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HomeMy WebLinkAbout2025-01-30 FY2026 FinanceSummitFinance Summit Select Board, School Committee, Appropriation Committee, Capital Expenditures Committee, January 30, 2025 The Finance Summit was called to order by Select Board Chair Doug Lucente at 7:01 p.m. on Thursday, January 30, 2025, via a hybrid meeting platform in Estabrook Hall, Cary Memorial Building, 1605 Massachusetts Avenue. Present for the Select Board (SB): Mr. Lucente, Chair; Mr. Pato; Ms. Hai; Mr. Sandeen, and Ms. Barry, as well as Mr. Bartha, Town Manager; Ms. Axtell, Deputy Town Manager; Ms. Kosnoff, Deputy Town Manager for Finance; Ms. Impink, Budget Officer; and Ms. Katzenback, Executive Clerk Present for the School Committee (SC): Ms. Jay, Chair; Ms. Sawhney; Ms. Cuthbertson; Ms. Lenihan; and Mr. Freeman Present for the Appropriation Committee (AC): Mr. Padaki, Vice Chair; Mr. Bartenstein; Mr. Levine; Mr. Ahuja; Mr. Osborne; Ms. Verma; and Ms. Yan Present for the Capital Expenditures Committee (CEC): Mr. Lamb, Chair; Mr. Kanter; Ms. Beebee; and Ms. Rhodes Also Present: Dr. Hackett, Superintendent of Schools; and Mr. Coelho, Assistant Superintendent for Finance and Operations ITEMS FOR INDIVIDUAL CONSIDERATION 1. FY2026 Preliminary Budget and Financing Plan Carolyn Kosnoff, Assistant Town Manager for Finance, presented the Town Manager’s preliminary recommended budget and financing plan. The White Book is published several weeks before finalizing the budget in order to receive input. She explained that the revenue allocation model at Summit II projected $6.7M of new revenue to add to the budget in FY26. At Summit III, this amount is being shown at $7.46M. This is a $764,000 increase, or 3.9% over last year. At Summit II the municipal departments and the school department originally requested 5% for the school department and 4.9% for the municipal departments, which both represented significant shortfalls from what revenue was actually available. Between new revenue available and other adjustments to the budget, at this point the recommendation is for a balanced budget. This is a 3.9% increase, but the gap has been closed on both sides. There is overall a 6% increase in total revenues and a 6% increase in total expenditures. Free Cash is currently projected at approximately $23M. Regarding the municipal departments, overall, this budget is proposed to increase 3.5% or a $1.7M increase over the current year. In terms of balancing the municipal budget, one continued topic of discussion is the lack of a lot of surplus revenue in order to fund program improvements. In order to balance the budget, the Town Manager's budget was reduced by $47,613; a better portion of which was the management analyst salary which will be deferred again. Some programs which have been discussed and will continue to be supported in the budget include the composting program, a renegotiated contract for the Lexpress bus service, and a contract with Lex Media. There are also some items that the Town Manager has elected to fund for FY26, including a one-time appropriation for a solar study to assess the suitability of putting solar canopies in the Town's parking lots, and pruning and/or removal of street trees that are dead or hazardous. Regarding the program improvements, through this budget cycle, the municipal departments requested $2.3M in new programs, $2M of that was from the general fund, and $272,000 was from non-general funds. The Special Education Reserve Fund was originally proposed at $500,000 and this has been increased to $700,000. Ms. Kosnoff reviewed the breakdown of the types of capital projects that were requested for FY26, which all came from a five-year capital plan. The largest by far is the $654M excluded debt project, which is the Lexington High School. This year, there was not enough cash to do all of the projects. It was decided it would be prudent to not take on any more debt for regular projects for a year. The intention is to defer a few projects including the cemetery columbarium, part of the Harrington Fields project, the public parking lot project, part of the new sidewalk installation project, and one IT project. Regarding the Lexington High School project and debt service, the overall total project cost for debt service has not changed in any material way since November. Regarding the plan for Central Administration, the intention is to demolish the 146 Maple Street Central Building and have the Central Administration staff move into 173 Bedford St and then the new High School at completion. $6M has already been allocated to renovate 173 Bedford Street and this is currently out to bid. In this budget, there is a request for $3.5M for the Central Admin 146 Maple Street demolition. Also built into the budget, was $3.2M, originally $6.2M for the Harrington Fields construction. Of that amount, $1.2M is from CPA and $2M is from general fund. The Harrington Fields project is still early in the design phase and the public outreach and comment phase. The intention is to move forward with the $1.2M allocated from the CPC in order to continue with the design and construction documents and potentially have some extra set aside to be used for site work. The recommendation is to not move forward with the general fund piece of this yet, until the final project and cost estimate is known. Dr. Hackett explained that the original school budget request was for 4.98% increase and this required approximately $2M in reductions needed to get to that 4.98%. This is not a level service budget; it is a balanced budget. This will require consolidations of classrooms and a budget freeze. Professional development and expense lines have also been reduced. The Schools are doing everything they can to avoid an override. DOCUMENTS: White Book Presentation FY2026_ 2. Capital Expenditures Committee - Preliminary Report: FY2026 Proposed Capital Projects Charles Lamb, CEC Chair, reviewed the preliminary report. He explained that Fire and Rescue has seen a significant uptick in equipment prices, as well as long post pandemic delivery times of up to four years from contract to delivery. The Department, per CEC recommendation, have accelerated their replacement schedules to compensate for these long lead times. It will cost more for the Departments to do their jobs. Secondly, historically, it has been the CEC’s budget policy to use Community Preservation funds for any eligible projects to the extent allowable. The Affordable Housing Trust has an available unspent balance of $3.5M, of which $953,000 is from FY24 and $2.5M is from FY25. The proposed FY26 CPC allocation to the Trust is $3M and the Trust anticipates transferring that money to LexHAB for the Vine Street project, with another $3M request in FY27 also for Vine Street. The CEC has been discussing with the Chair of the CPC whether it may be prudent for the Committee to give up the liquidity of the entire recommended FY26 appropriation at Annual Town Meeting or instead hold some back until the Fall Special Town Meeting, during which time another equally worthy project may be found. Third, regarding the $645M for the FY26 appropriation to the Lexington High School Project, it is well understood that the SBC has selected the Bloom option and is using the previously appropriated $10M of D&E funding towards completing schematic design in time for a Fall 2025 debt exclusion, at which point there will be more refined cost estimates. It is also common knowledge that the Bloom option anticipates and requires an Article 97 swap. In the fall of 2025, the Select Board will need at least four members to vote in favor of a debt exclusion. Without that ratification, the project will stop dead in its tracks with a large portion of the existing $10M appropriation wasted. If Select Board members have significant objections to Bloom, then they need to make those objections known between now and February 14th. Mr. Levine (AC) stated that it would be good to discuss why the Free Cash amount is so increased this year. Also, while he supports the Bloom option, there should be additional discussion on it. The Old Harrington building should not be demolished until there are two prerequisites met. The first is a successful debt exclusion vote for the High School. The second is full funding for whatever fields will be built there. It may make sense to take more within the levy revenue to put towards debt service for the High School. Ms. Kosnoff stated that, regarding the demolition of the Central Administration building, a revised timeline was proposed which would allow for the demolition to wait until information if the debt exclusion was going to pass is obtained. There would be better pricing if demolition occurred over the winter. Also, regarding projections for the High School, interest earnings could further offset the debt service. Mr. Osborne (AC) stated that deferring or eliminating some potential projects may need to occur, as priorities have changed. Ms. Jay (SC) stated that, regarding a level service budget, it is important to discuss not just what is being removed but also that the budget should be increased as needed for important things. For example, in special education, in FY25 there were 25 new FTE added to support special education students. These positions are then built into the FY26 budget so that the services can continue. Ms. Lenihan (SC) asked about the timeline with regard to demolition of the Old Harrington building and building the fields. Mr. Bartha stated that in an ideal world, there would be $6.2M set aside to go through the planning process to determine what type of fields the community wants at Harrington. Through the CPC process this year, there is just over $3M available between the general fund and the CPC for that project. By delaying and setting aside some funds, there is an opportunity to complete the outreach process and determine what the community wants to see and then try to fully fund the project through next year's CPC and budget process. Ms. Kosnoff explained that Community Preservation funds have restrictions as to what they can be used for. They can be used for recreational fields, but not turf. The total appropriation requested as a worst-case scenario estimate, without plans, including synthetic turf fields and lighting, was $6.2M. Out of that amount, $4.2M was identified to qualify for CPA funds and $2M would not. Therefore, the total request was $4M from CPA funds, and $2M from the general fund. The issue is that, if in the future the Town wants to upgrade from the grass fields, funding would have to come from the general fund again. Mr. Boutwell, Recreation Committee, stated there will be an open design process to determine what type of field is designed. The intention was to accelerate this project to align with having a field completed before shovels went in the ground and Center fields were lost. The $6.2M is a placeholder. If synthetic turf was chosen, that would be a placeholder for sufficient funding, but it is unclear what the community will choose. Ms. Jay (SC) stated that there seems to be a perception that the Schools get 74% of the total Town revenue for the operating budget. The 74% is applied after removing all of the shared expenses. According to the report, the Schools are getting 48% of the Town's total revenue to work with for their operating budget. Ms. Kosnoff stated that this is difficult to say in terms of the revenue. 48% of the Town's expenses are the School's operations budget. But when reviewing the total amount that it costs to keep the Schools running, it is closer to the 74% which is through the revenue allocation model. Ms. Jay noted that the money that the School District has to work with for their operating expenses is the expense line, which in the pie chart is 48%. Ms. Sawhney (SC) stated that improving the collaboration between the school and municipality would be very helpful, may save money, and also maximize the impact of investments.The School Committee and the Select Board are elected committees or boards and have a direct responsibility to the people of Lexington. The School Building Committee is an appointed committee and has a similar responsibility as an extension. The groups need to come together individually and collectively to express support for the High School project, and to voice any concerns as a group. Town Hall meetings could be useful. Mr. Sandeen (SB) explained that on January 27, 2025, the Select Board approved the land disposition agreement which encumbered $500,000. Regarding the Affordable Housing Trust doing buy downs, in the MBTA zoning there is an opportunity to convert market rate units to affordable units. Mr. Pato (SB) stated that the report displayed a significant change in how taxpayers can perceive the impact of the High School project because it lays out that this is not an increase in tax payments as a cliff, but it is instead stretched out over a ten-year period, at a small amount each year. By having the Affordable Housing Trust apply their funds to convert existing development, this will ease a bit of the pressure on increasing development. He echoed the comments made regarding supporting the High School project and voicing any concerns. Mr. Lucente (SB) stated that he believes the groups have a duty and an obligation to provide taxpayers and the people voting on the High School project with every ounce of information to make an informed decision. He does not believe the Bloom option is the best one but acknowledged that there is a lot of time to understand the details and costs of the project. Regarding the Affordable Housing Trust, the intention is to give some funding to allow work to move forward, however there also need to be very clear housing goals for the Town. ADJOURN Mr. Lucente recognized Ms. Barry and Ms. Sawhney for their years of service. Upon a motion duly made and seconded, the Select Board voted 5-0 by roll call to adjourn the meeting at 9:11p.m. The Appropriation Committee, Capital Expenditures Committee and School Committee followed suit. A true record; Attest: Kristan Patenaude Recording Secretary