Source Committee Recommendation
$13,249,071 Water EF
$12,878,599 Wastewater EF
$3,131,959 Recreation EF Approve (8-0)
$272,708 Tax Levy
The current appropriation requests and requests from the past two years are summarized in the following table.
Enterprise Fund FY2023 FY2024 FY2025
Appropriated Appropriated Requested
a.Water
Personal Services $769,073 $892,639 $971,418
Expenses $454,419 $577,500 $614,400
Debt Service $1,195,179 $2,375,661 $1,386,157
MWRA Assessment $8,493,467 $9,342,814 $10,277,096
Total Water Enterprise Fund $10,912,138 $13,188,614 $13,249,071
b.Wastewater
Personal Services $348,279 $421,922 $464,858
Expenses $335,965 $517,400 $536,400
Debt Service $1,561,467 $1,406,381 $1,592,858
MWRA Assessment $8,432,789 $9,349,530 $10,284,483
Total Wastewater Enterprise Fund $10,678,500 $11,695,233 $12,878,599
c. Recreation and Community Programs
Personal Services $1,449,636 $1,682,935 $1,824,916
Expenses $1,318,614 $1,588,814 $1,579,751
Total Recreation and Community $2,768,250 $3,271,749 $3,404,667
Programs Enterprise Fund
This article addresses the operating budget of the Town's three enterprise funds: the Water Enterprise Fund, the
Wastewater Enterprise Fund, and the Recreation Enterprise Fund.' Enterprise funds allow a municipality to account
separately for certain "business operations" in which a fee is charged in exchange for goods or services, and it may
or may not receive support from the tax levy. For an overview of the legal framework and accounting concepts that
apply to the operation of an enterprise fund,please see Appendix B.
The operating and capital costs of the Water and Wastewater enterprises are funded exclusively by rates and fees
charged to users, with no support from the tax levy or General Fund. The operating costs of the Recreation Fund
' Capital appropriations for the enterprise funds are addressed in Articles 10 (CPA), 11 (Recreation Capital), 12 (Municipal
Capital), 13 (Water System Improvements), 14 (Wastewater System Improvements) and 15 (Pine Meadows Clubhouse
Renovations).
15
2024 ATM APPROPRIATION CoNMTTEE 13 MARCH 2024
enterprise are funded to the extent feasible by user fees, but also receive subsidies from the General Fund.
Recreation capital projects are funded from the Community Preservation Fund whenever feasible, and if such
funding is not available,from the Recreation Fund's retained earnings or the General Fund.
Water and Wastewater Enterprise Funds
Most of the costs in the water and wastewater operating budgets are appropriated under this article, per the table
above. Certain other recurring costs, however - including "indirect expenses" (for support services provided by
other Town departments), cash to be raised in the rates for continuous system capital improvements, and
contributions to the post-employment health benefits (OPEB) fund - are addressed in other articles. For
completeness, the table below summarizes all of the line items which comprise the annual water and wastewater
operating budget, showing changes from the prior fiscal year and the articles under which each item is appropriated.
Further details may be found in the Brown Book,pp. V-28, 32. Including these changes more accurately reflects the
actual year-over-year increases in the water and wastewater budgets.2
Water Enterprise Fund FY2024 FY2025 $ %
Appropriated Requested Change Change
Compensation $ 892,639 $ 971,418 $ 78,779 8.83 %
Expenses $ 577,500 $ 614,400 $ 36,900 6.39 %
Debt Service less FY24 BAN $ 1,075,660 $ 1,386,157 $ 310,497 28.87 %
MWRA Assessment $ 8,832,742 $ 8,449,930 $ (382,812) (4.33)%
Total Requested in Article 5 $ 11,378,541 $ 11,421,905 $ 43,364 0.38 %
Indirect Expenses (Article 4) $ 1,011,340 $ 968,301 $ (43,039) (4.26)%
Cash Capital/BAN (Article 13) $ 800,000 $ 1,000,000 $ 200,000 25.00 %
OPEB Contribution (Article 17) $ 2,761 $ 3,045 $ 284 10.29 %
Total Water Enterprise $ 13,192,642 $ 13,393,251 $ 200,609 1.52 %
Wastewater Enterprise Fund FY2024 FY2025 $ %
Appropriated Requested Change Change
Compensation $ 421,922 $ 464,858 $ 42,936 10.18%
Expenses $ 517,400 $ 536,400 $ 19,000 3.67%
Debt Service $ 1,406,381 $ 1,592,858 $ 186,477 13.26%
MWRA Assessment $ 8,861,891 $ 9,211,238 $ 349,347 3.94%
Total Requested in Article 5 $ 11,207,594 $ 11,805,354 $ 597,760 5.33%
Indirect Expenses (Article 4) $ 588,040 $ 596,525 $ 8,485 1.44%
Cash Capital (Article 14) $ 400,000 $ 500,000 $ 100,000 25.00%
OPEB Contribution (Article 17) $ 3,004 $ 609 $ (2,395) (79.73)%
Total Wastewater Enterprise $ 12,198,638 $ 12,902,488 $ 703,850 5.77%
On a combined basis, these "adjusted"water and wastewater budgets are increasing by 3.6%. The most significant
components of the increase are addressed briefly below. A small net decrease in the Town's combined MWRA
assessments (see below) has a positive impact. The continuation of a long-term plan to transition the funding of the
enterprises' recurring capital investment programs from debt to cash raised in the rates (see below) increases the
combined budget by about 1.25%,but should ultimately result in cost savings to rate-payers.
NIWRA Assessment. The largest component of both the water and wastewater budgets is the assessment charged by
the Massachusetts Water Resources Authority (MWRA), which now represents about 70% of the total combined
budget. As shown in the table immediately above, those assessments are changing by -4.33% and 3.94%
2 This table also differs from the Brown Book and the motion under Article 5 in three important respects: (1) it replaces the
FY2025 MWRA assessments,which are based on 10%"placeholder"increases over last year's initial appropriation,with the
smaller preliminary assessments recently issued by the MWRA; (2) it replaces the FY2024 MWRA assessments with the
actual, final assessments to which the original appropriations were amended at last fall's special town meeting; and (3) it
reduces the FY2024 water debt service line item by $1.3 million to reflect a one-time payoff of a$1.3 million BAN which
was financed by repurposing$800,000 originally to be raised in the rates as cash capital(double-counted in the Brown Book)
and a$500,000 draw from retained earnings which will not be repeated in FY2025.
16
2024 ATM APPROPRIATION CoNMTTEE 13 MARCH 2024
respectively, for a combined decrease of-.19%. This decrease,which compares favorably with an MWRA system-
wide increase of about 3.0%, results from a decrease in Lexington's system share. The Town is assessed a share of
the MWRA's total FY2025 water budget based on its proportionate usage in the most recent full calendar year
(CY2023) relative to other towns in the MWRA community. (The wastewater share formula is similar but a bit
more complicated.) In CY2023, Lexington's water system share fell by about 16%, reflecting a significant drop in
irrigation usage during last year's wet summer. The decrease results primarily from Lexington's pattern of
fluctuating irrigation usage, compared with other more urban towns in the MWRA community where water usage is
more stable. It may also reflect a trend of declining water use in Lexington due to conservation measures.
Transition to Cash Capital. Beginning in FY2021, a plan was initiated to transition the funding of regularly
recurring capital investments in the Town's water and wastewater systems (targeted at $2,200,000 annually for the
water system and $1,000,000 annually for the wastewater system) from borrowing to cash raised in the rates
(referred to in the Brown Books as "cash capital"). Since the intent is ultimately to fund the entire cost of the annual
capital investment program with cash raised in the rates, the cash component is treated as an ongoing operational
cost at rate-setting, much like debt service, even though applied to capital investment and appropriated in Articles
13 and 14. See Brown Book, pp. V-28, 32. To minimize the impact of the changeover on rates — which would be
significant if done on a one-time basis—the transition is being phased in gradually: in the case of the water fund,by
adding an additional $200,000 in "cash capital" each year for eleven years; and in the case of the wastewater fund,
$100,000 per year for ten years. See the Brown Book, pp. V-27 and V-31.3 The transition currently adds about
1.6%to the increase in the water fund budget and 1%to the increase in the wastewater rate budget, for a combined
impact of 1.2%. As the phase-in proceeds, the reduction in debt service will gradually offset the increase in cash
capital costs, reducing the impact on annual budget increases and saving interest costs.
Water and Wastewater Rate-Setting Issues
Because increases to the operating budgets of the water and wastewater enterprises approved at this annual town
meeting will ultimately translate into increases to the FY2025 water and wastewater rates when set later in the year,
a brief comment on the rate-setting process and the impact of this year's budget is in order.
Next fall, the Select Board will conduct rate hearings and set water and wastewater rates for FY2025. Two main
components factor into the rates: (1) the approved budget for the fiscal year; and (2) estimates of the amount of
water which will be consumed during FY2025 by Lexington residents at each of the three graduated "tiers" of
usage, as well as by certain other users for which Lexington serves as a conduit, primarily the Town of Bedford,the
Bedford VA hospital, and Hanscom Air Force Base/Lincoln Labs.
The goal at rate-setting is to establish rates which will generate sufficient revenue, given the anticipated usage, to
cover the budget established by Town Meeting for the fiscal year. If projected water usage is unchanged from the
prior fiscal year, then the required rate increase for each enterprise should generally match the year-over-year
increase in the budget approved by Town Meeting. If anticipated water usage increases from the prior fiscal year,
the required rate increase may be lower than the increase in the budget; and if anticipated water usage decreases,the
rate increase must be higher since most of the water and wastewater funds' costs are fixed,not variable.
By and large, water and wastewater rate increases have been relatively modest for more than a decade. From
FY2010 through FY2024, combined rate increases fluctuated between -1.9%and 12.6%for an average annual rate
increase of 3.9%. If there are no significant changes in projected usage in FY2024,this fall's rate increase should be
about the same. It should be noted, however, that there has been a recent trend of declining water usage for non-
irrigation purposes as plumbing fixtures are modernized and residents pay more attention to water conservation. If
that trend continues,a somewhat higher rate increase could be required in FY2025.
To minimize the risk of an operating loss, anticipated water usage is estimated conservatively. This means that the
water and wastewater funds typically generate revenue in excess of the amount assumed for the budget. The
disposition of that surplus revenue, or"retained earnings,"is discussed below.
3 As noted in footnote 2, the $800,000 originally anticipated to be raised in the FY2024 rates for the capital investment
program was repurposed to pay down a$1.3 million bond anticipation note (BAN)incurred for a one-time copper/lead pipe
replacement project, and the capital investment program was suspended in FY2024. The $1 million in cash capital to be
raised in the FY2025 rates will again fund the capital investment program.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Water and Wastewater Retained Earnings
Accumulated surpluses resulting from the operations of an enterprise fund, referred to as "retained earnings",
remain with the fund as a reserve, and may be used only for capital expenditures of the enterprise, subject to
appropriation, or to reduce user charges. See Appendix B. Deficits must be funded with existing reserves or, in the
absence of such reserves, made up in the following year's rates. The Town's policy is to maintain a balance of
approximately $1 million of retained earnings in each fund as a buffer against revenue shortfalls resulting from
unexpected reductions in usage or unanticipated extraordinary expenditures. Retained earnings in excess of that
amount are now typically applied to help fund capital projects in lieu of debt. The table below shows how the
balance of retained earnings has been deployed over the past several years and their proposed appropriation at this
ATM for FY2025.
Retained Earnings: Appropriations and Year-End Balances
Annual Town Meeting 2021 2022 2023 2024
Water
Starting Balance(I) $ 1,737,914 $ 3,537,851 $ 769,999 S 3,216,062
Appropriation for Rate Relief 77 — — — —
Appropriation for Capital $ 520,000 $ 1,820,000 $ 575,000 $ 1,488,900
Projected End Balance(4) $ 1,217,914 $ 1,717,851 $ 194,999 1,727,162
Wastewater
Starting Balance $ 1,297,665 $ 2,565,157 $ 1,807,854 $ 1,625,447
Appropriation for Rate Relief — — — —
Appropriation for Capital $ 110,000 $ 1,365,000 $ 715,404 $ 310,000
Projected End Balance(4) $ 998,736 $ 1,187,665 $ 1,092,450 1,315,447
(1) Certified retained earnings as of the end of the prior fiscal year (for this year, 6/30/2023) and available for
appropriation at this annual town meeting
(2) The Town's former practice of appropriating from retained earnings to subsidize the next fiscal year's operating
budget has been discontinued since FY2015.
(3) Proposed appropriations for capital projects for the next fiscal year (FY2025 at this ATM). Note that such
appropriations must be deducted as a liability from the projected retained earnings as of the end of the current
fiscal year even though the funds appropriated will not be spent until the following year.
(4) The projection of the retained earnings balance available at the end of the fiscal year assumes break-even
operational results, i.e., no surplus or deficit. A higher (lower) starting balance available for appropriation the
following year indicates that the current year's operating results were higher(lower) than were projected at rate-
setting,resulting in an operating surplus(deficit).
As can be seen from the table, the water retained earnings balances as of the end of FY2023 have rebounded
substantially from the prior fiscal year. The increases are attributable to favorable FY2023 operating results as
usage, particularly for irrigation, came in significantly in excess of projections due to the unusually dry summer of
2022; and interest earnings came in higher than expected due to increasing market interest rates. The water fund
experienced an FY2023 operating surplus of$3,094,855, and the wastewater fund experienced an operating surplus
of $631,476. The projected end balances in each of the funds, after capital appropriations at this ATM, are
substantially higher than the $1 million target for each fund but are prudent in view of last year's extraordinarily
wet summer and the negative effect it will likely have on FY2024 operating results.
Recreation Enterprise Fund
The Recreation Enterprise Fund, or Recreation Fund for short, has for many years been the principal source of
funding for the Town-sponsored recreational programs for residents, most of which are fee-generating. Prior to
2015, recreation activities were managed by the Recreation Department and both the Department and the activities
were financed entirely through the enterprise fund. In 2015, following the inauguration of the Lexington
Community Center(LCC),the Recreation Department was reorganized to include responsibility for the Community
Center and renamed the Department of Recreation and Community Programs (the Department or DRCP). The
Department now comprises four divisions: Recreation, Pine Meadows Golf Club, Community Center, and the
Administrative Division.
Historically, the Recreation Fund's operating budget was supported solely by program and facility fees. With the
opening of the LCC, however, which added the cost of several full-time employees to provide programming
18
2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
available to all residents that is not generally supported through fees, a decision was made to appropriate from the
tax levy the additional amount necessary to cover those costs. The original appropriation from the tax levy for this
purpose in FY2016 was $217,000 and$272,708 is requested this year, a modest increase over nine years.
The proposed appropriations for FY2025, and changes from the prior fiscal year, are shown in the table below. The
total FY2025 budget is about$150,000, or 4%,more than the appropriated FY2024 budget. The main contributor to
the change is an 8.4% increase in compensation expenses, reflecting step increases and cost-of-living adjustments,
and a wage rate increase for seasonal staff hired for camp and other recreational programs during the summer. It
also includes funding to transition the recently added part-time Recreation Coordinator to a full-time, benefited
position.
Recreation and FY2023 FY2024 FY2025 $ %
Community Programs Actual Approp. Requested Change Change
Compensation $ 1,449,636 $ 1,682,935 $ 1,824,916 $ 141,981 8.44%
Expenses $ 1,318,614 $ 1,588,814 $ 1,579,751 $ (9,063) (0.57)%
Debt Service – – – $ —
Total Requested in Article 5 $2,768,250 $3,271,749 $3,404,667 $ 132,918 4.06%
Indirect Expenses (Article 4) $ 286,104 $294,687 $ 308,991 $ 14,304 4.85%
Total $ 3,054,354 $ 3,566,436 $ 3,713,658 $ 147,222 4.13%
The sources of funds to support the FY2025 operating budget of the Department, including the tax levy, are as
follows:
Funding Source Amount
Recreation Enterprise Fund $ 375,000
Recreation user charges $ 1,730,340
Community Center user charges $ 330,000
Pine Meadows Golf Club user charges $ 1,005,610
Tax levy $ 272,708
Recreation and Community Center user charges are projected to be flat, but golf user charges are projected to
increase by 12%, reflecting strong demand for golfing recreation.
The projected distribution of expenses in FY2025 among the four divisions of the department is as follows:
Expense Amount
Recreation $ 1,497,709
Pine Meadows Golf Club $ 618,000
Community Center $ 694,997
Administration $ 593,961
Fee-Setting. The Director of Recreation and Community Programs and the Recreation Committee set fees from
time to time for use of the Town's playing fields, gyms, other recreational facilities, and for certain recreational
programs with the goal of covering all operating costs of those fee-generating activities. The proposed fees are
subject to the approval of the Select Board. If actual revenues come in higher than projections,the resulting surplus
becomes part of the Recreation Enterprise Fund's retained earnings and can be used for future operating expenses,
capital costs of the enterprise,to lower fees, or to absorb future losses.
Retained Earnings. The Recreation Fund's retained earnings, certified as of the end of FY2023 (6/30/23), are
$1,913,671, compared with $2,325,698 as of the end of FY2022. As is customary, $375,000 of the retained
earnings are requested for appropriation under this article to fund the operating budget. An additional $110,000 is
requested for appropriation under Article 11 (Recreation Capital)to fund ongoing Pine Meadows improvements.
Capital Costs. The capital costs of the Recreation Fund are covered, to the extent projects are eligible under the
Community Preservation Act (CPA), by the Community Preservation Fund. This year's CPA-funded projects, for
which appropriations totaling $2,342,000 are sought under Article 10, consist of Lincoln Field improvements,
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Lincoln Park Fitness Stations Equipment, and Park Improvements for hard court surfaces and athletic fields. For
more detail on these projects, see the discussion of Article 10 (CPA)below.
Capital projects not eligible for CPA funding may receive support from the General Fund through the appropriation
of free cash, within-levy debt or excluded debt, and may also be supported by the Recreation Fund's retained
earnings to the extent feasible. This year, the portion of the Lincoln Field improvements which relate to the
installation of artificial turf, and thus are not CPA-eligible, are proposed for funding by Free Cash. Capital costs of
the Pine Meadows Golf Club are typically funded from retained earnings attributable to golf user fees, as is the case
this year with the proposed appropriation under Article 11 (Recreation Capital) of$110,000 in retained earnings for
course improvements.
Looking Forward. Concerns were expressed in previous years that additional tax levy support, beyond that required
for the operations of the Community Center,might be required due to the stress placed on the Recreation Enterprise
Fund by closures required during the pandemic. With a strong recovery from the pandemic, however, these
concerns have largely been alleviated and changes in the funding of the Town's recreational programs and services
through the Recreation Enterprise fund are not actively being considered at this time.
Article 6 Appropriate for Senior Services Program
Funds Requested Funding Source Committee Recommendation
$15,000 Tax Levy Approve (8-0)
This article seeks an appropriation of$15,000 for the Town's Senior Service Program. The Senior Service Program
allows low to moderate-income seniors to perform volunteer work for the Town in exchange for a reduction in their
property tax. Tax reductions under this program supplement any other statutory exemptions for which the
participant qualifies. For more information about the Senior Service Program and other state and local property tax
relief options available to seniors, see Appendix D and the Town's brochure on tax relief.4
The Select Board is responsible for setting the age and income criteria for participation, the wage rate, and the
maximum credit allowed. Under current guidelines, the program is open to persons aged 60 years and older with
household income up to $90,000. The maximum reduction which may be earned is $1,755 per household per year,
which represents 130 hours at $13.50 per hour. The Lexington Council on Aging administers the program. The
Senior Services Program was last funded two years ago with an appropriation of$15,000, and the current amount in
the continuing balance account is approximately $27,000.
We have long considered this program to be a valuable form of tax relief as it combines a meaningful opportunity
for property tax reduction with civic engagement. It must be noted, however, that participation has declined
significantly over the last decade. The number of participants fell from 28 in 2013 to 13 in 2020,then to practically
zero during the pandemic when Town offices were closed, making it difficult to accommodate volunteer work.
Since then,participation has rebounded,but only slightly with just 4 participants to date in FY2024.
Clearly, this program needs attention. The $15,000 now requested, together with the existing account balance,
should be adequate to fund the program in FY2025, but also to provide flexibility for an increase in the wage rate
and other potential enhancements to increase awareness of the program and help restore participation.5
4 Town Tax Relief Brochure: hUps://www.lex ingtonma.gov/168/Elderly-Other-Tax-Relief
5 The Committee notes that $13.50 was the minimum Massachusetts wage rate in 2021, and that the rate has since been
increased to$15.00 per hour.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Article 7 Appropriate for Sustainable Capital Projects
Funds Requested Funding Source Committee Recommendation
$65,000 Free Cash Approve (8-0)
This is a new capital program to fund sustainable capital initiatives including solar panels, batteries, electric vehicle
(EV) charging equipment and related infrastructure. In the future this program may also include the study, design
and construction of rooftop solar or solar canopies, including battery storage, and other projects identified by the
Sustainability and Resilience Officer to move the Town towards achieving its sustainability goals.
The FY2025 request will fund two or more electric vehicle charging stations and a study for a solar canopy at the
Lincoln Field parking lot. At least one EV charging station would be installed at the Town Office Building,
primarily for charging municipal fleet vehicles, but could be utilized by the public outside of operating hours. This
request is expected to fund a second charger at a location to be determined.
Article 8 Accept Tucker Ave (Westernmost Portion)
Funds Requested Funding Source Committee Recommendation
$30,000 Free Cash Approve (8-0)
This article requests that the Town accept Tucker Ave starting at Carville Ave and going eastward for 332 feet to
the point where Tucker Ave is already an accepted public road.
Acceptance is the formal process which converts a private street (owned by the abutters) into a public street. After
the street is accepted,the Town takes responsibility for all future upkeep of the street. The costs of future upkeep of
this road is difficult to estimate but is expected to be minimal given its short span.
The funds requested under this article will be used to bring the road up to Town standards, and will be repaid to the
Town by the abutters as betterments applied to their property taxes.
Article 9 Establish and Continue Departmental Revolving Funds
Funds Requested Funding Source Committee Recommendation
See below RF Approve (8-0)
This article seeks reauthorization of all existing revolving funds. Information regarding the nature and purpose of
revolving funds can be found in Appendix C of this report.
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. A summary of the historical receipts, expenditures,
and balances for each fund during FY2023 and the first half of FY2024 can be found in Appendix C of the Brown
Book.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
FY2025
Program or Purpose for Revolving Funds Authorization
School Bus Transportation $ 1,150,000
Building Rental $ 632,000
Lexington Tree Fund $ 120,000
DPW Burial Containers $ 60,000
DPW Compost Operations $ 859,000
Minuteman Household Hazardous Waste Program $ 250,000
Senior Services $ 75,000
Residential Engineering Review $ 57,600
Health Programs $ 110,000
Lab Animal Permits $ 40,000
Tourism Revolving Fund $ 558,000
Refuse and Recycling Collection $ —
For FY2025, the requested spending limit for the Regional Cache Revolving Fund is zero. The Town no longer
serves as host community for the emergency management equipment that was stored at Hartwell Avenue. This fund
will be dissolved once a final audit is completed by the state.
The Refuse and Recycling Collection Revolving Fund was created last year to receive fees for certain types of
refuse collection, but the Select Board has not established any new fees. This fund is not used as a revenue source
in the FY2025 budget.
Article 10 Appropriate for the FY2025 Community Preservation
Committee Operating Budget and CPA Projects
Funds Requested Funding Source Committee Recommendation
See below CPA, GF, a-c,e-k: Approve (8-0)
GF Debt d: Pending
Community Preservation Act (CPA) projects are funded using the Community Preservation Fund (CPF), which is
managed as four separate sub-funds for Affordable Housing, Open Space, Historic Resources, and Unbudgeted
Reserves.
As stipulated by the Community Preservation Act, the CPF has two sources of revenue; a 3% surcharge applied to
property tax bills, and a variable annual state match of surcharge revenues collected by the Town. In the 17 years
since the Town enacted the CPA, the state match has averaged out to roughly 36%, and only once met the full
100% allowed by the Community Preservation Act. Fiscal pressures have resulted in a disappointingly low State
match for FY2024 with an even lower projection for FY2025.
The funds available for appropriation in the CPF includes a carry-forward balance of$3,541,335 from FY2024. The
local surcharge revenue and an estimated FY2025 state match of 15% results in budgeted revenue of$8,040,000,
and total available funds of $11,581,335. The CPF appropriations requested in this article total $9,275,565, of
which $681,200 is for debt service and $150,000 is for administrative expenses, which would leave a balance of
$2,305,770. This conforms to CPC policy to maintain a balance of around $2 million or more as a reserve for
unanticipated requests during the year.
22
2024 ATM APnzoPnoAnowCoxmunTuu l3MARCH 2024
Annual CPA Revenue& State Matching Rate
100%
$8.000.000
75%
$0.000.000
50%
$4.000.000
25%
$2.000.000
$0 0%
F-1 Local Surcharge [_� State Match -�-MutchO/o
has received$|,354,935inmatching funds for FY2024, u2|.80Y6match from the state.
Funding requests for the FY2025CPA projects unedutai|udhu|orr.
Article Item Funding Funding Source
Request
$ 200,000 CPF Historic Resources
$ 884,000 CPF Undesignated Fund
10(a) Cary Memonial Library Renovation Balance
$ 2,300,000 10(a) CPFSubtotal
$ 1,700,000 GF Debt
10(b) Archives and Records Management $ 20,000 CPF Historic Resources
10(c) Park Improvements-Athletic Fields-Bowman School $ 545,000 CPF Unbudgeted Reserve
10(d) Lincoln Park Fitness Stations Equipment $ 160,000 CPF Unbudgeted Reserve
10(e) Park Improvements-Hard Court Surfaces-Valley Rd $ 492,000 CPF Unbudgeted Reserve
10(f) Lincoln Park Field Improvements $ 665,000 GF
$ 1,810,000 100 Total
10(g) LexHAB Support, Restoration, Preservation, and $ 482,365 CPF Communitv HousinR
Decarbonization
10(h) Lexington Housing Authority Exterior Preservation $ 100,000 CPF Community Housing
10(i) Affordable Housing Trust Funding $ 1,920,000 CPF Unbudgeted Reserve
100) Projected Debt Service $ 681,200 CPF Historic Resources
10(k) Administrative Budget $ 150,000 CPF Unbudgeted Reserve
10(a) Cary Memorial Library Renovation
This request iytoappropriate $4,000,000 ($2,300,000 of CPA funds and $|,700,000ofGeneral Fund debt) for the
reconfiguration of the Children's room, u new heat-pump 14l/AC system for the |orrur |uvuL the rup|uounuunt of
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
ceilings throughout the lower level, renovated lower level restrooms,new carpeting for the lower level hallway, and
replacement of the stairway treads connecting the south lobby and the main level. The Cary Memorial Library
Foundation's trustees will contribute $1.5 million towards the total project cost of $5,500,000, combined with
approximately $700,000 from prior authorizations for additional HVAC work to be included in this contract. The
project is expected to commence in July 2024 and upper floors of the library will remain open during construction.
10(b)Archives and Records Management
This request is to appropriate $20,000 for archiving and records management of fire department records
(1927-1929),book of marriage intentions (1850-1897 and 1898-1909), and planning board records (1918-1930), all
of which are deemed to be of historical significance. This is an ongoing project and the first request for CPA
funding for Archives and Records Management was in Fiscal Year 2009. Work will begin after July 1, 2025, the
first day of the new fiscal year. There are not any grant programs for which this work would qualify, because the
Town Archives are a part of the town government. Any cash contributions would go into the general fund.
10(c) Park Improvements—Athletic Fields—Bowman School
This request is to appropriate $545,000 for the renovation of the athletic fields at Bowman Elementary School. The
renovation includes installation of natural grass, a new irrigation system,new backstops, signage, and park benches.
It will also provide improved accessibility to Dunback Meadow. These fields were last renovated in 2008.
10(d)Lincoln Park Fitness Stations Equipment
This request is to appropriate $160,000 to renovate and upgrade the fitness equipment at Lincoln Park. There are 15
equipment stations along the Teresa and Roberta. Lee Fitness/Nature Path that were first installed in 2003. Some
members of this Committee are of the opinion that this renovation should be supported from the trust funds
established for this purpose - the Teresa and Roberta Lee Fitness Nature Path and the Richard and Jeanne Kirk
Fund. The latest reported balances of these trust funds are $118,046 and $679,568 respectively (see p. 193-194 of
the 2023 Town Annual Report). The committee has not voted on this article as of the publication of this report
pending further information from the Trustees.
10(e) Park Improvements—Hard Court Surfaces—Valley Rd
This request is to appropriate $492,000 for reconstructing the Valley Courts on Valley Road. These courts were last
reconstructed in 2008 with an estimated life of 10-15 years. They were resurfaced in 2021 as an interim measure to
address superficial cracking and prolong the life of the courts, using $100,000 appropriated under Article 10(h) at
ATM 2020 (Note: the appropriation also included ADA work outside of the resurfacing). However, the
environmentally friendly asphalt material used for the resurfacing has already failed and was only warranted for one
year. The current request will reconstruct the courts using post-tensioned concrete slabs that carry a 25-year
warranty.
10(1) Lincoln Park Field Improvements
This $1,810,000 appropriation request ($1,145,000 of CPA funds and $665,000 from the General Fund) is for
synthetic turf replacement at Lincoln Field 42. The improvements will allow for increased utilization of the fields,
alleviating the shortage of available hours currently experienced by the Recreation Department. This is the second
year of a three year renovation project to replace all three fields. The renovations to Lincoln Field#1 was approved
under Article 10(i) at ATM 2023. Renovation of Lincoln Field 43 is planned for FY2026.
The project includes a professional evaluation to determine if the subsurface/base "pad" can be reused or if a
replacement is required for safe function of the field. The project then comprises removal of the existing surface
turf"carpet" at Lincoln Field 42, laser grading of the subsurface, inspection and repair (as needed) of the drainage
system, replacement of the base "pad" if indicated by the aforementioned study, replacement/recycling of the infill
material, replacement of the surface turf, replacement of the (wood) anchors and edging around the immediate field
perimeter, and restoration of the walkways,guardrails, and plantings surrounding the field.
6 2023 Annual Town Report: https://records.lexingtonma.gov/WebLink/0/edoc/2914055/2023%20Annual%20Report.pdf
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
10(g) LexHAB Support,Restoration,Preservation, and Decarbonization
This appropriation requests $482,365 to support LexHAB's affordable housing. There are four components of this
request:
• Preservation, rehabilitation and restoration for 7 of CPA-funded units
• Preservation for 19 non-CPA-funded units
• Decarbonization initiatives for 3 CPA-funded units
• A subsidy for the rents of LexHAB's lowest income tenants
LexHAB is looking to expend a total of$1,282,365 for these projects in FY2025, combining this appropriation with
$400,000 from Mass Save and$400,000 from LexHAB's reserves.
This request will use $293,300 to fund capital projects like those funded in prior years with CPA money. CPA
funds of$94,200 will be used for preservation, rehabilitation, and restoration of 7 CPA funded units.'CPA funds of
$108,100 will be used for preservation of 19 non-CPA funded units.$ The work on both these types of unit includes
exterior and interior painting, flooring, kitchen, and bath repairs and replacements; exterior and interior door, roof,
driveway and retaining wall replacement; car port maintenance; and landscaping.
CPA funds of$91,000 will fund decarbonization by installing solar panels on 3 units and converting gas to electric
heating in 2 units.9
New this year is a request for $115,740 to subsidize the rents of LexHAB's lowest income tenants. LexHAB caps
rent payments at 30% of a tenant's income. Most other housing organizations that cap rent payments based on
tenant income also receive outside subsidies to their operating budgets, but LexHAB does not currently receive any
outside subsidies. LexHAB has many tenants who qualify as "extremely low income", which is defined by the U.S.
Dept. of Housing and Urban Development(HUD) as at or below 30%of the Area Median Income (30%AMI). As
a result, LexHAB's cap on rent payments and lack of outside subsidies has resulted in a revenue shortfall
threatening the funding needed for regular maintenance and repairs in LexHAB's housing stock.
In 2021, LexHAB adopted a minimum rent payment policy based on the 30% AMI threshold. In effect, this
imposes a minimum income level for new LexHAB tenants. Families must have income of at least 30%of the Area
Median Income, which varies with the size of the household. These income levels define the minimum monthly
rents displayed in this table.
Minimum Rent Based on 30%AMI for 2023
Size (BRs) 30%AMI Monthly Rent
1 $31,150 $779
2 $36,600 $890
3 $40,500 $1,001
4 $44,500 $1,113
The minimum rent policy applies to incoming tenants, but tenants who were residents prior to the policy's creation
are granted an exception. Those tenants continue to pay rent capped at 30% of their income. LexHAB seeks CPA
funds to fill the gap between the rents that"extremely low income"tenants pay and their prescribed minimum. The
requested amount of$115,740 was calculated using rental income shortfalls from 2023.
The requested amount would function as an operating subsidy for LexHAB, enabling them to maintain low rents for
existing extremely low income tenants. Once their status as a nonprofit is confirmed, LexHAB may be able to seek
additional subsidies at the local, state and federal levels. This could include funds to house homeless families, and
for low-and very low-income tenants.
7 The seven CPA funded units are: 241 Grove St; 454 Marren Rd; 1 Wilson Rd; 300 Woburn St; 107 Parker Manor; 1001/1003
Mass Ave.
8 The 19 non-CPA funded units are: 18 Banks Ave; 8 Bruce Rd;3 Chestnut Lane;3 Edna St; 8 Emerald St; 15 Grandview Ave;
22 Hamblen St; 6 Sedge Rd; 31 Skyview Rd; 165 Waltham St; Garfield Common; 16 Rangeway St; 48 Locke Village; 5, 17
77, 85,94 Emerson Gardens; 13 Fairview Ave.
9 Solar panels for 3 units at 241 Grove St and 1001/1003 Mass Ave, and gas to electric conversion for 2 units at 1001/1003
Mass Ave.
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2024 ATM APPROPRIATION CONMTTEE 13 MARCH 2024
LexHAB is also considering increasing its existing minimum rent payment,which would moderately increase rental
revenue.
This request for the CPA to subsidize LexHAB will recur annually. The size of the request will be based on current
rent shortfalls, less any outside funding obtained.
10(h)Lexington Housing Authority Exterior Preservation
The Lexington Housing Authority requests $100,000 in CPA funding to help finance the siding, windows and
exterior door replacement at a duplex home located at 561/563 Mass Ave. The total project cost is estimated at
$150,000 with the balance of money coming from the Executive Office of Housing and Livable Communities.
This building was constructed in 1991 with wooden siding. This project would replace it with vinyl siding,which is
more cost efficient to install and maintain, and install energy efficient windows and exterior doors.
106)Affordable Housing Trust Funding
The Affordable Housing Trust (AHT), a recently formed municipal organization, seeks $3,200,000 to use as
prefunding for the trust. Established by Town Meeting at Special Town Meeting the 2022-3, the AHT acts as a
funding entity for affordable housing needs. This money would be added to the trust's current fund balance of
$1,540,628 and allow it to operate as authorized.
The AHT supports the cost-effective creation of affordable units in Lexington, with a greater diversity of housing
choices. When adequately funded, the AHT can help housing organizations (such as LexHAB) respond to real
estate market opportunities in a timely manner. These funds can be used to purchase and save currently affordable
housing stock, particularly when town meeting would be unable to respond before the opportunity is lost. Due to
the high cost of real estate in Lexington, even for smaller and older houses,the AHT can only achieve its goals with
robust prefunding.
The AHT also seeks to support developments with multiple affordable units in larger projects. While the AHT is
not a developer, it can provide the local component of funding required by developers who create large projects that
rely on state, federal, and private funding that far exceeds the local contribution.
In FY2024, the AHT received $1,500,000 of CPA funds, $439,402 transferred from the Affordable Housing
Stabilization Fund, the annual Brookhaven mitigation payment, and Short Term Rental fees (paid by AirBnB and
similar businesses).
In FY2025, in addition to the requested CPA funds, the AHT will receive $103,000 from the Brookhaven
mitigation payment and$5,000 from Short Term Rental Fees. They are also pursuing State and Federal grants.
The FY2024, AHT expenses included $550,000 to LexHAB which they combined with $400,000 in CPA
prefunding to purchase a duplex on Massachusetts Ave, and $19,870 for a site study on Parcel 68-44 at the
intersection of North St and Lowell St. The AHT's anticipated FY2025 projects include: supporting LexHAB
acquisition of properties on the open market; subsidizing LexHAB's Vine St project following LexHAB's transition
to nonprofit status; creating a resident support subsidy; funding studies to allow creation of an RFP for Parcel 68-44
(Article 33), and subsidies to increase affordable housing units in future MBTA Communities or SRD zoning
developments.
While prefunding will allow the AHT uses its funds without further appropriation by town meeting, Article VIII of
the Trust document has the following controls:
1.The Lexington Town Treasurer shall be the custodian of the funds and shall maintain separate accounts
and records for the funds;
2.The Trust's approved annual budget and revisions shall be submitted to the Select Board and recorded by
the Town Treasurer;
3.The books and records of the Trust shall be audited annually by an independent auditor and a copy
provided to the Select Board,
4.The Trust shall provide to the Select Board a report of its activities at the end of every fiscal year.
5.The Trust must receive prior approval by the Select Board of purchases of real estate that exceed the
average sale price of a single family home in Lexington.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
The AHT is also required to report on all expenditures of CPA funds to the CPC. The prior year's CPA spending is
detailed in the AHT's annual application for new CPA funding.
CPA support for Community Housing in Lexington has barely exceeded the State's 10% minimum of total CPA
revenue. In the past 10 years, it was 12.97%out of a total $57.6 million in CPA appropriations. The past five years
have seen a further decline in Community Housing funding, with only 10.12% of the $29.1 million being
appropriated to housing, and most of that to preserve and rehabilitate existing LexHAB and Lexington Housing
Authority units. During the same 5-year period 42.97%of appropriated CPA funds went to Recreation facilities and
28.13%to Historic Resources,primarily to the rehabilitation of municipal facilities.
The AHT expects to make ongoing annual CPA requests, and it regards the CPA as a steady and reliable revenue
source. Based on the anticipated size of future AHT requests for CPA funds and the reduced oversight from town
meeting, this committee is committed to reviewing annual spending by the AHT, and encourages the AHT to
develop a 5-year capital plan.
This request is consistent with the presentations to the Town Meeting during debate of the AHT's approval.
Additionally, their goals, restrictions, and operating methods are as presented. This request is on a scale of what
could be anticipated considering the low level of past affordable housing spending and the goals that Town Meeting
supported when approving the Trust.
10(j) Projected Debt Service
This section requests the appropriation of$681,200 to meet debt service obligations for the previously approved
CPA project- Cary Memorial Building Upgrades $681,200 (2014 Special Town Meeting,Article 2)
This appropriation would retire all remaining debt for the Cary Memorial Building Upgrades and is the last of
current CPA debt. The next authorized debt is $2,000,000 for the Munroe Center for the Arts renovations and this
debt has not yet been issued.
10(k)Administrative Budget
This appropriation of$150,000, made annually, would be used to fund the Committee's administrative assistant,
member dues to the non-profit Community Preservation Coalition, administrative expenses, legal and
miscellaneous expenses and land planning, appraisal and legal fees for open space proposed to be acquired using
CPA funds. The budget for this money is mostly unknown and most of it is contingency money limited to the
purposes outlined above. Since the 2007 acceptance of CPA, the average annual administrative expenditures have
been $70,622, and $1,115,675 of the total amount of appropriated administrative money has been returned and then
been available to fund projects.
Article 11 Appropriate for Recreation Capital Projects
Funds Requested Funding Source Committee Recommendation
$110,000 Recreation EF RE Approve (8-0)
For basic capital requests,the Appropriation Committee defers to the report of the Capital Expenditures Committee
when there is general agreement on our committees' recommendations to Town Meeting.
The requested appropriations are listed below together with a funding breakdown. Additional information on the
items in this request is available in the Brown Book(relevant pages for each item are cited below).
Funding Brown
Article Description Amount Source Book
Page
11 Pine Meadows Golf Course improvements $ 110,000 Recreation RE XI-19
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Article 12 Appropriate for Municipal Capital Projects and Equipment
Funds Requested Funding Source Committee Recommendation
$10,253,686 See below Approve (8-0)
For basic capital requests,the Appropriation Committee defers to the report of the Capital Expenditures Committee
when there is general agreement on our committees' recommendations to Town Meeting.
The requested appropriations are listed below together with a funding breakdown. Additional information on the
items in this request is available in the Brown Book(relevant pages for each item are cited below).
Brown
Article Description Amount Funding Source Book
Page
$ 86,766 Free Cash
12(a) Transportation Mitigation $ 13,234 TNC Spec. Rev. XI-18
$ 100,000
12(b) Heavy Vehicle Extrication Equipment $ 175,000 Free Cash XI-18
$ 377,000 Free Cash
12(c) Ambulance Replacement $ 125,000 Amb. Stab. Fund XI-18
$ 502,000
$ 1,215,000 Free Cash
$ 125,000 Water RE
12(d) Equipment Replacement $ 260,000 Sewer RE XI-19
$ 320,000 Compost Debt
$ 1,920,000
12(e) Sidewalk Improvements $ 800,000 Free Cash XI-20
$ 75,000 Free Cash
12(f) Hydrant Replacement $ 75,000 Water RE XI-21
$ 150,000
12(g) Townwide Signalization Improvements $ 50,000 Free Cash XI-21
12(h) Stormwater Management Program $1,350,000 Free Cash XI-21
12(1) Cemetery Columbarium Design $ 50,000 Free Cash XI-23
120) Public Parking Lot Improvement Program $ 15,000 Free Cash XI-23
12(k) Network Core Equipment Replacement $ 550,000 Free Cash XI-23
12(1) Municipal Technology Improvement Program $ 550,000 Free Cash XI-23
12(m) Network Redundancy &Improvement Plan $ 998,500 Free Cash XI-24
12(n) Network Technology Improvements $ 161,000 Free Cash XI-24
12(o) Scanning -Electronic Document Management $ 110,000 Free Cash XI-24
12(p) Election Equipment Upgrade $ 64,865 Free Cash XI-25
12(q) Street Improvements $2,707,321 Free Cash XI-21
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Article 13 Appropriate for Water System Improvements
Funds Requested Funding Source Committee Recommendation
$1,288,900 Water EF RE
$1,000,000 Water User Rates Approve (8-0)
$2,288,900
This article addresses proposed capital expenditures to be made during FY2025 to upgrade and maintain 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, see Appendix B and the discussion under Article 5.
Work to Be Done and Funding
Annual Distribution System Improvement Plan. A total of $2,288,900 is requested this year to fund an annual
program to replace unlined or inadequate water mains and deteriorated service connections and to eliminate dead
ends in water mains. The details of the project can be found in the Brown Book,p. XI-23. Capital appropriations for
similar purposes, and in similar amounts, have been made in most years over the last decade. The goal is to assure
dependable service with high water quality, pressure, and volume for domestic needs, commercial needs, and fire
protection, as well as to minimize water main breaks.
Historically,the annual amount requested for this program was $1,000,000. Beginning in FY2020,that amount was
increased to $2,200,000, a higher level of capital investment which was expected to continue indefinitely. The
substantial increase was based on an asset management study completed in 2017 by the Wright-Pierce
environmental engineering firm, which recommended an ongoing annual expenditure of this magnitude to keep
Lexington's water system safe and reliable. The asset management plan identified areas of vulnerability, aging pipe,
and areas with low volumes and pressures; and it recommended the replacement of 1%of the Town's water mains
on an annual basis (based on an estimated system useful life of 100 years).
Last year, the annual program was suspended to permit the funding of a special, one-time project, required by
regulations of the EPA and the Massachusetts DEP, to identify and replace water lines in town containing lead or
copper. This year, the program will be reinstated with a 4% increase in the $2,200,000 base amount. The Town's
five-year capital plan anticipates similar annual expenditures going forward,growing at the rate of 2%per year. See
Brown Book,p. XI-27.
The funding proposed for this year's program is a combination of user charges raised in the rates ($1,000,000) and
retained earnings ($1,288,900). The user charge component continues a plan initiated five years ago gradually to
transition the funding of the water system improvement program from debt to cash by an additional $200,000 each
year. The goal is to reduce debt service costs associated with borrowing. To mitigate pressure on water rates in the
short term, the changeover is being phased in over eleven years, and this is the fifth such increase. See the
discussion under Article 5 above and the Brown Book,pp. V-27,XI-23.
Although the balance of$1,288,900 would ordinarily be funded with debt, it is proposed this year to fund it entirely
from retained earnings. This strategy is made possible by the existence of an extraordinary balance of over
$3,000,000 in water fund retained earnings at the end of FY2023. See the discussion under Article 5. The use of
retained earnings this year in lieu of debt will put the "excess" retained earnings to a productive use and benefit
future rate payers by reducing future debt service costs.
Miscellaneous Appropriations under Other Articles. For completeness, certain capital items necessary for the
operations of the water department, such as trucks and equipment, are typically funded under other articles,
particularly Article 12 (Municipal Capital). This year, an appropriation of $125,000 is requested from water
retained earnings under Article 12(d)to cover half the cost of a Mack dump truck that will be shared with the sewer
department. See Brown Book, pp. XI-19-20. Also, an appropriation of$75,000 is requested from water retained
earnings under Article 12(f) to cover half the cost of the Town's annual hydrant replacement program. See Brown
Book, p. XI-22. The rationale for sharing this cost with the general fund is that the hydrants are used not only for
fire prevention but also for water system flushing purposes.
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2024 ATM APPROPRIATION CoNMTTEE 13 MARCH 2024
Committee Recommendation
The Committee recommends approval of both the appropriation amount and the funding methods requested in this
article. It supports the principle of continuous capital investment to assure the safety, soundness and longevity of
the Town's water and wastewater infrastructure. It also supports transitioning the funding from debt to cash raised
directly in the rates as the investment programs are a regularly recurring expense of each enterprise. The
changeover results in somewhat higher water and wastewater rates in the short run as it requires funding an
increasing portion of current capital investment with cash while continuing to pay the debt service costs of prior
borrowing. As the prior debt is retired, however, and the associated debt service costs diminish, the pay-as-you-go
model will more transparently and directly reflect the current cost of system upgrades and maintenance at the time
of rate-setting, and it will also save interest costs.
Article 14 Appropriate for Wastewater System Improvements
Funds Requested Funding Source Committee Recommendation
$50,000 Wastewater EF RE
$561,210 Wastewater Debt Approve (8-0)
$500,000 Wastewater User Rates
$1,111,210
This article addresses proposed capital expenditures to be made during FY2025 as part of a continuing program to
upgrade and keep current the assets of the Wastewater Enterprise Fund, including both sewer mains and pumping
stations. For general background on the enterprise funds, and the relationship between the budget process and the
water rate-setting process, see Appendix B and the discussion under Article 5.
Work to Be Done and Funding
Annual Sanitary System Investigation and Improvement program. A total of$1,061,210 is requested this year as
part of an ongoing annual program to investigate the condition of and rehabilitate sanitary sewer infrastructure. The
goal is to improve the system's operation, reduce backups and potential overflows, prevent malfunctions, and
reduce infiltration, thereby lowering measured flows through the MWRA meter. A description of the program can
be found in the Brown Book, p. XI-12. It is proposed that this year's program be funded with a combination of
wastewater debt($561,210) and user charges ($500,000).
The user charge component continues a plan initiated five years ago gradually to transition the funding of the
wastewater maintenance and improvement program, about $1,000,000 per year, from debt to cash, increasing cash
and reducing debt by an additional $100,000 each year. The goal is to reduce debt service costs associated with
borrowing. To mitigate pressure on rates in the short term, the changeover is being phased in over ten years, and
this is the fifth such increase. Seethe discussion under Article 5 above and the Brown Book,pp. V-31,XI-12.
Pump Station Upgrades. From FY2013 through FY2023, Town Meeting made annual appropriations in the range
of$400,0004800,000 to upgrade the Town's ten sewer pump stations in accordance with an asset management
plan developed in 2023 by the Wright-Pierce engineering firm. In the final year, an extraordinary appropriation of
$2,000,000 was made to bring the project to a conclusion. Last year, an appropriation of $75,000 was made to
update the 2013 asset management plan. This year, an additional appropriation of$50,000 is requested from the
wastewater fund's retained earnings to complete the update.
Miscellaneous Appropriations under Other Articles. Certain capital items necessary for the operations of the sewer
department, such as trucks and equipment, are typically funded under other articles, particularly Article 12
(Municipal Capital). This year, an appropriation of$260,000 from wastewater retained earnings is sought under
Article 12(d) for the purchase of a Ford 550 utility truck ($135,000), and also for half the cost of a Mack dump
truck ($125,000)which will be shared with the water department.
Committee Recommendation
The Committee recommends approval of both the appropriation amount and the funding methods requested in this
article. It supports the principle of continuous capital investment to assure the safety, soundness and longevity of
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
the Town's water and wastewater infrastructure. It also supports transitioning the funding from debt to cash raised
directly in the rates as the investment programs are a regularly recurring expense of each enterprise. The
changeover results in somewhat higher water and wastewater rates in the short run as it requires funding an
increasing portion of current capital investment with cash while continuing to pay the debt service costs of prior
borrowing. As the prior debt is retired, however, and the associated debt service costs diminish, the pay-as-you-go
model will more transparently and directly reflect the current cost of system upgrades and maintenance at the time
of rate-setting, and it will also save interest costs.
Article 15 Appropriate for School Capital Projects and Equipment
Funds Requested Funding Source Committee Recommendation
$1,323,050 Free Cash Approve (8-0)
This request of$1,323,050 addresses the School Department's strategic goal of enhancing the capacity to utilize
technology as an instructional and administrative tool. The request will continue to support student access to
devices for innovative learning methods that integrate supportive technologies, problem-solving based approaches,
and higher order thinking skills. It also maintains and improves, when needed, current infrastructure such as
networks, access points and servers. This is an ongoing annual request. Detailed information is available on pages
XI-16,XI-17 of the Brown Book.
Description Amount
Tech Workstations $ 204,150
1:1 Middle School Program $ 234,080
1:1 Lexington High School $ 209,560
STEM/Art/Computer Science $ 51,000
Interactive Projectors/Whiteboard Units and
Document Cameras $ 231 260
District and Building Network Infrastructure $ 373,000
Server/Storage Infrastructure $ 20,000
Total Amount Requested: $ 1,323,050
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Article 16 Appropriate for Public Facilities Capital Projects
Funds Requested Funding Source Committee Recommendation
$3,874,345 Free Cash
$980,655 Tax Levy Approve (8-0)
$4,855,000
For basic capital requests,the Appropriation Committee defers to the report of the Capital Expenditures Committee
when there is general agreement on our committees' recommendations to Town Meeting.
This article requests funds for the facilities projects summarized below. For further discussion of these items,please
see the report of the Capital Expenditure Committee and the capital projects section of the Brown Book.
Item Description Free Cash Tax Levy
16(a) Public Facilities Bid Documents $ 125,000
16(b) Public Facilities Interior Finishes $ 219,345 $ 230,655
16(c) School Paving and Sidewalks $ 265,000
16(d) Public Facilities Mechanical/Electrical/Plumbing Replacements $ 3,265,000 $ 750,000
Totals $ 3,874,345 $ 980,655
Article 17 Appropriate to Post Employment Insurance Liability Fund
Funds Requested Funding Source Committee Recommendation
$1,997,451 Free Cash
$32,270 Tax Levy
$3,045 Water EF Approve (8-0)
$609 Wastewater EF
$2,033,375
This article requests the appropriation of$2,033,375 into the Post Employment Insurance Liability(PEIL) Fund. Of
the requested amount, $1,997,451 would come from free cash, $32,270 from the tax levy, $3,045 from the Water
Enterprise Fund, and$609 from the Wastewater Enterprise Fund.
The tax levy amount corresponds to an amount from the Health Claims Trust Fund (HCTF) appropriated under
Article 4 line 2130 to support the employee benefits line of the operating budget. This is the final remaining balance
of the HCTF following withdrawals from that fund in previous years for direct support of the operating budget and
indirect support of the PEIL Fund.
The amounts requested from the two enterprise funds are based on benefits earned by the employees of the Water
and Wastewater Departments.
The PEIL Fund holds funds that will be used in the future to pay for health care benefits for retirees. These benefits
make up most of the "other post-employment benefits" (OPEB) that the Town provides as part of the total
compensation for its employees. For a detailed discussion of OPEB, the present status of the PEIL Fund, and
related issues,please see Appendix F.
The Town of Lexington's future OPEB liabilities are not fully funded. The unfunded liability is the sum of the
actuarially determined obligations incurred during current and prior fiscal years that have not been funded (via
contributions to the PEIL Fund). Every year,the total amount of the unfunded liabilities grows by the present value
of future benefits earned during the current year, less the value of benefits provided to retirees during the current
year through the operating budget, and less any contribution to the PEIL Fund for future liabilities.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
One benefit of contributing to the PEIL Fund is that, like the pension fund, it can be invested in equities that earn a
higher return than most Town-managed funds, thus reducing future liabilities. Although the Committee recognizes
that there are valid alternative priorities to which some portion of these funds could be allocated, such as additional
bolstering of our Capital Stabilization Fund to help address significant upcoming capital investment challenges, it
supports this year's proposed PEIL appropriation request.
The PEIL Fund balance was $29,811,364 as of December 31, 2023.
Article 18 Rescind Prior Borrowing Authorizations
Funds Requested Funding Source Committee Recommendation
None N/A Approve (8-0)
State law requires that Town Meeting vote to rescind the unissued portions of borrowing authorizations
(appropriations funded by debt)that are no longer required for the purpose stated in the authorization. The amounts
shown below were never borrowed and do not represent funds in Town accounts. Rescinding these authorizations is
the final bookkeeping task for every debt-based appropriation.
At the 1999 Annual Town Meeting under Article 34, $3,000,000 in General Fund debt was appropriated for
acquiring land for open space and conservation purposes, including outdoor recreation. After 25 years, none of the
appropriation has ever been used, and last year the Conservation Commission voted unanimously in support of
rescinding it.
Article 19 Establish, Amend, Dissolve and Appropriate To and From
Specified Stabilization Funds
Funds Requested Funding Source Committee Recommendation
$4,036,373 Tax Levy Approve (8-0)
State law authorizes towns to create and maintain a general purpose stabilization fund (in Lexington, the
"Stabilization Fund"), and stabilization funds for specified purposes, e.g., the "Capital Stabilization Fund". Funds
created for specified purposes may only be used to fund those purposes. Appendix E summarizes the laws
governing specified stabilization funds and provides a brief history and description of each of the Town's funds.
Town Meeting may create a new specified stabilization fund, alter a fund's specified purpose, approve
appropriations into a fund, appropriate money from a fund, or dissolve a fund. Town Meeting may also direct
specific revenue sources to be deposited directly into a stabilization fund, bypassing the need for Town Meeting to
formally appropriate those revenues into the fund. Appropriations into specified stabilization funds do not authorize
expenditures, but rather put aside funds for specified future uses. Additions or withdrawals not addressed by other
specific warrant articles are approved in this article.
This article requests an appropriation of$4,036,373 into the Capital Stabilization Fund (CSF) from the tax levy.
The Capital Stabilization Fund holds monies that are used to reduce the impact of borrowing for major capital
projects. At present the balance is being built up, but in the future the balance will be used to mitigate the large debt
service payments for the project to replace or renovate Lexington High School.
The amount requested for appropriation corresponds to the revenue that is generated under a policy proposed by the
Town Manager and adopted by the Select Board about two years ago. This policy calls for the new property tax
revenue from projects that are approved via a rezoning by town meeting on the basis of a Preliminary Site Use and
Development Plan (PSDUP), or are pursuant to the recent changes in the dimensional controls in the Hartwell
Avenue zoning district,to be earmarked for the CSF. This policy creates a source of recurring annual revenue and it
enables steady appropriations into the CSF that will increase in size each year based on the Town's commercial
development activity.
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Article 20 Appropriate for Prior Years' Unpaid Bills
Funds Requested Funding Source Committee Recommendation
None N/A IP (8-0)
This is an annual article to request funds to pay bills after the close of the fiscal year in which the goods were
received or the services performed and for which no money was encumbered.
There are no unpaid bills from the prior fiscal year at press time, and no action is required under this article.
Article 21 Amend FY2024 Operating, Enterprise and CPA Budgets
Funds Requested Funding Source Committee Recommendation
None N/A IP (8-0)
This article allows needed revisions to current year operating, enterprise, and CPA budgets. As of publication,there
are no proposed changes to the FY2024 operating, enterprise and CPA budgets.
Article 22 Appropriate for Authorized Capital Improvements
Funds Requested Funding Source Committee Recommendation
None N/A IP (8-0)
This is an annual article to request supplemental funding for ongoing capital projects that were approved during
previous town meetings.
There are no requests for supplemental funding of existing capital projects at this time.
Article 23 Appropriate Opioid Settlement
Funds Requested Funding Source Committee Recommendation
None N/A Approve (8-0)
This is a housekeeping article which establishes a more efficient way for the Town to account for and expend funds
received over the last two years, and expected to be received annually over the next 10-15 years, under settlements
recently entered into between the Massachusetts Attorney General and certain opioid manufacturers and distributors
(the "Opioid Settlements").
Under the Opioid Settlements, Lexington and other Massachusetts communities which elected to participate
became entitled to receive annual payments over eighteen years (2021-2038) from opioid manufacturers Johnson &
Johnson, Teva Pharmaceutical Industries, and Allergan (now part of AbbVie); and from a number of distributors,
including Walmart, CVS, and Walgreens. The total amount that Lexington is scheduled to receive over the life of
the settlements is approximately $1,850,000 (not discounted to present value). The funds may be expended only to
fund opioid prevention,harm reduction,treatment and recovery programs.
When Lexington received its initial payments from the State,totaling $76,256 in 2022, and $187,927 in 2023, state
law required that these amounts be appropriated by Town Meeting to the General Fund, where they were reserved
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
for expenditure by the Director of Public Health. In late 2023, state legislation was enacted to simplify the process.
Towns may now place the funds directly into a special revenue fund when received, from which they can then be
expended by the responsible official without the need for further appropriation.
As authorized by the new legislation, this article requests Town Meeting to establish an Opioid Mitigation Special
Revenue Fund,to which any unexpended settlement funds that were previously appropriated shall be transferred;to
which any future settlement payments received may be allocated; and from which monies may then be spent,
without further appropriation,under the direction of the Town Manager.
Article 24 Appropriate Funding for Semiquincentennial Commission
Funds Requested Funding Source Committee Recommendation
$500,000 GF Approve (8-0)
This article requests the appropriation of$500,000 to fund the initial startup costs of planning and coordinating the
events for the celebration of the 250th Anniversary of the Battle of Lexington ("Lex250"). These events will take
place from 2024 to 2026. The requested funds are part of a larger budget for the Lex250 celebration, and will be
used for personnel costs, planning and event support services, promotional materials, etc. for the events as
coordinated by the Semiquincentennial Commission with approval by the Select Board. The funds will come from
the General Fund. The Town is also using ARPA funds and state earmarks to support the costs of the celebration.
Article 25 Appropriate for Pine Meadows Clubhouse Renovation
Funds Requested Funding Source Committee Recommendation
$2,575,000 GF Debt Approve (8-0)
This article requests the appropriation of$2,575,000 to renovate the clubhouse building at Pine Meadows Golf Club
to bring the building into ADA compliance and ensure a functional user space. The project will be funded with
General Fund debt,probably bonded over 10 years.
Key project elements include:
• Modernize plumbing and restrooms to meet code and accessibility
• Modernize the HVAC system and install solar energy system to contribute power
• Reconfigure operational spaces to improve customer circulation and customer/staff interaction
There will be no increase in square footage of the clubhouse.
Article 26 Appropriate for Design Funds for LHS Construction
Project
Funds Requested Funding Source Committee Recommendation
$10,000,000 GF Debt Approve (8-0)
This article requests the appropriation of$10,000,000 to pay for design services for a new or renovated Lexington
High School.
In early 2022, the Massachusetts School Building Authority (MSBA) invited the Town of Lexington into a joint
process that may lead to the renovation or replacement of the High School. This joint participation brings two
benefits to the Town. First, if the process plays out favorably with all approvals granted by voters and the MSBA
Board,the MSBA will pay a share of the costs of the project, an amount that could be in the neighborhood of$100
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
million. Second, the MSBA brings extensive experience in the renovation or replacement of Massachusetts public
school buildings to the process, and their guidance will help to reach optimal decisions about what is built and how
the construction is done.
The MSBA process consists of a series of numbered modules. Module 2, Forming the Project Team, has been
completed; the members of the School Building Committee have been appointed and architecture firms have been
retained to serve as the owner's project manager and the design team. The LHS project is currently in Module 3,
Feasibility Study, wherein existing conditions are assessed, educational and other goals are documented,
preliminary design options are developed and studied, multiple options are presented to the Town. Ultimately, one
of those options will be chosen for further development.
The Feasibility Study will be followed by Module 4, Schematic Design, wherein a design is developed sufficiently
to provide estimates of the project scope and cost, and a construction schedule. The next step, Module 5, involves
arranging for final project approval and funding. This entails a town meeting appropriation for the remaining
project expenses, a debt exclusion referendum, and a vote by the MSBA Board on a project funding agreement.
Module 5 is projected to commence near the end of calendar year 2025.
At Special Town Meeting 2022-2 in the spring of 2022, $1,825,000 was appropriated to fund the early phase of the
project, more or less through the Feasibility Study that is projected to conclude around the end of calendar year
2024. The current request would fund all of Module 4, Schematic Design, and any professional support needed for
Module 5,the project funding and approval phase.
The expenditure of design funds on this project is considered a reimbursable expense by the MSBA, so the Town
will be reimbursed for some portion, in the range 25%to 31%, of the expense. If the project receives all approvals,
most notably from voters in a referendum to exclude the project's debt service from the limits under Proposition
2'/2,then debt service on the non-reimbursable part of the $10 million appropriated under this article will be covered
under that debt exclusion. If the project is not approved,the non-reimbursable part will be paid as within-levy debt.
Prior to the debt exclusion referendum,this debt will be structured using interest-only bond anticipation notes.
Article 27 Appropriate for Renovation of 173 Bedford Street
Funds Requested Funding Source Committee Recommendation
$334,155 Free Cash
$30,000 Bond Premiums
$5,635,845 GF Debt Approve (7-1)
$6,000,000
The motion under this article requests $6,000,000 for work to renovate the Town-owned building at 173 Bedford
St. in preparation for its use as swing space for a sequence of Town facilities over the coming decade. The first of
these would be the LPS Central Office, which would move to this building while Lexington High School is being
renovated or a new high school building is under construction. The Town's long-term plan presumes that a new
home for the Central Office will be included in the high school project, and that the Central Office will be relocated
there.
There are several reasons to move the Central Office out of the old Harrington School building at 146 Maple St.
The first is to make the 6-acre old Harrington School site available for new athletic fields that will partially mitigate
the loss of service of many athletic fields during the high school project. In the long term, this would also increase
the number of athletic fields in the Town's recreation portfolio, which will better meet the recreational demands of
Lexington residents. A professional evaluation of the condition of the old Harrington School building indicates that
it is in need of major system replacements that would likely cost in the neighborhood of$16 million, a substantial
fraction of the cost to build new space for the Central Office.
After the Police Department headquarters moves into its new facility around June 2024, the 173 Bedford St.
building will be unoccupied. The building comprises 17,000 square feet of floor area on the first and second floors
and 4,000 square feet in the basement. The old Harrington School building comprises about 46,000 square feet, but
a space study has shown that the Central Office requires only about 20,000 square feet, and less than that will be
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
needed if some of the groups presently housed together with the Central Office can be relocated to other school
buildings.
At present, 173 Bedford St. has no elevator, making the second floor inaccessible. It lacks essential safety systems
and adequate climate control. The funds requested under this article would be used to install an elevator,to install a
sprinkler system, to replace the gas-fired HVAC system that is past its end of life with a fully electric HVAC
system, and to change the interior walls, etc.,to fit the Central Office needs. Per the Town's sustainability policies,
the Select Board recommends that an efficient all-electric heat-pump HVAC system be installed.
There are major renovation projects planned for Cary Memorial Library and the Town Office Building that will
require swing space during construction. A renovated 173 Bedford St. can serve that purpose after the Central
Office is relocated to the high school. Until a specific concept for the high school project is chosen, the duration of
the construction project will be uncertain. Construction of an all-new high school could be completed in about five
years, but an add-on/renovation alternative could take as long as seven years. In any case, the 173 Bedford St.
building likely will be in use for much of the next ten to twelve years while the Central Office, Cary Library, and
Town Office building projects are underway.
The funding for this request will be financed by $334,155 from free cash, $30,000 of premiums received from bond
issuances, and $5,635,845 of General Fund debt.
Article 29 Amend the General Bylaw - Noise Control
Funds Requested Funding Source Committee Recommendation
None N/A —
The Appropriation Committee has chosen to comment on this bylaw change without making any recommendations
to inform Town Meeting about potential pressures its acceptance could put on future Town budgets. We'll look at
how enforcement of the current bylaw is handled in the current FY2024 and the proposed FY2025 budget, and how
the proposed bylaw changes may require future changes. The bylaw amendments in this motion address two very
different noise sources, construction noises and landscaping noises, that have different enforcement agents, and so
will be discussed separately.
The first part of the motion deals with the section of the bylaw that controls noise generated at construction sites.
Current enforcement and tracking of the bylaw is based with the Building Department. Complaints made during
Town business hours are handled by the Building Commissioner and his administrator, although the Health
Department also has enforcement jurisdiction. The Building Department has purchased a noise meter to test for
noise levels. Violations that occur at other times, i.e. construction on prohibit days such as holidays, or outside of
business hours, are handled by the Police or Fire department. One provision of this bylaw change requires
developers to engage a third party noise consultant and will shift the monitoring of noise levels back on to the
developers. However the increased restrictions that would be enacted by the bylaw changes will require more office
staff time to review the plans submitted, and still require the staff to spend time for site visits. The provision
prohibiting building on state holidays will increase enforcement calls to the police and fire, especially because most
private building contractors don't have those holidays off. None of these changes, even if contractors are in full
compliance with mitigation measures,will end construction noise, only limit it.
The second part of the motion deals with the section of the bylaw controlling noise from gas-powered leaf blowers.
Although not all of the prohibitions in the bylaw are in effect, complaints are still being made. These complaints are
now being addressed by the Police Department. However the department is uncomfortable sending a uniformed,
armed officer to respond to this type of civil matter. The department's budget for FY2025 includes the addition to
its staff of a part-time civilian Code Enforcement Officer, who would be responsible to enforce and educate
violators about this section of the bylaw. The proposed bylaw change would delay for one year the prohibition the
use of gas-powered leaf blowers by commercial landscapers, and will not increase the level of enforcement in
FY2025.
As bylaw enforcement ramps up in future years this position may require additional hours. Additionally, it is
possible that in the future this enforcement officer may be tasked with other aspects of the Noise Bylaw and even
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Tree Bylaws. The Committee urges Town Meeting to be prepared for downstream impacts on the operating budget
when considering changes to our bylaws.
Article 33 Authorize the Select Board to Seek Affordable Housing
Funds Requested Funding Source Committee Recommendation
None N/A —
While there is no appropriation requested under this article, it does have financial implications to the Town. We
have not offered a formal recommendation, but the Committee wishes to share its perspective on a complicated
issue.
Background
This article seeks Town Meeting's approval to dedicate a Town-owned property for the development of all-
affordable housing. The 3.12-acre property is Parcel 68-44 in the Assessor's database and is located on Lowell
Street near the intersection with North St. and the Burlington and Woburn town lines (the "Lowell Street Parcel" or
the "Parcel"). The Parcel was gifted to Lexington by the State in 1978 "for conservation, recreation and housing
purposes". The motion requests Town Meeting to authorize the Select Board to dispose of the property for "the
purposes of developing 100%affordable housing thereon", either through a sale or a long-term lease, and to "enter
into such agreements as are necessary for such purposes."
If approved, this request would enable the Select Board, together with the Affordable Housing Trust (AHT), to
initiate a process to dispose of and develop the Lowell Street Parcel for 100%affordable housing. The Select Board
will develop a Request for Proposals (RFP) in coordination with the AHT, Town staff, and Town Counsel. The
RFP will set forth requirements and priorities for the development. The Town would gather responses and the
Select Board would determine which, if any, of the proposals is satisfactory. A developer would then be selected to
build and manage a complex of all-affordable rental housing units. The site-planning, dimensional, density,
massing, and other zoning-related issues would all need to be negotiated and approved under a "friendly 4013"
process.To
An "all-affordable" housing development is different from the other affordable housing options that are currently
available in Lexington. Rather than a large group of market-rate units with a limited number of affordable units,
typically only one out of ten units, or a single-family home or duplex,we understand that the proposed development
would consist of perhaps as many as 50 rental units, most likely in an apartment-style building, varying from 1 to 3
bedrooms in size. All units would qualify for the Town's Subsidized Housing Inventory (SHI) and would have rent
payments suitable for incomes ranging from 30%AMI to 80%AMI (Area Median Income). The article proponents
have assured us that they intend to include affordability requirements in the Parcel lease or deed that will not expire.
Funding for the development would come from a variety of sources. The Town would contribute the Parcel and a
payment to cover a portion of the development costs. The remainder of the funding would come in the form of state
and federal subsidies, including income tax credits available to investors, that are available to support this kind of
development. Financing would be coordinated by a developer who specializes in all-affordable developments.
Unlike much of the current affordable housing in Lexington that is managed by the Lexington Housing Authority or
LexHAB, it is anticipated that this new development would be privately owned and operated;that the Town would
not be responsible for maintenance and would not provide rental subsidies for the tenants; and that a for-profit
operator would be expected to pay annual property taxes, or, in the less likely event that a non-profit operator is
chosen, a payment-in-lieu-of-taxes (PILOT).
10 Chapter 40B of the Massachusetts General Laws permits a developer seeking to develop a property with at least 20%
affordable housing unilaterally to seek to bypass existing local zoning requirements. The requested exemption would be
heard and ruled on by the Zoning Board of Appeals(ZBA). If a town does not meet a 10%minimum threshold of affordable
housing as measured by the ratio of the Subsidized Housing Inventory (SHI) to the total number of dwelling units in the
town,the presumption is in the developer's favor, and the developer has the right to appeal to a State board that is generally
favorable to the developer. If a town does meet the 10% minimum threshold, as Lexington does at this time, the ZBA's
ruling is unlikely to be overruled upon appeal. In a"friendly 40B," (non-ZBA)town officials support rather than oppose the
subject development.
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A noteworthy goal of the proposal is to leverage the Town's contributions of land and money by enabling a
developer to gain access to tax credits and other state and federal subsidy programs that would fund the bulk of the
costs. In this financing model, the Town could create "more with less", compared to the increasingly expensive
affordable housing initiatives that have been pursued to date through LexHAB, or the use of"density bonuses" to
encourage the inclusion of affordable units in market-rate developments.
The Town recently published a Housing Feasibility Study" that presents some hypothetical funding scenarios for
several affordable housing development alternatives. The study indicates that the alternative providing the largest
amount of affordable housing per dollar invested by the Town is an all-affordable development consisting of units
for renters with an average income of 60% of the Area Median Income (60% AMI). The study suggests that a
development with a per-unit cost of about $500,000 would require a cash contribution of approximately $100,000
per unit from the Town. In other words, the Town's investment would be multiplied by a factor of five. While the
financing that may materialize could vary somewhat up or down from this hypothetical factor,the advantage to the
Town is clear.
The development of a multi-unit project on the Lowell Street Parcel would not conform with local zoning
regulations, and the development would undergo permitting through a "friendly 4013" process. The Select Board,
the AHT, and possibly other Town boards and committees would join the developer in asking the Zoning Board of
Appeals ("ZBA"), to approve dimensional, density, and siting aspects of the proposed development. Since more
than 10% of Lexington's housing units currently qualify for the Town's SHI, the ZBA would have significant
latitude to approve, approve with conditions, or disapprove the proposed development.
Main Project Aspects to be Determined
As noted above,the Select Board, in consultation with the AHT, intends to issue an RFP to solicit proposals for an
all-affordable development on the Parcel. At this time, absent any draft of an RFP, important aspects of the Town's
expectations for a potential development have not been determined. These include:
• How many dwelling units would be built?
• What is the distribution of unit sizes and numbers of bedrooms?
• How many parking spaces will be provided?
• What are the building height and setback limits?
• Will affordable status for all units be required in perpetuity?
• What are the specifics of affordability requirements?
• Will solar panels be required?
• Will the project set a net-zero goal?
Answers to these questions can affect the project's cost, and each will drive financial impacts on the Town, either
directly or indirectly.
Financial Benefits,Impacts and Risks
Given that the scope, size, density, and composition of a possible future project are uncertain, it is not possible to
quantify the financial benefits, impacts and risk with any precision, but we have identified the following general
categories of impacts.
The financial benefits typically anticipated for a private, market-based residential development are the annual
property tax revenues and one-time fees for building permits and other incidentals. If this project were developed
by a for-profit company, it would be obligated to pay property taxes (though on the basis of a relatively low
assessed value due to affordability restrictions). If it is owned by a not-for-profit, it could be asked to make
payments-in-lieu-of-taxes ("PILOTs"). However,this may not result in a net financial benefit to the Town if an up-
front cash payment from the Town is required to enable the eventual owner of the development to pay taxes or
PILOTS.
The proponent's presentation materials do not address "external" financial impacts of the project beyond the need
for Town subsidies and the contribution of land. There are nevertheless several categories of impacts which should
be considered, even if they cannot be quantified.
112023 Housing Feasibility Study: https://www.lexingtonma.gov/1903/Housing-Feasibility-Study
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• Traffic. Adding new units anywhere in Lexington creates traffic impacts. The magnitude of those impacts
will depend on the project size. Even if the contribution of this project can be characterized as relatively
insubstantial,they should be carefully evaluated given that Lowell Street is a busy road,particularly at peak
hours.
• Infrastructure. Consideration also should be given to the potential need for improvements to infrastructure,
including the addition of sidewalks, roadway and traffic signal modifications,water and sewer connections,
etc.
• Town Services. On its own, a development of up to 50 units is unlikely to have a significant impact on most
town services,but adding new units would contribute to the cumulative increase in the demand for services
as the Town experiences growth in its housing stock.
• School Impacts. Unlike age-restricted building projects such as the recently approved Waterstone Senior
Living project on Pleasant Street, an all-affordable housing development will welcome families with
school-age children. Qualifying for some state and federal subsidies requires an all-affordable development
contain a majority of two-and three-bedroom units,which are particularly attractive to families.
While it is always possible to downplay the financial impact in any of these areas by applying an incremental
analysis to one project on its own, a complete analysis requires that cumulative effects be considered as well, i.e.,
the cumulative effects of the multiple developments that are reasonably likely to come to fruition, including those
following the MBTA Communities overlay districts approved at the 2023 Annual Town Meeting.
In addition to these categories of "external' financial impacts, there are also financial risks to the Town which
should be understood, evaluated, and mitigated to the extent feasible. Among those risks are that a private
developer may fail or go out of business, potentially leaving the Town with the cost and risk of completing the
development or finding a replacement developer; and that the costs of maintaining the property may increase faster
than allowable rents, creating a revenue deficit that could threaten the continued financial viability of the housing
development without further subsidies.
Authority for Control of the Development Conceit
Town Meeting is being asked to delegate the responsibility for determining the scope and details of the
development to the Select Board. It does not appear that Town Meeting will have another opportunity to approve or
disapprove the specifics of an all-affordable housing project on the Lowell Street Parcel, either through an
appropriation or a zoning article. If Town Meeting approves the appropriation of substantial CPA funds to the
recently created Affordable Housing Trust (AHT), including the $3.2 million requested this year under Article
10(i), the funds necessary to proceed with a project on the Lowell Street Parcel will be available directly from the
AHT.
This article differs from other land dispositions and public or quasi-public projects in that Town Meeting is asked to
delegate entirely to the Select Board its traditional authority to dispose of Town property, as well as the
responsibility for evaluating, resolving, and mitigating the risks and concerns described above without having a
specific proposal.
Committee Position
This Committee supports the concept of building affordable housing on the Parcel and of taking advantage of state
and federal subsidies. However, under the present circumstances, the Committee does not believe it has sufficient
information to make an informed financial evaluation of, or to take a position for or against, the article on the
merits. The structuring and financing of a federal and state-subsidized affordable housing development is extremely
sophisticated and complex. It can follow many different models involving for-profit and not-for-profit entities,
grants, and governmental subsidies.
The Committee also does not take an official position on whether a broad delegation to the Select Board is
warranted, but some members would prefer to have more detailed information and a better understanding of what
terms and conditions might be included in an RFP before doing so. Other members believe this request represents
the start of an unparalleled opportunity to expand affordable housing in Lexington and they are satisfied with the
process under which the Town would undertake this project.
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Article 34 Amend General Bylaws - Tree Bylaw - Extend Tree Bylaw
to All Private Property
Funds Requested Funding Source Committee Recommendation
None N/A —
The Appropriation Committee has chosen to comment on this bylaw change without making any recommendations,
to inform Town Meeting about potential pressures its acceptance could put on future Town budgets. We'll look at
how enforcement of the current bylaw is handled in the current FY2024 and the proposed FY2025 budget, and how
the proposed bylaw changes may require future changes. There are three proposed bylaw changes, Article 34, 35
and 36, and the following comments apply to all.
The current Tree Bylaw addresses the removal and replacement of trees located in the lot setbacks during the
development or redevelopment. Monitoring and enforcement of the bylaw is the responsibility of the Department of
Public Works Superintendent of Public Grounds. These tasks have grown to occupy such a significant amount of
time that the FY2025 budget includes a request to add an additional full-time position, Assistant Superintendent of
Public Grounds, with salary and benefits of$103,000. The proposed bylaw changes under Article 34, 35 and 36
will clarify the regulations that make up the bylaw, aiding in the monitoring and enforcement. This additional
clarification combined with the additional staffing means that the financial effects of these articles are already
accounted for in the FY2025 budget. The same applies to future budgets, until and unless other changes to the
bylaw are proposed at a future town meeting.
Article 35 Amend General Bylaws - Tree Bylaw - Require Mitigation
Planting in Certain Instances
Funds Requested Funding Source Committee Recommendation
None N/A —
See Article 34.
Article 36 Amend General Bylaws - Tree Bylaw - Exemptions
Funds Requested Funding Source Committee Recommendation
None N/A —
See Article 34.
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Appendix A: 5-Year Budget Projections
The Town's Finance Department prepares a 5-year forecasts for use in the Budget Summit process to develop a
budget for the next fiscal year. This report summarizes the Finance Department's projections and discusses their
implications in planning for future Town budgets.
All budget figures in the tables in this appendix are given in thousands of dollars.
Summary of Projections
Table A-1 summarizes total revenues and expenses, showing actual results for FY2022 and FY2023, revised
budgeted figures for FY2024 (still underway), the proposed budget for FY2025 presented in the Brown Book, and
projected figures for FY2026-FY2029. The bottom line shows net surpluses (deficits).
For FY2022 and FY2023 the Town ran substantial overall surpluses, about 4.8%of expenses in FY2022 and about
5.6% in FY2023. These surpluses flowed to free cash in the following year, and were available to fund one-time
expenses. For the current fiscal year (FY2024), the revised budget shows income and expenses in balance, as
required under state law. After the tax levy new growth and Free Cash have been certified, the current year,
FY2024, may also show a surplus. Normally, fiscal years will end with a surplus because Town budgets are
developed conservatively—they avoid overestimating revenues or underestimating expenses, limiting the chance
that the Town be short of funds for budgeted expenses. Towns may not run a deficit during the fiscal year, except in
very limited circumstances.
Similarly, the recommended budget for FY2025 is balanced, and it seems likely that the final actual figures will
result in a surplus due to the Town's conservative budgeting policy.
Table A-1. Actual and Projected Revenues and Expenses ($1,000s)
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029
Revenue Category Actual Actual Revised Proposed Projection Projection Projection Projection
Total Revenues $ 254,876 $ 274,892 $ 279,071 $ 290,053 $ 291,771 $ 299,807 $ 307,565 $ 316,996
Total Expenses $ 243,290 $ 260,352 $ 279,071 $ 290,053 $ 297,009 $ 307,779 $ 320,478 $ 333,161
Revenue-Expenses $ 11,586 $ 14,540 $ — $ — $ (5,238) $ (7,972) $ (12,913) $ (16,165)
As%of expenses 4.8 % 5.6 % —% —% (1.8)% (2.6)% (4.0)% (4.9)%
The projections beyond the FY2025 budget under consideration show projected expenses exceeding projected
revenues, yielding deficits ranging from 1.8%of expenses in FY2026 to 4.9%in FY2029. However, any projection
of revenues or expenses is subject to considerable uncertainty, as we discuss in greater detail below. When the time
comes to prepare a budget for one of those years, if the projection still indicates a deficit, changes will be made to
bring budgeted expenses and revenues in line. This can be accomplished with a combination of adjustments,
including limited program improvements and increasing the use of available funds.
Projections, particularly those several years out and those made in times of uncertain inflationary pressures, are
subject to substantial uncertainties, however the projected deficits suggest a modest revenue increase and the need
to control costs.We present the projections in more detail below.
Projected Revenues
Table A-2a shows projections of various revenue categories and provides notes on the assumptions behind those
projections. Property taxes dominate revenues, accounting for 79% of total revenues in FY2023 (actuals) rising to
85%in the projection for FY2029. As a result, the assumptions concerning property tax revenues are critical to the
projections.
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Table A-2a. Projected Revenues by Category ($1,000s)
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029
Revenue Category Actual Actual Revised Proposed Projected Projected Projected Projected
1 Property Tax $ 204,229 $ 216,187 $ 227,349 $ 237,146 $ 244,433 $ 253,044 $ 261,870 $ 270,917
Levy
2 State Aid $ 16,677 $ 17,095 $ 19,633 $ 19,944 $ 20,386 $ 20,628 $ 20,868 $ 21,110
3 Local Receipts $ 16,714 $ 23,992 $ 14,771 $ 16,116 $ 16,319 $ 16,530 $ 16,748 $ 16,971
4 Available Funds $ 17,825 $ 17,643 $ 17,329 $ 18,474 $ 11,200 $ 10,161 $ 8,621 $ 8,527
5 Revenue Offsets $ (2,002) $ (1,831) $ (1,891) $ (2,349) $ (2,441) $ (2,484) $ (2,529) $ (2,575)
6 Other Revenues $ 1,432 $ 1,806 $ 1,894 $ 1,835 $ 1,872 $ 1,928 $ 1,986 $ 2,046
Total Revenues S 254,876 S 274,892 S 279,086 S 291,166 S 291,771 S 299,807 S 307,565 S 316,996
All dollar amounts shown in thousands.Source:Lexington Finance Department
Notes on assumptions
1 Property Tax Reflects statutory allowable growth of 2.5%and assumed new growth of$2.5 million
Levy annually.
2 State Aid Increases at$30 per pupil for FY2025-29.(minimum aid). School enrollment for
FY2025-2027 is from School Dept budget documents. UGGA projected to increase by 2%
per year.
3 Local Receipts Assumes modest growth in local receipts based on evaluation of historical averages.
4 Available Funds Free Cash estimate of$10,000,000 available for FY2025,$9,000,000 for FY26, and
$7,550,000 for FY2027-2028. Annual contribution of $171,000 from TDM Stabilization
Fund to support Lexpress and the Alewife Shuttle. In FY2025,$32,270 from balance of
Health Claims Trust Fund to be used to fund health insurance.This will be$0 in future
years as the fund is fully drawn down.Includes$50,000 in grant funding to support Visitor
Center operations for FY2024-FY2027.Further annual contributions from PEG Special
Revenue Fund and Cemetery Sale of Lots Fund reflect anticipated spending tied to those
areas.
5 Revenue Offsets $800K for overlay(property tax abatement and exemptions)in FY2026-29. $400K set-
aside for snow&ice deficit annually;Also includes Cherry Sheet Assessments increasing
at 3.5%annually and Cherry Sheet Offsets(State Aid to Public Libraries).
6 Other Revenues Water,Wastewater and Recreation FY2025 Enterprise Indirects increasing by 2%annually.
Table A-2b shows the projected year-to-year percentage increases in the various revenue categories. Keep in mind
that many sources of FY2022 revenues were heavily impacted by the pandemic. Note that the Property Tax Levy
grows more slowly from FY2025-FY2029 than in the earlier years. The substantial growth rate in FY 2024 Chapter
70 State Aid is not expected to continue, although it is still uncertain how revenue generated by the Fair Share
Amendment, aka the "Millionaire's Tax", will affect Lexington's future aid and this is not factored in this
projection. Local Receipts also are greatly reduced from the proposed FY2025 levels. In both cases,the differences
appear to reflect conservative assumptions, which we discuss in more detail below for property tax revenues. The
other notable change is in Available Funds, which shrink in the projected years due to conservative budgeting
which lowers levels of free cash.
Table A-2b. Annual Rates of Increase in Revenues
FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029
Revenue Category Actual Revised Proposed Projected Projected Projected Projected
1 Property Tax Levy 5.9% 5.2% 3.8% 3.6% 3.5% 3.5% 3.5%
2 State Aid 2.5% 14.8% 1.6% 2.2% 1.2% 1.2% 1.2%
3 Local Receipts 43.5% (38.4)% 9.1% 1.3% 1.3% 1.3% 1.3%
4 Available Funds (1.0)% (1.8)% 6.6% (39.4)% (9.3)% (15.2)% (1.1)%
5 Revenue Offsets (8.5)% 3.2% 24.2% 3.9% 1.8% 1.8% 1.8%
6 Other Revenues 26.1% 4.9% (3.1)% 2.0% 3.0% 3.0% 3.0%
Total Revenues 7.9% 1.5% 3.9% 0.6% 2.8% 2.6% 3.1%
Note:Each entry shows the percentage change from the previous year, calculated from Table A-2a.
It is important to note that the use of Free Cash to supplement the operating budget is now phased out under a 5-
year program. The FY2019 budget used $3.74 million, and this amount was reduced by $700,000 per year, with the
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
program suspended in FY2022 due to the pandemic,then completed in FY2023. This transition has the net effect of
having $700,000 more available in each of these years to fund non-recurring items such as Cash Capital, OPEB, or
the Capital Stabilization Fund. The increased use of cash for capital projects has reduced within-levy debt and the
associated interest costs. The Town does not intend to use Free Cash for operating expenses in future fiscal years.
Proposition 2'/2 limits growth in the property tax levy to 2.5%each year plus the additional revenue resulting from
"New Growth" in the tax base. This New Growth is the incremental tax revenue from the assessed value of a
property following capital investment, e.g., construction and/or renovation. The limit on the tax levy may be
temporarily exceeded to cover debt service on projects that are deemed exempt from Proposition 2'/2 as the result of
a town-wide referendum. In addition, a successful operating override referendum can permanently increase the tax
levy limit.
Leaving aside exempt debt service and operating overrides, New Growth is a key determinant of increases in
property tax revenue. The Finance Department's projections assume that New Growth will be $2.5 million per year,
up slightly from the $2.75 million assumed in recent prior years. As shown in the figure below, this assumption is
conservative in the sense that it has been lower than the actual new growth in nine of the last ten fiscal years.
New Growth Levy: Budgeted vs. Actual ($1,000s)
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000 - - - - - - -
$1,000
$0
New Growth for Openi oris . . . TOW New Growth — —Assinne l for forecast
Based on a fiscal guideline adopted for FY2023,the New Growth resulting from PSDUP rezonings or that occurs in
the Hartwell Overlay District, is to be appropriated to the Capital Stabilization Fund to be used to offset future debt
service payments made on the Lexington High School project. Of the $6,857,000 FY2023 New Growth, $1,676,000
was in this category. In addition, $1,060,000 of FY2023 new growth resulted from a change in tax status at Takeda
Pharmaceutical company in regards to their personal property assets. This unexpected revenue from Takeda was
set-aside into the Pension Fund. These two set-aside amounts totaled $2,735,999 in new growth revenue that was
unavailable to support the operating budget in FY2023.
The Finance Department's projection assumes that the conservative figure assigned for New Growth in the budget
can be used as a valid projection, but in the long run this will underestimate future tax revenue. The budget for New
Growth is intentionally set well below the expected value as a safeguard against a budget shortfall, which could
result if actual New Growth fell below the budgeted amount. A more realistic projection should instead be based on
measurable trends, including, but not limited to, the long-term average for New Growth that has used to fund the
operating budget.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
It is more difficult to evaluate the assumptions regarding the projections of other revenue categories, but we note
that past forecasts for those other categories have not been consistently low or high.
However, for total revenues in the last three completed fiscal years (FY2021-FY2023), actual revenues have been
higher than projected, especially for projections made several years in advance. For example, projections for
FY2023 made in 2019 were 9.8% below actuals and those for FY2022 made in 2018 were 7.5% lower than the
actual.
Projected Expenses
Table A-4a shows the Finance Department's expense projections by category.
Table A-4a. Projections of Expenses (figures shown in$1,000's)
FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029
Expense Category Actual Revised Projection Projection Projection Projection Projection
Education S 131,478 S 138,232 S 143,915 S 151,213 S 158,884 S 166,947 S 175,423
8 LPS Wages $ 106,450 $ 112,792 $ 120,853 $ 126,896 $ 133,240 $ 139,902 $ 146,898
9 LPS Expenses $ 21,804 $ 21,939 $ 19,655 $ 20,638 $ 21,670 $ 22,754 $ 23,891
10 Minuteman $ 3,224 $ 3,502 $ 3,406 $ 3,679 $ 3,973 $ 4,291 $ 4,634
Municipal S 57,074 S 61,435 S 64,000 S 68,867 S 70,304 S 71,657 S 72,403
11 Municipal Wages $ 35,892 $ 38,035 $ 39,872 $ 44,002 $ 44,662 $ 45,199 $ 45,085
12 Municipal Expenses $ 21,182 $ 23,400 $ 24,128 $ 24,865 $ 25,641 $ 26,458 $ 27,319
Shared Expenses S 18,317 S 18,819 S 18,896 S 20,786 S 21,946 S 23,125 S 24,322
13 Debt Service $ 7,168 $ 6,854 $ 6,123 $ 7,213 $ 7,573 $ 7,952 $ 8,350
14 Mitigate Within Levy $ - $ - $ - $ - $ - $ - $ -
15 OPEB $ 1,930 $ 1,980 $ 2,030 $ 2,080 $ 2,130 $ 2,180 $ 2,230
16 Retirement $ 9,219 $ 9,985 $ 10,743 $ 11,493 $ 12,243 $ 12,993 $ 13,743
Benefits S 30,864 S 34,938 S 37,479 S 39,351 S 41,317 S 43,382 S 45,551
17a Medicare $ 2,089 $ 2,190 $ 2,305 $ 2,443 $ 2,590 $ 2,745 $ 2,910
17b Health Insurance $ 27,712 $ 31,613 $ 33,948 $ 35,645 $ 37,428 $ 39,299 $ 41,264
17c Dental $ 1,045 $ 1,110 $ 1,201 $ 1,237 $ 1,274 $ 1,312 $ 1,352
17d Life $ 18 $ 25 $ 25 $ 25 $ 25 $ 25 $ 25
18 Reserve Fund $ - $ 750 $ 850 $ 850 $ 850 $ 850 $ 850
19 Workers'Comp. $ 625 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500
20 Unemployment $ 119 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200
21 Property&Lib.Ins. $ 933 $ 992 $ 1,141 $ 1,198 $ 1,258 $ 1,321 $ 1,387
22 Uninsured Losses $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200
23 Solar Production $ 381 $ 390 $ 390 $ 390 $ 390 $ 390 $ 390
24 Capital $ 14,251 $ 16,342 $ 16,776 $ 8,234 $ 6,709 $ 6,686 $ 6,713
25 Other $ 592 $ 1,841 $ 715 $ 230 $ 230 $ 230 $ 230
26 Approp.to Capital Stab $ 3,785 $ 396 $ - $ - $ - $ - $ -
27 Unallocated Revenue $ - $ - $ 955 $ 955 $ 955 $ 955 $ 955
28 Tax Levy Dedicated to $ 1,733 $ 4,036 $ 4,036 $ 4,036 $ 4,036 $ 4,036 $ 4,036
CSF
Total Expenditures S 260,352 S 279,071 S 290,053 S 297,009 S 307,779 S 320,478 S 333,161
Note:Amounts in italics are subtotals.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Table A-4b below provides the department's notes on the assumptions underpinning the projections.
Table A-4b.Notes on Projected Expenses
Expense Category Notes on Assumptions
Education
8 LPS Wages Assumes a 5%increase.
9 LPS Expenses Assumes a 5%increase.
10 Minuteman FY2026-29 projections increase by 8%.
Municipal
11 Municipal Wages Projections based on step increases for current staff,settled collective bargaining contracts,and anticipated
contract settlements for out-years.
12 Municipal Expenses Level-service budget using CPI of 7%for electricity,5.5%for natural gas,10%for IT software expenses,and
1.8%for all other expenses.
Shared Expenses
13 Debt Service Within levy debt service from General Fund debt table.Includes projections on all authorized unissued debt
service,plus an increase of 5%in newly authorized debt funded projects each year. (This is a maximum
amount of in-levy debt for existing authorizations).
14 Mitigated Within Debt service increases in FY2026-2028 above 5%will be mitigated by use of the Capital Stabilization Fund.
Levy Debt Service (N/A)
15 OPEB Continued funding of OPEB with a$50,000 annual increase.
16 Retirement Contributory Retirement assessment(based on 2030 amortization of unfunded liability and 7.25%interest rate
assumption).
Benefits
17a Medicare 6%increase in Medicare,reflecting an increase in the number of eligible employees and increases in wages.
17b Health Insurance FY2025,growing at 5%annually.
17c Dental FY2025,growing at 3%annually.
17d Life Level Funding
18 Reserve Fund Level Funding
19 Workers'Comp. Level Funding.;to maintain account balance of approx. $2 million
20 Unemployment Level Funding.
21 Property&Lib.Ins. FY2025,growing at 5%annually.
22 Uninsured Losses Level Funding. Staff may recommend further reductions in out-years to maintain fund balance at$1 million.
23 Solar Production Payments to Syncarpha for construction costs of Hartwell Ave.solar arrays. Level Funding.
24 Capital Assumes all available Free Cash not set aside for pension,current year needs or unallocated will be used for
cash capital,plus,$2.71M for Street Improvement and$231K for Municipal Building Envelope,portions of
which grow at 2.5%through FY2029.
25 Other Reflects various warrant articles such as Senior Tax Work-Off and$200K in unanticipated needs in
FY2025-29
26 Approp.to Capital Reflects past and projected transfers to continue funding the Capital Stabilization Fund to cover the high school
Stab.Fund project.
27 Unallocated Revenue Proposed allocation set-aside for yet to be determined priorities.
28 Tax Levy Dedicated Set-aside of tax levy tied to commercial new growth for Capital Stabilization Fund. Anticipated to grow in
to CSF future years,tied to new revenue that is not captured in this model.
To simplify the discussion of the expense projections, Table A-5a aggregates the expense categories from Table
A-4a. The three major groupings are Education, Municipal, and Shared Expenses. For Education,we show LPS and
Minuteman separately.We provide a further breakdown for shared expenses,breaking out appropriations for capital
projects and to the Capital Stabilization Fund and OPEB, all three of which are determined by explicit policy
decisions, some of which are made after the Town knows actual new growth and the amount by which actual
expenses are less than budgeted. The "other" shared expenses are dominated by employee benefits, the largest
component of which is Health Insurance costs.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Table A-5a. Expense Projections Aggregated
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029
Expense Category Actual Actual Revised Projection Projection Projection Projection Projection
Education S 123,767 S 131,478 S 138,232 S 143,915 S 151,213 S 158,884 S 166,947 S 175,423
LPS $ 120,637 $ 128,254 $ 134,730 $ 140,508 $ 147,534 $ 154,910 $ 162,656 $ 170,789
Minuteman $ 3,130 $ 3,224 $ 3,502 $ 3,406 $ 3,679 $ 3,973 $ 4,291 $ 4,634
Municipal S 53,717 S 57,074 S 61,435 S 64,000 S 68,867 S 70,304 S 71,657 S 72,403
Shared Expenses S 65,864 S 73,533 S 79,404 S 82,138 S 76,929 S 78,591 S 81,875 S 85,334
OPEB $ 1,880 $ 1,930 $ 1,980 $ 2,030 $ 2,080 $ 2,130 $ 2,180 $ 2,230
Capital $ 10,136 $ 14,251 $ 16,342 $ 16,776 $ 8,234 $ 6,709 $ 6,686 $ 6,713
Capital Stabil.Fund $ 3,788 $ 5,518 $ 4,433 $ 4,036 $ 4,036 $ 4,036 $ 4,036 $ 4,036
Other $ 50,060 $ 51,834 $ 56,649 $ 59,296 $ 62,579 $ 65,716 $ 68,973 $ 72,355
Grand Total S 243,347 S 262,085 S 279,071 S 290,053 S 297,009 S 307,779 S 320,478 S 333,161
Note:Amounts in italics are subtotals.Source:Aggregation of values in Table A-4a
Table A-5b shows the year-to-year percentage increases in the various aggregated categories. Education expenses
are projected to grow more rapidly than municipal expenses. Within education, the Town's contribution to
Minuteman is projected to rise substantially more rapidly than the budgets for LPS. The Town plans to grow the
size of its annual OPEB contribution by$50,000 each year, a modest annual rate of about 2.5%.
Table A-5b. Annual Rates of Increase in Expenses
FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029
Expense Category Revised Proposed Projection Projection Projection Projection Projection
Education 62% 5.1% 4.1% 5.1% 5.1% 5.1% 5.1%
LYS 6.3% 5.0% 4.3% 5.0% 5.0% 5.0% 5.0%
Minuteman 3.0% 8.6% (2.7)% 8.0% 8.0% 8.0% 8.0%
Municipal 6.2% 7.6% 4.2% 7.6% 2.1% 1.9% 1.0%
Shared Expenses 11.6% 8.0% 3.4% (6.3)% 2.2% 4.2% 4.2%
OPEB 2.7% 2.6% 2.5% 2.5% 2.4% 2.3% 2.3%
Capital 40.6% 14.7% 2.7% (50.9)% (18.5)% (0.3)% 0.4%
Capital Stabilization Fund 45.7% (19.7)% (8.9)% _% _% _% _%
Other 3.5% 9.3% 4.7% 5.5% 5.0% 5.0% 4.9%
Grand Total 7.7% 6.5% 3.9% 2.4% 3.6% 4.1% 4.0%
Note:Each entry shows the percentage change from the previous year, calculated from Table A-5a.
Planned contributions to the Capital Stabilization Fund to reduce the future impacts on taxes of the High School
project show the greatest volatility, increasing significantly from zero dollars in FY2021 to $3.8 million in FY2022,
$5.5 million in FY2023 and then $4.4 million in FY2024. It drops to $4 million in FY2025 and for the last 4 years
of the projection, which represents only the current amount dedicated from tax levy new growth as outlined earlier
in this section. The amount set aside from tax levy new growth in future years is expected to increase, and the Town
may also elect to appropriate free cash or other available funds to the Capital Stabilization Fund, neither of which
are reflected in this projection. Capital spending is projected to drop off in FY2026,which correlates to the decrease
in projected free cash available in those periods. However capital spending is prone to actually increase when one-
time sources of revenue such as Free Cash exceed projections and are applied to expand this annual program. Other
shared expenses are projected to rise at relatively low rates.
Concluding Remarks
The Finance Department's projections appear to suggest that over the next five years, the Town will have to find
ways to reduce expenses or increase revenues to maintain a balanced budget as required by state law. To further
complicate matters, we know that these projections may not take fully into account the probability that the current
high inflation environment will exceed projections. Due to rises in the costs of materials and labor, the Town has
received bids for performing capital projects that greatly exceed the appropriations made to fund them. Energy
prices have also been rising rapidly, which will generally increase the cost of goods and services. An extended
period of inflation could also trigger wage increases that are much larger than those assumed by these projections.
Additionally, it is unclear how long high interest rates will persist and increase the carrying cost of our debt
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
funding. However, our review suggests that the impact of these problems may be partially mitigated by the Town's
conservative approach in forecasting revenues.
To address the financial strains suggested by the projections, some combination of actions may be needed to meet
balanced budget requirements, such as:
1. Improving efficiency so that the same services can be provided with fewer resources. Such
opportunities may well prove elusive.
2. Creating additional sources of revenue. There may be opportunities to increase some fees or add new
ones,but it is not clear that there are opportunities for significant increases.
3. Reducing service levels.
4. Relaxing of some of the goals embodied in the Town's fiscal policies, e.g., curtailing contributions to
the Capital Stabilization Fund or other reserves.
5. Passing Proposition 2'/2 operating override(s)to permanently boost annual property tax revenue.
Each of these alternatives involves policy tradeoffs for which this Committee offers no specific guidance.
It is also important to note that actions to reduce operating expenses, or to increase recurring annual revenues in one
year will generally carry forward to reduce future deficits. For example, reductions in service levels, if not restored,
will lower expenses in future years with no further action.
However, actions to eliminate a projected operating deficit using non-recurring revenue, particularly Free Cash,
generally will not carry forward. Such actions tend to reduce the Free Cash that carries over into the next fiscal
year. In successive years,the prior year's "solution"becomes increasingly difficult to implement as Free Cash and
other non-recurring revenue is consumed but not replaced.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Appendix B: Enterprise Funds
The Town of Lexington has maintained Water, Wastewater (Sewer), and Recreation Enterprise Funds since soon
after the state legislature enacted legislation authorizing such funds, G.L. c. 44, § 53F ''/2, in the late 1980's. An
enterprise fund "establishes a separate accounting and financial reporting mechanism for municipal services for
which a fee is charged in exchange for goods or services. Revenues and expenses of the service are segregated into
a fund with financial statements separate from all other governmental activities" and are accounted for on an
accrual basis. An enterprise fund provides management and taxpayers with information to measure performance,
analyze the impact of financial decisions, and determine the cost of providing a service. Enterprise funds may be
operated on a stand-alone basis, i.e., supported by fees, or subsidized by the General Fund.
The Water and Wastewater Enterprise Funds operate on a completely stand-alone basis. These funds do not rely on
any tax-levy revenues but cover their complete operating and capital needs with user charges and fees.
The Recreation Enterprise Fund is only partially stand-alone. Before the Community Center began to operate, the
Recreation Department's operating costs were funded by user charges and fees. In the same time period, the
Enterprise Fund contributed to the debt service on certain recreation capital projects, such as the Lincoln Field
restoration project for which the debt has now been fully repaid, but projects, such as the renovation of
playgrounds, that were associated with facilities that do not generate fees were funded by the tax levy. With the
advent of the Community Center, the Recreation Department was reorganized into the Department of Recreation
and Community Programs. Since the Community Center provides a range of fee-free services to the community,the
salaries and benefits of a group of Community Center related employees is now funded through the tax levy. Most
recreation capital costs are subsidized by the General Fund through a combination of tax levy funding, within-levy
borrowing, Community Preservation Act(CPA) funding, and debt exclusion funding.
Establishing the Enterprise Fund Budgets
At the Annual Town Meeting each year, Town Meeting appropriates an operating budget and authorizes capital
expenditures for each of the three enterprise funds for the upcoming fiscal year. Later in the year(in the early fall in
the case of the Water and Wastewater Enterprise Funds), user charges are set that are designed, based on
projections of usage for the fiscal year, to be sufficient to cover the appropriations made by Town Meeting to run
the enterprises.
Depending on the accuracy of the usage projections, the actual revenue realized by the enterprise during the year
may exceed or fall short of the appropriated amount. Any operating surplus must be retained in the enterprise fund.
The funds accumulated (referred to as "retained earnings") may be applied only to meet the capital needs of the
enterprise or to reduce user charges. Any operating loss (after applying any accumulated retained earnings),must be
made up in the succeeding fiscal year's appropriation.
Since FY2007, the annual town meeting warrant has contained a separate article for the appropriation of the
enterprise fund operating budgets (previously, appropriations for the enterprise funds were commingled with those
for the General Fund). This presentation makes it easier to understand the operating budgets of the enterprise funds.
However, it should be noted that certain indirect costs that are charged by the General Fund to the enterprise funds
are still appropriated as part of the operating budget, and that certain other components of the budget, including
contributions to OPEB and funding for capital projects and programs, are appropriated in other articles. For the
complete operating costs of the enterprise funds, including indirect costs, OPEB contributions and cash applied
toward capital projects„ see the Brown Book sections on Water,Wastewater, Recreation.
To present a more meaningful picture of the complete enterprise fund operating budgets, the tables included in our
write-up of the enterprise fund operating budget article have been expanded to show all components of the budget,
however appropriated.
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2024 ATM APPROPRIATION COXMTTEE 13 MARCH 2024
Appendix C: Revolving Funds
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 Town Meeting. A revolving fund allows Town Meeting
to dedicate in advance a specific source of anticipated revenue from fees and charges, on an ongoing basis and
without the need for further appropriation, to pay expenses for rendering the services for which those fees and
charges are collected.
Revolving funds managed by municipal departments are generally governed by G.L. c. 44, § 53E1/2. (There are
also several revolving funds managed by the School Department, such as the School Lunch Fund, which 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.
Under the Municipal Modernization Act of 2016, Town Meeting may establish a revolving fund by by-law, which
obviates the need for annual reauthorization. The bylaw must specify:
• the purpose(s)for which monies deposited in the fund may be used
• the source(s) of funds to be deposited
• the board, department or officer authorized to expend monies from the fund; and
• any other reporting requirement the Town may impose
The revolving funds the Town of Lexington has established,with their purposes and sources of funds, can be found
at Section 110-1 of the Code of Lexington, https://ecode360.com/32569540.
Town Meeting is required each year to vote a limit on the total amount that may be expended from each revolving
fund in the ensuing fiscal year. Expenditures may not be made, nor liabilities incurred, in excess of such limit
during the fiscal year, except with the approval of the Select Board and this Committee. In any event, expenditures
may not exceed the existing balance of the fund. Any balance remaining in a fund at the end of a fiscal year may be
carried over to the next fiscal year. If a revolving fund is terminated,the balance in the fund reverts to the General
Fund at the end of the fiscal year.
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2024 ATM APPROPRIATION CoXMTTEE 13 MARCH 2024
Appendix D: Tax Relief Programs
In early 2004, the Board of Selectmen created an ad hoc Tax Deferral and Exemption Study Committee to explore
ways in which the property tax relief available to low and moderate-income senior citizens and other needy
residents could be enhanced and made more accessible. Since then, with the guidance of this committee, Town
Meeting has taken a succession of steps to expand such relief, for the most part maximizing the options that the
Town is allowed to adopt under existing state law and, in some cases, obtaining home rule petitions to further
increase opportunities for tax relief.
The principal programs for tax relief now available to Lexington homeowners are:
• A state income tax "Circuit Breaker" program providing a state tax credit for low and moderate-income
homeowners and renters age 65 and over(at no cost to the Town).
• A tax deferral program under which low-to-moderate-income homeowners age 65 or over may defer any or
all of their property tax, after applying any available exemptions,up to half the value of their house. The
deferral need not be repaid until the house is sold or transferred. The interest rate applied to each year's
deferral is a variable rate designed to match the Town's earnings on its funds.See generally G.L. c. 59, §5,
clause 41A.
• A tax exemption program under which homeowners age 65 or over with limited income and limited assets
other than the value of their home may deduct$2,000 from their annual property tax.See generally G.L. c.
59, § 5, clause 41C.
• A locally-controlled Senior Service program adopted by Town Meeting in 2006.
• A Community Preservation Act surcharge exemption program.
A brief description of each of the programs follows. Detailed and up-to-date information about eligibility criteria,
the amount of relief available, and which programs may be combined can be found in a brochure on the Town
website entitled Property Tax Relief Programs which is updated annually by the Assessor's office. See https:
www.lexingtonma.gov/168/Elderly-Other-Tax-Relief.
State Income Tax "Circuit Breaker"
The "Circuit Breaker" provides state income tax relief to low- and moderate-income homeowners and renters age
65 and over. Qualified homeowners are entitled to a refundable dollar-for-dollar credit on their state income tax to
the extent that their real estate taxes and one half of their water and sewer bills exceed 10% of their income.
Qualified renters are entitled to the credit to the extent that 25% of their annual rent exceeds 10% of their income.
This program is administered by the Massachusetts Department of Revenue and has no direct impact on Town
finances.
The "41A" Deferral Program
This property tax deferral program, available to low and moderate-income homeowners 65 and over, is authorized
by state law, G.L. c. 59, § 5, Clause 41A, and administered at the local level. Although not widely used, it offers
immediate and substantial property tax relief to seniors who may be having trouble paying their taxes. Those who
qualify may defer any part or all of their property tax in any given year, up to a cumulative total of half the assessed
valuation of the property. The deferred taxes do not have to be repaid until the property is sold or transferred,
whether before or after the resident's death. Towns are permitted to set their own interest rates for this program at
any rate up to 8%. Lexington's interest rate is a floating Treasury rate, updated annually, which is intended to be
equivalent to the Town's return on its funds in the year of deferral. The rate set each year remains in effect for the
life of deferrals granted in that year.
The 41A deferral program is an attractive form of tax relief from the Town's point of view because it is essentially
revenue-neutral. While a significant increase in the number of participants could potentially affect the Town's cash
flow, there is little risk of loss since the Town is in effect making well-secured loans. The Town anticipates
repayment of all deferred taxes with interest, and over time an equilibrium should be reached under which as many
deferral agreements are repaid as are entered into.
The "41C" Exemption Program
For many years, the Town has made available to qualifying seniors a property tax exemption under Clause 41 of
G.L. c. 59, §5, and its successor, Clause 41C. Under the "41C" Program, the State partially reimburses the Town
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for exemptions granted, subject to appropriation. Exemptions not reimbursed by the State are funded from the
Town's overlay account.
Prior to 2004, the credit was limited to $500 per year and eligibility criteria were quite restrictive. Since then, the
Town has increased the exemption to $2,000 and taken a number of steps to expand eligibility,taking advantage of
local options made available by the legislature from time to time.
In 2005, Town Meeting voted to adopt the provisions of G.L. c. 59, § 5, Clause 41D, which automatically adjusts
the income and asset limits for Clause 41 C (but not the exemption amount)by a COLA established annually by the
state Department of Revenue. The current income and asset limits are detailed in the Property Tax Relief Programs
brochure mentioned above.
The Senior Service Program
The Senior Service program allows low-income seniors to perform volunteer work for the Town in exchange for a
reduction in their property tax. This program is locally controlled. Eligibility criteria, the "wage" rate, and the
maximum amount which may be worked off are established by the Select Board from time to time. The Senior
Service program, formerly funded from the overlay account, is now funded as part of the Town's annual budget and
is subject to appropriation.
CPA Surcharge Exemption
Low-to-moderate income homeowners age 60 or over, and low-income homeowners under age 60, may obtain a
100% exemption from the CPA surcharge on their property tax. These exemptions directly reduce the amount of
CPA revenue that the Town receives.
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Appendix E: Specified Stabilization Funds
The state statute authorizing towns to create and maintain a stabilization fund, G.L. c. 40, section 513,was amended
in 2003 to permit the creation of multiple, separate stabilization funds for specified purposes. It was further
amended by the Municipal Modernization Act in 2016. The creation of such funds, the specification of their
purpose, any alteration of their purpose, and any appropriation out of the funds, must be approved by a two-thirds
vote of town meeting. Appropriations into a fund may be approved by a majority vote of town meeting; and the
dedication of a recurring revenue stream to a fund, which continues for a minimum of three years until revoked,
may be made by a two-thirds vote of town meeting. To supplement its general Stabilization Fund, Lexington has
created a number of specified stabilization funds,which are described below.
At the 2007 Annual Town Meeting, four specified stabilization funds were established to replace certain pre-
existing special revenue accounts. Monies in the special revenue accounts, funded by negotiated payments from
developers, had previously been spent without specific appropriation. In order to comply with Massachusetts
Department of Revenue guidelines, and to make the existence and use of the funds more transparent, monies
accumulated during the year in the special revenue accounts are now transferred periodically by vote at an annual or
special town meeting to the following specified stabilization funds:
The Transportation Demand Management/Public Transportation (TDMIPT) S.F. contains payments negotiated
with developers to support the operations of transportation services. It was initially created to support the Lexpress
bus service. The 2016 Annual Town Meeting extended the purpose to "supporting the planning and operations of
transportation services to serve the needs of town residents and businesses."
The Traffic Mitigation (TM) S.F. holds payments negotiated with developers to support traffic mitigation projects,
such as improvements to signals and pedestrian access at intersections, including funds previously contained in the
Avalon Bay TDM special revenue account.
The School Bus Transportation S.F. was created to support daily school bus operations and was originally funded
with $200,000 contained in the Avalon Bay School Bus Transportation special revenue account. This fund was
dissolved at the 2018 ATM.
The Section 135 Zoning Bylaw S.F. was created to finance public improvements using monies contributed by
developers pursuant to Section 135 of the Code of Lexington.
At the 2008 Annual Town Meeting, the Special Education Stabilization Fund was created to set aside reserves to
help cover unexpected out-of-district special education expenses that exceed budget. A related goal was to enhance
transparency around the out-of-district special education budget component by segregating this expense item and
bringing budget overruns to Town Meeting for its approval. This fund was created in FY2009 with an initial
appropriation of $350,000 and another $350,000 was appropriated to the fund at the spring 2009 Annual Town
meeting. At the 2021 annual town meeting, $500,000 was transferred from this fund under article 4 to support the
Lexington Public Schools operating budget. The transferred funds were not spent, so under Article 19 at the 2023
annual town meeting $500,000 was transferred into the fund.
At the 2009 Annual Town Meeting the Center Improvement District Stabilization Fund was created and was funded
by a $100,000 payment received from the developer of Lexington Place in FY2010. The funds may be used for
projects such as tree planting, sidewalk improvements to the abutting connector between the parking lot and the
sidewalk. In each year from FY2018-2020, $27,000 was appropriated for the bike share program in Lexington
Center.
The Debt Service Stabilization Fund was also created at the 2009 Annual Town Meeting. It was used to hold
proceeds from bonds issued to support addition/renovation projects at the Diamond Middle School, Clarke Middle
School, and Lexington High School. The balance in the fund was withdrawn over a number of years and put
toward the debt service for the associated bonds. The final withdrawal was made and the stabilization fund was
dissolved under Article 3 at the 2022-3 Special Town Meeting.
At the 2011 Annual Town Meeting two more funds were created:
The Avalon Bay School Enrollment Mitigation Fund was funded with a $418,900 payment received from Avalon
Bay pursuant to an Education and Trust Fund Escrow Agreement dated May 31, 2006. The terms of that agreement
called for the establishment of an escrow fund in the amount of$750,000 with disbursements made to the Town
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annually if the number of students residing at the development (Avalon at Lexington Hills) exceeded 111. The
amount payable per student in excess of 111 was $7,100. The fund was dissolved at the 2018 ATM.
The Transportation Management Overlay District Fund (TMOD) was funded by payments from those developers
who choose to pay a transportation mitigation fee rather than taking responsibility for improving all the
intersections in the area to a certain level as provided in Section 135-43.0 of the Zoning Bylaw. Per Section
135-43.C(5)(c) "any transportation mitigation fees paid to the Town are intended to be used to fund infrastructure
improvements that are necessitated by the proposed development of the applicant."
At the 2012 Special Town Meeting, the Capital Stabilization Fund was created to set aside funds for future capital
projects, including but not limited to building renewal projects, and/or to mitigate the impact on taxpayers of debt
service, both excluded and non-excluded, related to capital projects. After the Town issues a large bond for a
project where the debt is exempted under Proposition 2'/2, the Town's exempt debt service rises sharply, with a
direct impact property tax bills.Withdrawals from the Capital Stabilization Fund allow the Town to both reduce the
magnitude and smooth the impact of the sudden increases in exempt debt service. Town Meeting can set aside
funds in periods when the Town has a surplus, and in later years these funds can be appropriated to offset a portion
of the exempt debt service. This in turn reduces the amount the tax levy must be raised above the usual limits under
Proposition 2'/2. This fund may also be used to mitigate sudden increases caused by new within-levy, i.e., non-
exempt, debt.
At the 2018 Annual Town Meeting, three new funds were created with dedicated revenue streams. The Visitor's
Center Capital Stabilization Fund was established to serve as a repository for grants, gifts, or special fees related to
the Visitor's Center building capital project. The Water System Capital Stabilization Fund was established for the
specific purpose of reserving monthly payments received from the Town of Bedford per an agreement for the sale
of water (water from the MWRA goes to Bedford through Lexington's system). The agreement with Bedford has
two components, 1) the cost of water used, and 2) a flat annual fee or "demand charge" that is split into monthly
payments. The annual fee is set so as to cover costs of future infrastructure improvements related to the Lexington-
to-Bedford water connection. It is envisioned that the monthly payments would be put into this stabilization fund
for future capital projects instead of being applied annually for rate reductions. The annual fee for FY2018 was
$62,175 and it will increase each year by a CPI factor. The Affordable Housing Capital Stabilization Fund was
established to reserve payments from Brookhaven for affordable housing, commencing in FY2020 per an
agreement in regard to the rezoning article for Brookhaven's expansion at the 2017 Annual Town Meeting.
The Ambulance Stabilization Fund was established under Article 8 of the 2018-1 Special Town Meeting for the
purpose of funding the purchase of ambulances. The fund was created in anticipation of payments from National
Development in connection with rezoning on Watertown St. Under Article 3 of the 2022-3 Special Town Meeting,
$250,000 was put into the fund.
The balances in the general as well as the specified stabilization funds may be found in the Brown Book on page
C-3.
Affordable Housing Trust
Lexington's Affordable Housing Trust (AHT) is a municipal entity that accumulates and distributes funds to
support affordable housing in the Town. The AHT is not a stabilization fund, per se, but it does act as a reserve
fund to support affordable housing.
The AHT was created by Article 12 of the 2022-3 Special Town Meeting. Primary funding for the trust comes from
the Community Preservation Act and affordable housing mitigation payments made by developers. The AHT has a
Board of Trustees that provides oversight and administers grant making, while the Town Finance Department
handles its accounting. AHT funds are managed by the Town Treasurer using a conservative investment policy that
prioritizes liquidity and stability.
AHT funds are not subject to further appropriation by Town Meeting, therefore the AHT can act independently
whenever opportunities arise. A limit on the total annual grants made by the AHT is set by the Select Board. The
Affordable Housing Trust Study Committee has recommended setting this limit to the median sales price of a home
in Lexington. Grants in excess of the annual limit are subject to Select Board approval.
The AHT does not develop or own housing units. Instead, the trust provides grants for the creation of affordable
housing to private developers (either nonprofit or for-profit), including LexHAB. Such housing may be new
construction, or use existing housing that is acquired and converted. Projects funded by the AHT are subject to
existing bylaws that govern development in the Town.
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In addition to creating affordable housing,the trust may:
• Increase affordability in existing and future housing developments
• Preserve properties faced with expiring affordability restrictions
• Assist low-and moderate-income homebuyers
• Help low-and moderate-income families make health and safety repairs
• Educate and advocate to advance affordable housing initiatives
• Hire administrative staff, consultants,housing specialists, and contractors
Future revenue supporting the AHT could include funds generated from special legislation. Currently Lexington is
waiting for legislative approval for two such home rule petitions: Bill H.3891 An Act to Establish a Surcharge on
Specific Commercial Development Activities for the Purpose of Funding the Creation of Community Housing, and
Bill H.4314 An Act Authorizing a Development Surcharge for Community Housing.
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Appendix F: Other Post Employment Benefits
The OPEB Liability
The Town of Lexington is required by State law to provide health benefits to retired employees that are comparable
to those provided for active employees. These and other retirement benefits, which are distinct from pension
benefits, are known as "other post-employment benefits" or OPEB for short. Health care benefits are by far the
largest component of OPEB. Currently, all of the Town's retirees are eligible for Medicare and receive Medicare
supplement coverage from the Town.
Because the Town is obligated to provide these benefits in the future, the anticipated costs extending over the
lifetimes of currently vested employees and retirees represent a financial liability. The size of that liability depends
on the number of employees, each employee's number of years of service,the time intervals over which the retirees
are expected to receive retirement benefits, the expected cost of providing those benefits in those future years, and
the present value of those future benefits.
In a hypothetical world where the number of retirees remains constant and annual per-capita medical costs inflate at
a rate close to a general inflation index, the size of the OPEB liability in terms of inflation-adjusted dollars would
be relatively stable, because the increases and decreases would tend to balance out. In practice, however, the
inflation-adjusted value of the OPEB liability often increases each year because of
• real (inflation-adjusted)increases in the cost of health care,
• growth in the number of retirees receiving benefits, and
• actuarial adjustments to the projected longevity of retirees.
Pay-As-You-Go versus Pre-Funding
There are two approaches to funding the OPEB liability. The first is a pay-as-you-go model where annual OPEB
expenses are paid entirely through appropriation from the tax levy. This model uses current dollars to pay for
current expenses related to benefits earned in previous years. The Town's pay-as-you-go OPEB cost for FY2023 is
approximately $8.2 million and the projected cost for FY2024 is approximately $8.7 million not including small
amounts for the Town's shares of retiree dental and life insurance.
The other approach is a pre funded model in which expenses are paid from a trust fund called the Post-Employment
Insurance Liability Fund, or PEIL Fund. This fund exists, but it is only partially funded. Once it is fully funded,
withdrawals from the Fund will cover the annual OPEB expenses, and the Town will make annual contributions to
the Fund equal to the "normal cost", or "service cost", i.e., the present value of future benefits earned during the
current year. The balance of the Fund will be maintained at or near the full-funding level by investment returns in
addition to these annual contributions. This model,which pays for future expenses using current dollars, is also how
the Retirement Fund(pensions)will operate once it is fully funded.
The difference between the current balance of the PEIL Fund and the amount needed for it to be considered fully
funded is called the "unfunded liability". Currently, contributions to the PEIL Fund act to reduce the size of the
unfunded liability, and current-year OPEB expenses are funded from the operating budget, i.e., not by withdrawals
from the Fund.
The pay-as-you-go and pre-funded models each have advantages and disadvantages. The pay-as-you-go model is
simpler to administer, but there is no benefit from long-term investment earnings, and no hedge against the higher
inflation of health care costs. In the pre-funding model, once a sufficient trust fund balance is achieved, the
investment earnings pay for a substantial portion of the costs. Building up the trust fund results in higher expenses
during the decades-long transition period, but should eventually result in lower annual appropriations from the tax
levy.
Under pay-as-you-go, there is a large gap between the time when services are rendered and the time when funds
must be raised to pay the benefits associated with those services. This gap can complicate long-term financial
planning.With prefunding,the projected fully-loaded cost of services is accounted and paid for in the current year.
Even partial prefunding has some benefits. Any monies in the trust fund provide assurance that the Town will be
able to satisfy at least some portion of its future liability, and the fund is always available as a reserve, e.g.,to fund
a portion of retiree health costs in particularly challenging fiscal years.
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On the other hand, appropriating money into the trust fund for future obligations reduces the funds available to
spend on other items or to be put aside for other purposes. Policy makers must consider whether such funding
should take priority over other liabilities, such as the costs of maintaining or replacing roads and buildings in a
timely manner. In some circumstances, choosing the latter might generate significant future savings.
On March 10, 2014,based on a recommendation from the OPEB Working Group,the Board of Selectmen endorsed
a formal policy for making annual appropriations to the OPEB trust fund:
It is the policy of the Board of Selectmen to recommend to Town Meeting each year a budget
contribution to the OPEB Trust Fund in an amount that ranges from 35 to 100 percent of the full
Normal Cost, with the General and Enterprise Funds bearing their respective shares of those
contributions. This approach will mitigate growth in the Unfunded Actuarial Accrued Liability,
reducing the amount the Town will need to budget for health insurance by approximately one-third,
as the assets of the OPEB Trust Fund will be used to underwrite the annual cost of retiree benefits.
Further, it is recognized that there are competing claims for limited Town funds, which are
considered as part of the annual budget process. Consequently, the annual recommendation for
OPEB funding shall be made in the context of other capital and operating budget needs, such that
recommended OPEB funding shall not have a material, detrimental impact on service delivery or
the maintenance of Town capital assets and infrastructure.
The Committee has supported this policy, and since 2014 the Town has made annual contributions of roughly 35%
of the OPEB normal cost to the PEIL Fund, with the exception of 2020 when the contribution was lower due to
uncertainty about the impact of the Covid-19 pandemic.
In FY2021, the Town Manager assembled a Financial Policy Working Group to review the above policy and
consider possible modifications. To date, the Working Group has considered minor adjustments to the policy, but
has not made any specific recommendations.
The Post Employment Insurance Liability(PEIL) Fund
The Post-Employment Insurance Liability Fund or PEIL Fund was created pursuant to authority granted to the
Town through a special act of the Massachusetts legislature in 2002 (MGL Chapter 317). The Fund was created to
allow the Town, at the discretion of Town Meeting, to earmark and set aside funds to pay for future retiree health
benefits. Once money has been appropriated into the PEIL Fund, Town Meeting may only appropriate monies out
of it to pay for health care costs of retirees.
The Retirement Board is responsible for the management of the PEIL Fund as well as the Retirement Fund, which
supports the Town pension system. The rules governing the management of these two funds are similar. Unlike
most other Town monies, the balance in each of these two funds may be invested in equities with degrees of risk
and rates of return that are suitable for long-term growth.
As articulated in the above policy statement of the Board of Selectmen and as confirmed by the Financial Policy
Working Group,the intention is to continue with the transition to the pre-funded approach. Hence, there have been
appropriations into the PEIL Fund at each annual town meeting since 2008. Until the Town fully funds its OPEB
liability, moving toward the pre-funded model will require the Town to continue paying for a number of years for
annual pay-as-you-go OPEB expenses, while also appropriating funds into the PEIL Fund. This combination of
appropriations could be continued until the PEIL Fund is fully funded.
GASB standards and the determination of the OPEB liability
The Town of Lexington follows standards set by the Government Accounting Standards Board (GASB) in its
"statements". In regard to OPEB accounting, GASB statements 74 and 75 (GASB 74 and GASB 75) lay out the
relevant standards, having superseded the previous set of standards described in GASB statements 43 and 45.
Briefly,these statements require the determination of the actuarial value of the Town's OPEB liability according to
specified metrics every two years, and the inclusion of a summary of the results in the Town's financial statements.
Bond rating agencies consistently ask about the actuarial report, suggesting that the size of the OPEB liability, and
its current funding level, factor into the Town's bond rating.
Estimating the present value of a complicated long-term liability like OPEB involves many actuarial assumptions,
and the final results are very sensitive to some of these factors, especially the discount rate (the rate of return on the
funds to be used to pay the future obligations), the predicted rate of inflation of per-capita medical costs, and the
number of active and retired employees. An understanding of the actuarial analyses in a proper context requires
consideration of the underlying assumptions, and judgment of how well they might mirror real-world conditions.
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Each year, the Town engages an actuarial consultant who must follow the procedures and reporting templates
established by the GASB standards to produce a report. A full actuarial analysis is done every two years. A briefer
update based on the previous year's full analysis is done in each intervening year.
The primary purpose of the actuarial reports is to provide information that is presented in the Town's financial
statements. This information, in turn, informs potential investors about one specific aspect of the present financial
health of the Town, and enables uniform comparisons of the financial health of multiple municipalities.
A secondary use of the actuarial reports is to provide guidance to a municipality when policies regarding the OPEB
liability are considered. A municipality may use additional modeling scenarios with a broader range of financial
assumptions when the formally mandated assumptions used for the report do not fully capture the municipality's
OPEB funding process and liabilities.
Recent Status of OPEB Funding
The most recent full actuarial analysis, received in August 2022,presents the picture of the Town's OPEB liabilities
and funding as of June 30, 2021. This report and two previous reports are available on the Town's Finance
Department web page under "Finance Documents". The actuarial firm used a discount rate calculated according to
GASB directives. For this analysis, the actuaries used a discount rate of 3.94%which is the equivalent of a 6.75%
rate for a certain interval followed by a 2.16%rate. Using this discount rate, the total OPEB liability as of June 30,
2021, was estimated at approximately $266 million. Using a 4.94% discount rate, the liability would be reduced to
approximately $207 million. The actuarial analysis was done to satisfy GASB requirements, not to generate data
that is appropriate for determining a funding schedule. The Town's OPEB liabilities for policy-setting purposes are
likely to be much lower than those in the actuarial report because different assumptions, especially with regard to
the discount rate, would likely be used. This is illustrated by a calculation done in 2020 by a different actuarial firm
in which the total liability was estimated to be about$146 million based on a 7.5%discount rate. A fair estimate of
the liability is likely between $146 million and $266 million; obtaining such an estimate would require a detailed
calculation using a fair discount rate likely near 6.75%.
In June, 2023, the Town received a report that updates the full actuarial analysis from June 30, 2021, to June 30,
2022. The update changes the assumed discount rate from 3.94%to 5.17% and considers 124 additional retirees.
The result is a total OPEB liability of about$246 million as of June 30, 2022, rather than the pre-update liability of
about $266 million as of June 30, 2021. We emphasize, as noted in the actuarial report, that these values are
calculated for purposes of financial reporting and not for purposes of funding strategy.
History of the PEIL Fund
The history of appropriations into the PEIL Fund is given in the following table. Since the monies in the Fund are
invested, the Fund balance will fluctuate up and down, but will generally be significantly larger than the sum of
past appropriations into the Fund. The balance was, as of December 31, 2023, reported to be $29,811,364,while the
sum of the previous appropriations is $19,054,141.
Appropriations Into the PEIL Fund
Appropriation Approved Amount Appropriation Approved Amount
2008 Annual Town Meeting $ 400,000 2018 Annual Town Meeting $ 1,842,895
2009 Annual Town Meeting $ 440,690 2019 Annual Town Meeting $ 1,885,486
2010 Annual Town Meeting $ 479,399 2020 Annual Town Meeting $ 750,000
2011 Annual Town Meeting $ 500,000 2021 Annual Town Meeting $ 1,885,486
2012 Annual Town Meeting $ 500,000 2022 Annual Town Meeting $ 1,935,486
2013 Annual Town Meeting $ 775,000 2023 Annual Town Meeting $ 1,985,486
2014 Annual Town Meeting $ 1,119,000
2015 Annual Town Meeting $ 1,200,000
2016 Annual Town Meeting $ 1,512,318
2017 Annual Town Meeting $ 1,842,895
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