Loading...
HomeMy WebLinkAbout2026-01-07 Finance Summit IIFinancial Summit II Select Board, School Committee, Appropriation Committee, Capital Expenditures Committee January 7, 2026 7:00 PM Estabrook Hall, Cary Memorial Building Financial Summit II was called to order by Select Board Chair Jill Hai at 7:00p.m. on Wednesday, January 7, 2026 via a hybrid meeting platform in Estabrook Hall, Cary Memorial Building, 1605 Massachusetts Avenue. Present for the Select Board (SB): Ms. Hai, Chair; Mr. Pato; Mr. Lucente; Mr. Sandeen and Ms. Kumar as well as Mr. Bartha, Town Manager; Ms. Axtell, Deputy Town Manager: Ms. Kosnoff, Deputy Town Manager for Finance; and Ms. Katzenback, Executive Clerk Present for the School Committee (SC): Ms. Jay, Chair; Ms. Cuthbertson; Ms. Lenihan; Ms. Carter and Mr. Freeman, as well as Dr. Hackett, Superintendent of Schools; Dr. Scully, Asst. Superintendent for Finance & Operations; and Mr. MacCutcheon, Director of Finance Present for the Appropriation Committee (AC): Mr. Parker, Chair; Mr. Ahuja; Ms. Verma; Mr. Bartenstein; Mr. Levine; Mr. Michelson; Mr. Osborne and Ms. Yan (7:25pm arrival) Present for the Capital Expenditures Committee (CEC): Mr. Lamb, Chair; Ms. Beebee; Mr. Boudett; Ms. Rhodes; and Mr. Rubenstein All boards and committee called their groups to order with a roll call of attendance. ITEMS FOR INDIVIDUAL CONSIDERATION 1. Progress Update on FY2027 Budget Development (School, Municipal and Capital Budgets) and Review Budget Calendar and Future Summit Dates Carolyn Kosnoff, Assistant Town Manager for Finance, explained that in November all of the revenue projections and preliminary set asides were presented. This showed a projected budget gap of approximately $4.7M across the entire general fund. This evening, she will present the adjusted revenue allocation, including all of the new revenues coming in for the year, less the set asides. The new allocation is up to 3.6%, which is at the bottom of the Town’s normal range, compared to the 2.4% which was previously presented. The School has indicated that they have identified enough items to balance the budget with the 3.6%. They are not currently showing a deficit. On the municipal side, a round of initial cuts has been made, and the gap should be closed prior to the White Book being published.This should be made without programmatic cuts that would be noticeable to the public. Ms. Kosnoff reviewed where the additional $2.3M came from. Only one revenue adjustment was made to the investment income. In terms of shared expenses, updated guidance from Minuteman High School showed that a preliminary assessment of the enrollment of Lexington students is going up fairly significantly. A request was made to hold approximately a 16% increase in this assessment for this year, or an additional $222,000 of shared expenses. Regarding the health insurance line, originally a 15% increase was being held in health insurance premiums for FY27. Updated guidance from the GIC states that 13.5% is reasonable to hold, leading to an additional $533,000 going back into shared expenses. The Public Facilities Department, which services both the school and municipal buildings, has reduced its budget by $135,000. Under cash capital, the free cash number is going down by $1.6M. There will be a one-time debt financing only for the fire truck, but no other capital projects or programs were deferred. Items not previously incorporated into the preliminary budget include $75,000 for the Vision Survey. Also, the School Department has indicated that they have a mandate for adding a new curriculum, at a one-time purchase of approximately $700,000 in FY27. Ms. Kosnoff noted that the $897,000 which was freed up from free cash, is a one-time revenue. This will be the budget deficit that the Town will start FY28 with. Ms. Kosnoff explained that the initial municipal deficit was $1.39M. An additional $609,000 was added from the revenue allocation as discussed, leading to a 3.6% increase. The Town Manager, Budget Officer and she have conducted a first round of voluntary reductions. At this point, there is still a remaining deficit on the municipal side of $457,000. Departments continue to work on this and there will be another targeted round of reductions to close the gap. In terms of the FY27 capital request, Ms. Kosnoff explained that the Capital Expenditures Committee has met with all municipal department heads and reviewed the capital plans. There is a total capital across all funds of $33M which includes the water and sewer enterprises, recreation enterprise, compost revolving fund, and the CPA funds. This leads to an allocated total general fund cash capital of $18M which is made up of both the tax levy and free cash. Mr. MacCutcheon and Dr. Scully reviewed a number of items from the school budget. The request for FY27 totals a 3.6% increase which matches the revenue number. This number was obtained by taking some steps that are less than ideal and that will require further work in the spring. The initial level services budget envisioned a 4.6% increase. The current projection is built on 2.5% COLAs for the expiring contracts. Six out of the past seven years’ budgets have had increases under 4.5% and four of the seven have had increases under 4%. In terms of the recommended FTE count, there are 42 fewer positions than what was approved in the FY26 budget. Further cuts will likely be made this spring in order to avoid other, less ideal, cuts. Mr. Bartha asked what would happen if the 2.5% COLA does not work out in contract negotiations. Dr. Scully noted that there would then need to be other reductions made, which could be a real challenge. Mr. Lcvine (AC) asked how many of the 42 positions proposed to be reduced have already been completed. Dr. Scully stated that next year's budget currently incorporates 14.5 of these reductions. Mr. Bartenstein (AC) asked for an existing chart showing the various bargaining units, the timing of when they come up for renewal, and the relative dollar amounts for each category. Dr. Scully pointed to the FY27 recommended staffing summary to review the bargaining units. Mr. Boudett (CEC) stated that there seems to be some ability to look into the future in terms of the revenue from the commercial side for the Town budget. He asked about the forecast for 2027 and 2028 in terms of commercial assessments. Ms. Kosnoff stated that new growth is new revenue coming into the Town. In that aspect, there is a humongous drop-off seen in the commercial real estate market. There is no new development happening, which means no new growth projected from the commercial market. Staff estimates an amount of new growth for each year, approximately $2M currently for new growth, which incorporates all residential and commercial. Assessments are different. The total tax levy is not going to change. As commercial assessments decrease and they become less valuable because there is not a competitive market for them, their share of the tax levy will decrease. This does not have an impact on total revenue to the Town, but it does impact resident’s tax bills, because as commercial value decreases, it shifts some of the tax levy burden to residential taxpayers. Ms. Kumar (SB) asked about the contributing factors for the 42 positions proposed to be reduced. Dr. Scully explained that this can be due to enrollment numbers, changes in teaching processes, and other staffing efficiencies. Dr. Hackett explained that this will be a challenging budget season and more aggressive and difficult decisions are having to be made. Mr. Lucente (SB) asked about the total percent increase from FY26 through FY31 as presented by the schools. Dr. Hackett explained that each year the schools have been asked to identify five-year budget projections. The analysis from the accountants was very detailed and comprehensive.Those numbers, based on the current level of staffing, are accurate. However, there are volatile items that always need to be considered. Ms. Kosnoff noted that an overarching five-year projection is also completed on the municipal side. The school's direct numbers are taken out of their presentation and incorporated into the Town's projection. Ms. Hai (SB) stated that the municipal initial projection shows a 3.6% increase in the school budget line and a 3.6% increase in the allocation itself. However, the most recent school projection shows a 4.64% increase for FY27. Dr. Scully explained the slide showed how the projection has changed from the initial projection using the allocation model. Mr. Sandeen (SB) asked about projected health care costs into the future. Ms. Kosnoff stated that staff has not yet finalized the five-year projections. The hope is to put out a version of that out around the time of the White Book. It is likely that 10% will be held for next year. Mr. Levine (AC) stated that the five-year projection for the school budget is not solely about operational cost reductions, but by doing things such as using circuit breaker funds which essentially kicks the can down the road. He supports taking $6.5M off the top of the tax levy to pay for the high school project but also noted that this is part of the reason that the budgets are tight. Ms. Kosnoff explained that staff intends to publish the White Book, which will incorporate the school and the municipal preliminary recommended budgets, on Friday, January 23rd. This will then be discussed at the next summit on Wednesday, January 28th. The Select Board will then vote the high-level budget summary on February 9th. The intention is to publish the final Town Manager's recommended budget and financing plan on February 27th, which will be four weeks ahead of Town Meeting, on March 30th. DOCUMENTS: FY 2027 Budget Development Update, FY 2027 Lexington Public Schools Presentation - Budget Summit 01072026 2. Review of Draft 2026 Annual Town Meeting Article List Kelly Axtell, Deputy Town Manager, reviewed the draft list of articles being proposed for the 2026 Annual Town Meeting Warrant. DOCUMENTS: Draft 2026 Annual Town Meeting Article List ADJOURN Upon a motion duly made and seconded, the Select Board voted 5-0 by roll call to adjourn the meeting at 8:340p.m. The Appropriation Committee, Capital Expenditures Committee and School Committee followed suit. A true record; Attest: Kristan Patenaude Recording Secretary