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APRIL 191"
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REPORT TO THE
2026 ANNUAL TOWN MEETING
RELEASED MARCH 23, 2026
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 • Vinita Verna • Lily Manhua Yan
2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Table of Contents
Summary of Warrant Article Recommendations iii
Preface 1
Introduction 2
Warrant Article Analysis and Recommendations 6
2026 ANNUAL TOWN MEETING
Article 4 Appropriate FY2027 Operating Budget 6
Article 5 Appropriate FY2027 Enterprise Funds Budgets 17
Article 6 Amend FY2026 Operating, Enterprise and CPA Budgets 21
Article 7 Sustainable Projects 21
Article 8 Appropriate for Vision for Lexington Survey 22
Article 9 Establish and Continue Departmental Revolving Funds 22
Article 10 Appropriate for the FY2027 Community Preservation Committee Operating Budget and
CPA Projects 23
Article 11 Appropriate for Recreation Capital Projects 28
Article 12 Appropriate for Municipal Capital Projects and Equipment 29
Article 13 Appropriate for Water System Improvements 30
Article 14 Appropriate for Wastewater System Improvements 32
Article 15 Appropriate for School Capital Projects and Equipment 31
Article 16 Appropriate for Public Facilities Capital Projects 32
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 34
Article 21 Appropriate for Authorized Capital Improvements 36
Article 22 Street Acceptance 37
Article 23 Appropriate for Trash/Recycling Bins 34
Article 24 Elderly and Disabled Taxation Aid Fund&Committee (GL c. 60, § 3D) . . . . . . . . . . . . . . 34
Article 25 Surcharge on Specific Residential Development(Citizen Petition) . . . . . . . . . . . . . . . . . . . 36
Article 26 Oversee Financial Expenditures Lexington High School Project(Citizen Petition) . . . . . . . 36
Article 27 Procurement for Online Capital Project Platform (Citizen Petition) . . . . . . . . . . . . . . . . . . . 37
Article 28 Speed Humps—Walnut St(Citizen Petition) 39
Article 31 Amendment—Chapter 90, § 9 "Regulation of Refuse Disposal" 39
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
APPENDICES
Appendix A: 5-Year Budget Projections 42
Appendix B: Enterprise Funds 50
Appendix C: Revolving Funds 51
Appendix D: Tax Relief Programs 52
Appendix E: Specified Stabilization Funds 54
Appendix F: Other Post Employment Benefits 57
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Summary of Warrant Article Recommendations
Abbreviations
CPF Community Preservation Fund RE Retained Earnings
EF Enterprise Fund RF Revolving Fund
GF General Fund SF Stabilization Fund
IP Indefinitely Postpone SRF Special Revenue Fund
2026 ANNUAL TOWN MEETING
Art Funds Funding Committee
icle Title Requested Source Recommendation
4 Appropriate FY2027 Operating Budget See below See below Approve(9-0)
$12,070,061 Water EF
5 Appropriate FY2027 Enterprise Funds $12,206,358 Wastewater EF Approve 9-0
Budgets $3,660,757 Recreation EF pp ( )
$267,810 Tax Levy
6 Amend FY2026 Operating,Enterprise and $275,000 Free Cash Approve(9-0)
CPA Budgets
7 Sustainable Projects $463,000 Free Cash Approve(9-0)
8 Appropriate for Vision for Lexington Survey $75,000 Free Cash Approve(8-1)
9 Establish and Continue Departmental See below See below Approve(9-0)
Revolving Funds
Appropriate for the FY2027 Community
10 Preservation Committee Operating Budget $8,495,355 CPF Approve(9-0)
and CPA Projects
11 Appropriate for Recreation Capital Projects $190,000 Recreation EF Approve(9-0)
12 Appropriate for Municipal Capital Projects $11,669,235 See below Approve(9-0)
and Equipment
13 Appropriate for Water System Improvements $2,381,639 Water EF Approve(9-0)
14 Appropriate for Wastewater System $1,304,080 Sewer RE Approve(9-0)
Improvements
15 Appropriate for School Capital Projects and $1,425,657 Free Cash Approve(9-0)
Equipment
16 Appropriate for Public Facilities Capital $5,801,720 See below Approve(9-0)
Projects
17 Appropriate to Post-Employment Insurance $2,133,375 Free Cash,Water/ Approve(9-0)
Liability FundSewer User Rates
18 Rescind Prior Borrowing Authorizations See below See below Approve(9-0)
19 Establish,Amend,Dissolve, and Appropriate See below See below Approve(9-0)
To and From Specified Stabilization Funds
20 Appropriate for Prior Years' Unpaid Bills $10,000 Free Cash Approve(9-0)
21 Appropriate for Authorized Capital N/A N/A IP (9-0)
Improvements
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
2026 ANNUAL TOWN MEETING
Art Funds Funding Committee
icle Title Requested Source Recommendation
22 Street Acceptance N/A N/A Approve(9-0)
23 Appropriate for Trash/Recycling Bins $1,204,000 Free Cash Approve(9-0)
24 Elderly and Disabled Taxation Aid Fund & N/A N/A Approve(9-0)
Committee (GL c. 60, §3D)
25 Surcharge on Specific Residential N/A N/A Approve(9-0)
Development (Citizen Petition)
Oversee Financial Expenditures Lexington
26 None N/A Disapprove (1-8)
High School Project (Citizen Petition)
27 Procurement for Online Capital Project $50,000 Free Cash Disapprove (0-9)
Platform (Citizen Petition)
28 Speed Humps—Walnut St (Citizen Petition) None N/A Disapprove(0-8-1)
L31 Amendment— Chapter 90, §9 "Regulation of N/A N/A Approve(8-1)
Refuse Disposal"
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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 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 relevant
considerations or cautions. If one or more Committee members are strongly opposed to the majority's position, we
may include a brief statement of the opposing view.
The Committee recommends an action on the expected motion for each article. If a motion is amended, the
Committee will provide an updated recommendation during town meeting. Our recommendations are usually to
"Approve"or"Disapprove"the motion, or to "Indefinitely Postpone"the article. The report's recommendations for
each article are displayed in the headers at the start of each article. Voting on each recommendation is displayed as
the number of members in favor of the action, followed by the number of members opposed, and lastly (if
applicable)the number of members abstaining,e.g., "(6-2-1)"indicates six members in favor,two opposed, and one
abstaining. Some vote counts may not reflect the full committee, in which case the total number of votes and
abstentions will be less than nine. For convenience, all recommendations are 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 2027 Recommended Budget & Financing Plan (the "Brown Book"),
dated February 26, 2026, 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 School Committee's Recommended Budget as voted February 10, 2026, is the most recent and
authoritative Lexington Public Schools (LPS) FY2027 budget document. However, it does not contain
much of the LPS budget material that may be found in the more comprehensive The Recommended Budget
of the Superintendent of Schools (hereafter the "LPS Budget Book").
• The Capital Expenditures Committee (CEC) Report to the 2026 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 2026 Annual Town Meeting, which details
requests approved by the CPC for funds from the Community Preservation Fund.
• The presentations and status reports from the School Building Committee.
The Brown Book is published at: https://lexingtonma.gov/2417/FY2027-Budget
The LPS Budget Book is published at: https://lexingtonma.org/lps-finance-and-operations
The School Building Committee's reports are published at: https://www.lhsproject.lexingtonma.org/
All other reports for this Town Meeting can be found under the main Town Meeting page:
https://lexingtonma.gov/2499/2026-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 with the support of Town staff. We have the pleasure and the
privilege of working with Town Manager Steve Bartha; Assistant Town Manager for Finance Carolyn Kosnoff(an
ex officio member of our Committee); Budget Director 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 Dr.
Christopher Scully; 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.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
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 scheduling goals for the Brown Book and this report were met this
year.
Committee Membership and Meeting Practices
The nine current voting members and one non-voting, ex-officio member of this Committee are listed on the cover
of this report. There have been no changes in membership since our last report.
On March 28, 2025, Governor Healey signed legislation to allow remote and hybrid meeting options for public
bodies through June 30, 2027. The Committee has continued to meet remotely using the Zoom application and
occasionally in person.
Reserve Fund
The appropriation into the Reserve Fund in FY2026 was $850,000. As of publication, there have been no requests
for transfers from the Reserve Fund. Any unused balance in the Reserve Fund will flow to free cash at the end of
the fiscal year.
The requested appropriation for the Reserve Fund in FY2027 will increase to $1,000,000, largely due to the risk of
mechanical failures in building systems at the high school that would require urgent repairs.
Developments Since Adoption of the FY2026 Budget
At the 2025-2 Special Town Meeting on November 3, 2025, the following financially related actions were
approved:
Article 3: $1,164,367 was appropriated from the General Fund into the Capital Stabilization Fund.
Article 4: The FY2026 operating budget was amended as follows:
• Minuteman Regional High School (MRHS) - The assessment for MRHS was lower than projected,
resulting in a reduction of$36,830 to the original appropriation on Line 1200. The excess funds
were included in the appropriation into the Capital Stabilization Fund under Article 3.
• Water and Wastewater - Debt service for the Water and Wastewater Enterprise Funds was revised
downward, resulting in a reduction of$93,489 to Line 3610, and a reduction of$141,910 to Line
3710. In addition, the MWRA Wastewater assessment was revised downward, resulting in a
reduction of $25,641 to Line 3720. These changes were factored into the water and wastewater
rates for the current fiscal year.
Article 6: Spending limits for the following revolving funds were increased as follows:
• Lexington Tree Fund - $60,000 to develop an Urban Forest Management Plan.
• DPW Compost Operations - $50,000 to install a security system at the Hartwell Avenue Compost
Facility.
• Health Programs -$45,000 to expand the Town's vaccine administration program.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Article 7: The state's "HERO Act" was adopted to increase property tax exemptions for disabled veterans
and their surviving spouses.
Article 8: $647,921,834 was appropriated to complete the funding for design and construction of the new
Lexington High School, the remodeling of the field house, the demolition of the old high school, and the
replacement of the affected athletic fields. The total of all appropriations approved for the high school
project is $659,746,834. This appropriation was contingent on a successful debt exclusion referendum.
On December 8, 2025, a townwide election was held for the debt exclusion referendum to fund the debt for the high
school project, and the referendum was overwhelmingly approved by voters.
The high school project is being conducted under the auspices of the Massachusetts School Building Authority
(MSBA), which will continue to monitor the project until the construction and final building evaluation is
completed. The Town receives partial reimbursements for design and construction expenses deemed eligible by the
MSBA. These MSBA reimbursements will sum to about$121 million, or 18.4%of the total cost.
FY2027 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 FY2027 Recommended Budget and
Financing Plan (the "Brown Book"). They provide a comprehensive overview of the projected revenue and
proposed spending for the coming fiscal year.
Revenue Source FY2026 FY2027 $ % %of
Tax Recap Projected Change Change Revenue
Property Tax Revenue $ 249,047,036 $ 258,361,669 $ 9,314,632 3.7% 80.4%
State Aid $ 21,532,602 $ 22,052,903 $ 520,301 2.4% 6.9%
Local Receipts $ 17,198,317 $ 18,821,440 $ 11623,122 9.4% 5.9%
Available Funds $ 25,611,684 $ 22,611,780 $ (2,999,904) (11.7)% 7.0%
Revenue Offsets $ (2,175,841) $ (2,360,640) $ (184,799) 8.5% (0.7)%
Enterprise Receipts $ 1,935,189 $ 2,047,125 $ 111,936 5.8% 0.6%
Gross General Fund Revenues $ 313,148,987 $ 321,534,276 $ 8,385,289 2.7% 100.0%
Less: Tax Levy Dedicated to CSF $ 6,580,908 $ 6,580,908 $ — —% 2.0%
Less: Revenue Set-Aside for $ 28,574,604 $ 23,535,746 $ (5,038,858) (17.6)% 7.3%
Designated Expenses
Net General Fund Revenues $ 277,993,476 $ 291,417,623 $ 13,424,147 4.8% 90.6%
The gross General Fund Revenue is projected to increase by 2.7% from FY2026 to FY2027. State aid is projected
to grow by only 2.4%this year. State aid in FY2026 grew by 2.8%. Once the Town's "new growth"tax revenue is
certified in the fall, the total tax levy number may increase resulting in higher gross revenue that may be
appropriated at a subsequent town meeting.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
The following table summarizes the FY2027 recommended budget in comparison to that appropriated for FY2026.
Budget Program FY2026 FY2027 $ %
Appropriated Recommended Change Change
Education 1000 $ 149,602,815 $ 155,825,094 $ 6,222,279 4.2%
Shared Expenses 2000 $ 77,370,757 $ 82,329,423 $ 4,958,666 6.4%
Municipal Departments 3000-8000 $ 50,995,276 $ 52,995,295 $ 2,000,020 3.9%
Subtotal- Operating Budget $ 277,968,848 $ 291,149,812 $ 13,180,964 4.7%
Cash Capital $ 19,524,216 $ 17,838,612 $ (1,685,604) (8.6)%
Other(approp.to reserves,misc.) $ 15,655,924 $ 12,545,852 $ (3,110,072) (19.9)%
Total- General Fund $ 313,148,988 $ 321,534,276 $ 8,385,288 2.7%
The revenue summary depicts a downward trend in revenue growth that continues from the prior year. As a result,
the budget program reflects more limited growth in operating expenses, along with significant reductions in one-
time expenses.
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 from the tax levy into the CSF. The size of the appropriation is
based 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.
The proposed FY2027 appropriation of$6,580,908 is unchanged from the prior year since there have been no new
qualifying developments approved by Town Meeting or new growth in the Hartwell Ave. district since last year.
This will be the first year that the Town requests an appropriation of funds out of the CSF to mitigate debt service
for the high school project. In subsequent years, the current year's tax levy dedicated to capital projects following
the noted budget guideline may be appropriated directly for debt service rather than going through the CSF.
ARPA Funds
Lexington was granted about $9.9 million in federal funds under the American Rescue Plan Act (ARPA). The
ARPA grant is administered by the Select Board and is not subject to appropriation by Town Meeting. All
remaining ARPA funds have been committed and must be paid out no later than December 31, 2026.
Lexington High School Project
The Town has voted to fund the full cost of the high school project and is in the process of completing design and
construction documents in preparation for requesting bids for construction contracts. The final appropriation was
approved at the 2025-2 STM, and a debt exclusion referendum was approved by voters on December 8, 2025. The
total project cost is estimated at$659.7 million. Construction will begin in the summer of 2026.
The Town expects that the Massachusetts School Building Authority (MSBA)will contribute approximately $121.3
million to the project which will reduce the amount the Town must borrow. Debt service will begin to be
recognized in FY2027 and will increase substantially in the following years,likely peaking in FY2030—FY2032.
Debt Service not subject to appropriation (Excluded Debt)
The Town must make annual payments for the debt service on excluded debt, i.e., debt that was excluded from the
limits of Proposition 2'/2 by town-wide referendum. The funding for this expense is raised in the tax levy by the
Select Board when it sets the property tax rates. This money is not subject to appropriation by Town Meeting, but
we discuss exempt debt service here to clarify the use of the Capital Stabilization Fund under Article 19.
The FY2027 gross exempt debt service is projected at $18,248,764, an increase of$2,041,308 (12.59%) relative to
FY2026. The increase is primarily due to the Lexington High School project. To partially offset this increase,
$800,000 from the Capital Stabilization Fund will be used to pay part of the exempt debt service. The net exempt
debt service will be $17,448,764, an increase of$1,241,308 (7.66°/x). Over the next eight years, appropriations from
the CSF will reduce the need to raise additional property tax revenue,thereby providing a modicum of tax relief.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
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 comparable to those of the
prior year. Each PIR is a proposal from a Town department to upgrade or initiate services funded by the operating
budget.
The Town Manager reviews and recommends PIRs for the municipal operating and shared expenses budgets. 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.
For FY2027, General Fund Program Improvement Requests totaling $749,461 were submitted on the municipal
side. This total represents a combination of one-time and ongoing expenses. Due to limited capacity in the General
Fund for program improvements this year, the Town Manager has recommended only $35,000 in new ongoing
expenses.
Below is a summary of recommended PIRs for the municipal budget using the General Fund. PIRs funded from
other sources, such as free cash and revolving funds, are not listed. PIRs for the LPS are covered in the school
budget.
Recurring General Fund Expenses
Line Program Description Funding
2600 Facilities Garage Door Maintenance $ 35,000
Total Recurring Expenses $ 35,000
The Department of Public Facilities has requested an annual increase of$35,000 for garage door maintenance.
One-Time General Fund Expenses
Line Program Description Funding
8400 Finance Tyler ERP Cashiering Module $ 115,000
Total One-Time Expenses $ 115,000
Article 12(o) requests $115,000 to implement use of a new Cashiering Module that will replace the Town's UmPay
and Invoice Cloud systems used for online payments. The system will streamline operations and eliminate many
manual operations. The annual licensing fee of$15,000 will be absorbed in budget line 8600 IT Expenses starting
in FY2028.
Finally, $100,000 from the Recreation Enterprise Fund was proposed to complete a Recreation Enterprise strategic
plan.
Appendix A in the Brown Book provides a complete list of submitted PIRs, including those not incorporated into
the recommended operating budget.
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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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Warrant Article Analysis and Recommendations
2026 ANNUAL TOWN MEETING
Article 4 Appropriate FY2027 Operating Budget
Funds Requested Funding Source Committee Recommendation
See below See below Approve (9-0)
The Operating Budget consists of three major categories: Education, Shared Expenses, and Municipal. Each
category is divided into items that are described by a name and a corresponding budget line number (shown in
parentheses).
Education (1000)
The Education budget funds Lexington Public Schools and the Town's annual assessment for Minuteman Regional
High School.
Lexington Public Schools (I 100)
Per the revised revenue allocation for the Lexington Public Schools (LPS) operating budget, an appropriation of
$151,729,248 is recommended for FY2027. The request represents an increase of 3.90% over the FY2026
appropriation.
The appropriation under this budget line does not include:
• The school portion of Shared Expenses (2000) including public facilities, employee and retiree benefits,
pension,debt service, liability insurance, and reserve funds;
• Revenue from federal, state, local, and private grants, or revolving and donation fund activity, which are
generally not subject to appropriation by town meeting;
• The amount for school technology that is covered under Article 15.
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 section of the operating budget. The requested LPS budget for FY2027 is intended to support about 42
fewer full-time-equivalent (FTE) positions than those approved in the FY2026 adjusted budget. Hence the
requested amount for this line item reflects the full amount from the revenue allocation process. It should be noted
that not all of the positions approved for FY2026, the current budget year, were filled. The School Department
estimates that the FY2027 budget nominally will require a reduction of 14.5 FTE positions from current staffing.
Further information about the budget request may be found in the "Education" section of the Brown Book and in
the LPS Budget Book,both of which are referenced in the Preface.
A breakdown of this operating budget into salaries and wages, and expenses is shown below.
Category FY2026 FY2027 $ %
Budget Recommended Change Change
Salaries &Wages $ 127,183,816 $ 131,524,406 $ 4,340,590 3.4 %
Expenses $ 18,849,517 $ 20,204,842 $ 1,355,325 7.2 %
1100 Lexington Public Schools $ 146,033,333 $ 151,729,248 $ 5,695,915 3.9 %
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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
2026 (FY2027). LPS projections comprise low, mid-point, and high enrollment numbers; the mid-point values are
given here. The FY2027 projection includes allowances for students who will live in new multifamily housing that
may be constructed under the umbrella of MBTA overlay district and other zoning provisions within the next year.
Since we have not seen an LPS projection of pre-K enrollment, the entry with a double asterisk is simply assumed
to be the same as that of the current school year.
Oct. 1,2023 Oct. 1,2024 Oct. 1,2025 Projected FY2027
Enrollment Enrollment Enrollment Enrollment
Early Childhood 76 70 68 68**
Elementary 2,674 2,541 2,425 2,488
Middle School 1,737 1,732 1,695 1,668
High School 2,318 2,405 2,367 2,330
Total 6,805 6,748 6,555 6,556
Salaries and Wages
Salaries and wages are recommended to increase by $4,340,590 (3.41°/x) and make up 87%of the FY2027 request.
The projected net decrease of 14.5 positions results from the elimination of 16.5 existing positions in the base
program, and the addition of 2.0 positions to satisfy legal requirements or contractual obligations (all numbers are
FTEs). There would be no changes due to projected enrollment changes or for program improvements.
Salary and wage changes result from changes in the number of employees, step increases, cost of living adjustments
(COLA), and position reclassifications. The FY2027 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 on page 12 of the LPS Budget Book.
Expenses
Expenses make up 13% of the FY2027 budget request. Special education out-of-district tuition is the largest single
line in the expense budget (see the table on page 15 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 special
education grant funds.
Funding Sources Not Subject To Appropriation
While a large fraction of the School Department's annual budget is funded by appropriations made by town
meeting, LPS also receives substantial funding from state, federal and local 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
to year. Detailed information on grant revenue may be found beginning on page 114 in the LPS Budget Book. The
following is a brief summary of other sources of revenue anticipated for FY2027.
• Federal Grants—The LPS Budget Book describes the federal grants anticipated to be received for FY2027.
The total value of the federal grants is expected to be $2,421,007.
• State Grants—The School Department projects that it will receive $1,875,150 in FY2027 from the METCO
program, which represents an increase of $19,620 from the amount budgeted for FY2026. Cherry-sheet
local aid for education, i.e., Chapter 70 aid, is treated as General Fund revenue and is not categorized as a
state grant.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
• Other Grants — The School Department also receives a number of modest-size grants from the Lexington
Education Foundation (LEF). The history of previous LEF grants may be found on pages 125-126 of the
LPS Budget Book.
• "Circuit Breaker"Reimbursements— 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. Until FY2026, the Lexington Public Schools' practice was to reserve a large fraction of the funds
received in a given fiscal year (based on SPED expenses in the prior fiscal year) for use in the following
fiscal year. Beginning in FY2026 the plan has been to spend just over half of the funds received in a given
fiscal year in the same year. A detailed exposition of the LPS Circuit Breaker funding may be found in the
LPS Budget Book on pages 36-37.
• Revolving Funds -A number of revolving funds have been set up to capture fee revenue intended to support
specific activities. The funds that are in operation include the School Lunch, Lost Books, Athletic, Early
Childhood Tuition &Gift, College Testing, Performing Arts, Lexington Community Education, and School
Transportation Revolving Funds. Details may be found in the LPS Budget Book on pages 99-106.
• Gift Funds -The LPS Budget Book provides a detailed exposition of gift funds starting on page 107.
Commentary
In December 2024 the Superintendent imposed a freeze on discretionary spending in order to avoid spending more
than the amount appropriated for FY2025. That fiscal year was completed with a rather small budgetary surplus.
LPS personnel have since remarked that the spending freeze was necessary and effective.
Both the current year operating budget (FY2026) and the operating budget for next year (FY2027) appear to be
significantly tighter than the budgets for recent years. These budgets have been crafted based on somewhat
optimistic assumptions that increase the risk of a budget overrun or a mid-year request for additional funding.
One of the LPS budget reduction actions that adds risk of an overrun involves removing students from the "high-
risk list." The "high-risk list" refers to in-district SPED students who currently receive additional support within
LPS, but whose level of need means they are at risk of needing out-of-district placement, which would trigger a
large increase in the cost of service.
The planned use of about $3.8 million in Circuit Breaker funds anticipated to be received in FY2027 adds risk of a
budgetary overrun in FY2027 because it leaves the School Department with lower reserves for use in the event
expenditures rise significantly above expected levels.
Two reserves provide backup in the event of an unexpectedly large increase in special education costs. The first is
the Special Education Stabilization Fund which had a balance of$1,307,968 as of December 31, 2025. Transfers
from this stabilization fund require a two-thirds majority vote of Town meeting. The second is the Special
Education Reserve Fund which had a balance of$750,000 on December 31, 2025. Transfers from this reserve fund
require approval from the School Committee and Select Board but not from Town Meeting. The balances in these
two accounts carry over from year to year. The FY2027 recommended budget does not propose any appropriation
into or out of the Special Education Stabilization Fund or Special Education Reserve Fund.
Even if there is no need for a budget supplement during the course of the school year, the apparent low degree of
budgetary margin suggests that the turn back of unexpended funds at the end of the year will be limited. A small
turn back would, in turn, contribute only a small amount to the free cash that flows from the net results of the fiscal
year.
Regional High School (1200)
Lexington's FY2027 projected assessment for the Minuteman Regional High School (MRHS) of $4,095,847
represents an increase of$532,511 (14.9°/x) from FY2026. It follows on the prior year's increase of 4.6% and a
decrease of 2.7%from FY2024 to FY2025. The large increase is due to growth in Lexington's enrollment. The four
year rolling average enrollment, the enrollment number that our assessment is based on, increased from 78.5 to
8
2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
86.75 students. Our assessment increase is significantly higher than the increase in the MRHS District budget
because Lexington's four year rolling average enrollment growth is larger than that of other in-district towns.
The District's Budget Overview
The Minuteman Regional High School (MRHS) Committee approved a FY2027 budget of$33,432,132, a 3.0%
increase over FY2026. The increase is the net effect of a 3.5% increase in the cost of operations and a 0.8%
increase in the School Building Project debt costs. Debt service is 17% of the total budget, and salaries comprise
over 47.7%of the budget. Unlike the Lexington Public Schools operating budget,the district's budget includes debt
service for major capital projects.
According to FY2024 state data, MRHS continued to have the highest average per-pupil operating costs of any
Massachusetts regional vocational district (RVD). The cost drivers include the lowest FY2025 student/teacher ratio
of 8.1 (compared to an average of 10.9 for all RVDs), a very high enrollment rate in special education of 45.4%
(the highest rate across all RVDs in the state, the next closest is 35.8%), and a high average teacher compensation
of$111,305 (the second highest across all RVDs, compared to an overall average pay of$99,868).
District Enrollment
The current MRHS enrollment is 657 students in a building with an 85% design capacity of 628 students. Of the
total, 615 students come from the nine member towns of the school district, and the remaining 42 students come
from out-of-district communities. The district has an enrollment goal for the incoming freshman class of 175
students. It is anticipated that all in-district applicants for the upcoming freshmen class,which includes 201 students
as of February 1, 2026, will be accepted. More importantly,the district is ready to increase freshman enrollment so
that all in-district applicants who finally decide to attend the school will have a seat. Any seats that remain will be
filled by out-of-district students. The admission of out-of-district students will not require any staffing increases and
will not increase baseline operating costs. Total school enrollment is expected to slightly increase in September
2026.
Enrollment at Minuteman Regional High School
Enrollment FY 22 FY 23 FY 24 FY 25 FY2026 FY27 est.
In-district 538 610 649 632 615 622
Out-of-district 117 82 37 37 42 56
Total 655 692 686 669 657 678
District Capital
The District continues to fund the debt service from the construction of the current school building. The District has
increased the contribution to their Capital Stabilization Fund by $100,000, to $1,050,000, to be in a position to
maintain the potential use of their other buildings without incurring any additional debt, and to save for future
maintenance needs as the building ages.
The District will not pursue Phase 2 of the Athletic Facility with Lesley University and has concluded their
partnership them. Instead the District will issue an RFP later this spring for a revised Phase 2. This phase of the
athletic facilities project will include six tennis courts, stadium seating with approximately 1,200 seats and a press
box, and a building containing locker rooms, bathrooms, a concession stand with a kitchen, storage spaces, and
mechanical rooms. Phase 2 is planned to be done at no cost to the District members. Rental income from use of the
Athletic Facility will be deposited into the District's Facilities Revolving Fund. This year $116,450 of revolving
fund revenue will be used to pay the debt service and maintenance of the athletic facility.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
The District's existing long-term debt obligations last through FY2050 and are summarized in the chart below.
MRHS District Debt Service FY2026—FY2051
7,500,000
5,000,000
2,500,000
0 ............
.:7 V UJ O'v n — e-! cn •y- u) 1,0 V UJ O'v C"> -+ e^1 cn •y- ur) V UJ O'v n —
T, 6:.r..; I::.T, f:.L. I::.T, f:.L. I::.T, 6:.r..; I::.T, f:.T., I::.T, f:.T., I::.T, 6:.r..; I::.T, f:.T., I::.T, f:.T., I::.T, 6:.r..; I::.T, f:.T., I::.T, f:.T., I::.T, f:.T
❑ School Bldg EM Athletic Facility
The obligations comprise two components with differing terms. The debt on the school building ends in FY2050,
and that for the athletic facility ends in FY2041. As stated above, 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 teachers' contract, settled in December 2025, specifies a 3.0% increase inclusive of step and lane changes.
Additionally, one new full-time position for facilities maintenance will be created. The funding for this position will
be shared evenly by the General Fund and the Facilities Revolving Fund. These changes contribute to a Personnel
Services increase of$332,798 that makes up 87%of the increase in the FY2027 MRHS budget.
Rising insurance costs are the next biggest driver of budget increases. The cost of health insurance for both
employees and retirees is expected to increase by $193,000. A $605,000 payment will again be made into the
MRHS Other Post-Employment Benefits (OPEB) Trust (current balance $3,125,682) toward the funding of the
district's $17,112,663 unfunded OPEB liability. Also, this budget will put $100,000 into the MRHS Stabilization
Fund.
About 19.1% of the revenue in the MRHS FY2027 budget comes from a combination of state aid, reserves, and
fees as shown in the table below. This is up from the FY2026 percentage of 18.0%mainly because of an increased
use of Prior Years Tuition and the first time use of funds from the Transportation Revolving Fund. The non-
assessment revenue for FY2027 is projected to increase by a total of$334,449. 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 1.5%
over the FY2026 budgeted amount due to increased per-student reimbursement. Transportation Aid is expected to
increase by 0.4%.
Revenue Sources FY2026 FY2027 Change S Change(%)
Chapter 70 $ 3,142,029 $ 3,188,454 $ 46,425 1.5%
Transportation Aid $ 1,129,911 $ 1,134,595 $ 4,684 0.4%
Prior Year Tuition $ 809,464 $ 1,099,550 $ 290,086 35.8%
Excess and Deficiency(E&D) Funds $ 650,000 $ 650,000 $ — 0.00%
Current Year Nonresident Capital Fee $ 255,341 $ 329,698 $ 74,357 29.1%
Facilities Revolving Fund $ 115,200 $ 116,450 $ 1,250 1.1%
Assessments $ 26,073,739 $ 26,710,366 $ 636,627 2.4%
TOTAL $ 32,461,056 IS 33,432,132 IS 971,076 3.0%
10
2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Lexington's Assessment
The revenue needed to support the budget that isn't raised through other sources, $26,710,366, 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 town'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 to each of
the nine member towns. The remaining 91%of the debt service cost is allocated in two ways, i.e., 50%is assessed
based on the most recent four-year rolling average of student enrollment and 41% is assessed based on the State's
"combined effort"factor as determined by the Chapter 70 formula.
A breakdown of the Town's FY2026 and FY2027 MRHS assessments is shown below. The projected assessment
for FY2027 is $4,095,847, an increase of$532,511 (14.9°/x)from the final FY2026 assessment.
Projected Lexington Assessment—Based on Unapproved House-2 Budget Bill
Enrollment Basis Assessment Components Per-Student
FY2026 FY2027 FY2026 FY2027 FY2027
State-Required Minimum 86 101 $ 1,539,304 $ 1,885,883 $ 18,672
Regular Day Students* 78.5 86.75 $ 1,013,801 $ 1,198,276 $ 13,813
Transportation* 78.5 86.75 $ 101,000 $ 64,292 $ 741
Total Operating Costs $ 2,654,105 $ 3,148,451
Debt Service* 78.5 86.75 $ 909,231 $ 947,396 $ 10,921
TOTAL ASSESSMENT $ 3,563,336 $ 4,095,847
Annual%increase (decrease) 4.6% 14.9%
*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.
The FY2027 operating cost assessment per student (excluding debt service) works out to $31,173 (based on
Lexington's October 2025 enrollment of 101 students), an increase from last year's per-student cost of $30,862
This is comparable to the $34,711 average assessment for in-district students. Due to the assessment formula, 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 or the facilities and capital equipment
used by the various departments. Other items in this category, including insurance premiums and payments related
to solar energy facilities, concern the overall operation of the Town.
As shown in the table below, 69.7% of shared expenses funds benefits for the employees of the school, municipal,
and shared departments. The second largest line item, comprising 18.9% of the total, funds the operations of the
Department of Public Facilities which supports the buildings and other structures used by the school, municipal,
and shared departments. The third largest line item, comprising 7.6% of the total, funds within-levy debt service.
This covers municipal bond payments for capital projects that were not funded using a debt exclusion.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
For FY2027, the requested appropriation for the Reserve Fund has increased to $1,000,000, primarily to be
prepared for unforeseen maintenance issues with building systems at the high school. The Brown Book presents a
long-term view of uses of the Reserve Fund under"Summary of Reserve Fund Transfers"in Appendix C.
Program FY2026 FY2027 % of $ %
2000 Description Restated Budget Shared Change Change
Expenses
2100 Employee Benefits &Insurance $ 53,368,693 $ 57,371,680 69.7 % $ 4,002,987 7.5 %
2200 Property&Liability Insurance $ 1,477,696 $ 1,653,542 2.0 % $ 175,846 11.9 %
2300 Solar Producer Payments $ 390,000 $ 390,000 0.5 % $ %
2400 Within-Levy Debt Service $ 5,983,068 $ 6,274,815 7.6 % $ 291,747 4.9 %
2500 Reserve Fund $ 850,000 $ 1,000,000 1.2 % $ 150,000 17.6 %
2600 Facilities $ 15,189,172 $ 15,530,142 18.9 % $ 340,970 2.2 %
3450 Refuse &Recycle Collection $ 112,128 $ 109,244 0.1 % $ (2,884) (2.6)%
Total $ 77,370,757 $ 82,329,423 100.0 % $ 4,958,666 6.4 %
The recommended total Shared Expenses budget for FY2027 is $82,329,423, an increase of$4,958,666 or 6.4%
from FY2026.
Employee Benefits & Insurance (2100)
The table below provides a breakdown of the benefits and insurance budget (line 2100) by category. This budget
line 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 $57,371,680, a
$4,002,987 (7.50°/x) increase over the FY2026 appropriation.
Benefits Category Amount $Change from % Change from percent of Total
prior year prior year
Retirement $ 12,300,042 $ 778,538 6.76 % 21.44 %
Medicare $ 2,541,296 $ 121,014 5.00 % 4.43 %
Health Insurance $ 40,399,916 $ 2,998,520 8.02 % 70.42 %
Dental Insurance $ 1,405,426 $ 104,915 8.07 % 2.45 %
Life Insurance $ 25,000 $ % 0.04 %
Unemployment $ 200,000 $ % 0.35 %
Workers Compensation $ 500,000 $ % 0.87
Total $ 57,371,680 $ 4,002,987 7.50 % 100
All of the appropriation for retirement will go toward the contributory retirement pension program, i.e., into the
Retirement Fund; there are no longer any retirees who receive non-contributory retirement benefits. The
appropriation will cover the FY2027 payouts from the Retirement Fund plus an additional amount to reduce the
Town's unfunded pension liability. To fully fund this liability, $1,060,000 of new tax-levy growth from Takeda
Pharmaceuticals personal property taxes was dedicated to the Retirement Fund in FY2023. Based on the most
recent actuarial assumptions, the Retirement Board estimates that the Retirement Fund will be fully funded by
2030.
A new actuarial valuation will be performed as of January 1, 2027 and will be reflected in the FY2029 budget. For
FY2027, the recommended contributory retirement appropriation is increasing to $12,300,042. Of that amount,
$400,000 will be funded from Free Cash, as was done for FY2026. In the Retirement Board's present plan, the
appropriations under this line item will increase by about 2.5% per year until 2030. Once the full funding goal is
reached, and assuming full-funding status is maintained, the annual appropriation for contributory retirement will
be reduced to the "normal cost"for the fund,which will be significantly lower.
Health insurance costs make up the bulk of the Employee Benefits budget and the growth trend for this expense
remains a concern for the Town. The FY2027 request for health insurance is $40,399,916, which represents a
8.02% increase over FY2026. The FY2027 budget is based on a projected increase of 9% in health insurance
premiums across all plans at November 2025 enrollment levels, and the projected addition of eighty (80)
12
2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
subscribers (new enrollees to health coverage, either from new retirees, active employees electing to begin or
resume coverage, and active employees switching from individual to family plans). The Town remains a member of
the State's Group Insurance Commission (GIC) health insurance program, which has helped slow the rate of
increases. The Town has an agreement with the Public Employment Committee (PEC) to remain in the GIC until
June 30, 2028. 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 FY2022.
Property & Liability Insurance (2200)
This line item covers the costs to insure all Town-owned property and equipment. The total request for Property
and Liability Insurance is $1,653,542, a$175,846 (11.90°/x) increase over the FY2026 appropriation. There are two
elements under this program: (a) Property and Liability Insurance and (b) Uninsured Losses. For FY2027, the
Property and Liability Insurance premiums are projected to increase by $175,846 (13.76°/x) due to an increase in
premium costs and an increase in staff wage costs. A portion of the Deputy Town Manager's salary is charged to
this line item in recognition of the ongoing support provided. Uninsured Losses is a continuing balance account and
the recommendation is to continue with a level funding of$200,000. As of June 30, 2025, the balance in this fund
was $1,118,573 which is in line with staff recommendations to maintain a fund balance of approximately $1
million.
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 debt service for the initial installation along
with annual 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$535,400 in FY2027.
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.
Debt Service (2400)
Line item 2400 covers annual payments for within-levy debt service. Gross within-levy debt service is projected to
be $6,274,815, a $291,747 (4.88°/x) increase from FY2026. Several mid-sized projects, such as the 173 Bedford
Street renovation, Pine Meadows Clubhouse, Police Station Solar Canopy, and Cary Library Renovation are
nearing completion. The increases in debt service for these projects will be partially offset by decreases as older
projects are fully paid off.
Reserve Fund (2500)
The Reserve Fund is set aside 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 FY2027 requested appropriation for the Reserve Fund is $1,000,000 which is an increase of$150,000 from the
prior year. This increase stems from the risk of unforeseen maintenance expenses at the existing high school where
the life expectancies of many building and HVAC systems have been exceeded.
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
13
2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
supports the planning of major renovations, building replacement, and new building construction. The FY2027
Public Facilities General Fund operating budget of $15,530,142 represents a $340,970 (2.24°/x) increase over
FY2026.
Municipal (3000-8000)
The municipal operating budget comprises all line items from 3000 to 8999. As shown in the table below, the
FY2027 recommended budget of$52,995,295 represents a $2,000,020 or 3.92% increase. The largest components
within the municipal budget are Public Safety, Public Works, and General Government.
FY2026 FY2027 $ %
Municipal Budgets Restated Recommended Change Change
3000 Public Works $ 13,971,800 $ 14,740,639 $ 768,839 5.50%
4000 Public Safety $ 19,204,966 $ 19,183,295 $ (21,671) (0.11)%
5000 Culture &Recreation $ 3,691,461 $ 3,762,283 $ 70,822 1.92%
6000 Human Services and Health $ 2,264,621 $ 2,388,856 $ 124,235 5.49%
7000 Land Use,Housing &Development $ 2,465,236 $ 2,542,629 $ 77,393 3.14%
8000 General Government $ 9,397,192 $ 10,377,593 $ 980,401 10.43%
Total $ 50,995,276 $ 52,995,295 $ 2,000,020 3.92%
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 mainly funded through the respective enterprise funds,will be acted on under Article 5.
The recommended appropriation of$14,740,639 for Public Works under this article represents a 5.50% increase
over FY2026. Of the total, $13,616,727 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$470,000, comes from other sources, primarily
fees and the Cemetery Trust Fund. About 39% of the recommended budget is for salaries and wages, while the
remaining 61%is for expenses.
The net increase in compensation of$241,202 (4.44%) from FY2026 is attributable to the cost of contractually
obligated step increases and cost of living adjustments.
The net increase in expenses is $527,637 (6.18°/x) from FY2026.
Public Safety (4000)
Public Safety covers Law Enforcement(4100) and Fire and Rescue (4200). Of the total recommended appropriation
of$19,183,295, about 51%is for Law Enforcement and 49%for Fire and Rescue.
The recommended FY2027 appropriation for Law Enforcement is $9,701,473 which is a very small decrease from
the FY2026 budget. About 87% of the budget is for compensation and the remaining 13% is for expenses. The net
change in compensation of$(52,173) is a decrease due to staff turnover. The net increase in expenses of$7,668
reflects current prices of equipment, contract services, and vehicle replacement that have been offset by targeted
reductions in vehicle replacement, supplies,materials and clothing.
The recommended FY2027 appropriation for Fire and Rescue is $9,481,822,which is a very small increase over the
FY2026 budget. About 91% of the budget is for compensation while approximately 9% is for expenses. The net
increase in compensation is $153,219. The recommended budget for expenses has changed by $(130,385), a
decrease which reflects the net of increases in contract services, gear and equipment, equipment repair, and EMS
supplies, offset by targeted reductions in vehicle and equipment replacement, supplies and materials, and
professional development.
It is important to note that both Law Enforcement and Fire and Rescue expense budgets have been rationalized for
FY2027 to meet the budget constraints and do not represent level service budgets. For example, delaying vehicle
14
2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
and equipment replacement increases the risk of unanticipated repairs. Similarly, the reductions in supplies,
materials and professional development are only temporary and are expected to be reversed in future budgets.
Culture and Recreation (5000)
Culture and Recreation covers Cary Memorial Library and Recreation and Community Programs. The FY2027
recommended appropriation of$3,762,283 represents a 1.92% increase over the FY2026 budget. About 80% of the
recommended budget is for compensation while the remaining 20% is for expenses. Note that the appropriation
under Article 4 only covers Cary Memorial Library. The Recreation and Community Programs budget is funded
under Article 5 mainly by the Recreation Enterprise Fund and,to a lesser extent,by the tax levy.
Human Services and Health (6000)
The total appropriation for Human Services and Health of$2,388,856 represents a 5.49%increase from the FY2026
budget.
The Human Services appropriation for$1,828,850 reflects an increase of$125,253 (7.35°/x). Of the total, 46%is for
compensation and 54% is for expenses. In addition to this appropriation, Human Services is also funded by a grant
from the Massachusetts Executive Office of Aging and Independence (EOAI), 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 $83,932 (11.14°/x). The net increase in expenses of
$41,321 (4.35%) reflects the new contract with the Town's current vendor for Lexpress. The contract has been
extended through June 30, 2030. In FY2025, the Town was awarded a $200,000 Community Transit grant which
offset part of the funding for Lexpress from the General Fund. As of publication, we have no indication that this
grant will be renewed for FY2027.
In FY2024, the Health Department was broken out from the Land Use, Health, and Development Department to
become a stand-alone department alongside Human Services. The appropriation for Health operations of$560,006
represents a (0.18)% decrease from FY2026. About 85% of the recommended budget is for compensation while
15% is for expenses. The increase in compensation of$3,482 (0.74°/x) is due to the cost of contractually obligated
step increases and cost of living adjustments. The recommended budget for expenses is decreasing by $(4,500) or
-5.14%.
The Health Department's work is also funded through the Health Programs Revolving Fund and its regulatory work
is partly funded through the Lab Inspections Revolving Fund.
Land Use, Housing, & Development (7000)
The recommended appropriation of$2,542,629 represents a 3.14%increase over the FY2026 budget. About 85%of
the recommended budget is for compensation while 15% is for expenses. The net increase in compensation of
$120,843 (5.94°/x) is due to contractual step changes and adjustments resulting from the recent Class and
Compensation Study. The net decrease in expenses of $(43,450) ((10.10)°/x) is due to targeted reductions in
spending. In addition to this appropriation, Land Use, Housing and Development is funded by the Tourism and
Residential Engineering Review Revolving Funds detailed under Article 9 and the Wetland Protection fund.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
General Government (8000)
General Government covers six different budgeting units. The recommended appropriation of $10,377,593
represents a 10.43%increase from the FY2026 budget.
FY2026 FY2027 $ %
Program 8000 General Government Restated Recommended Change Change
8100 Select Board $ 1,439,529 $ 1,553,553 $ 114,024 7.92%
8200 Town Manager $ 1,609,722 $ 2,474,736 $ 865,014 53.74%
8300 Town Committees $ 73,120 $ 73,120 $ %
8400 Finance $ 2,206,218 $ 2,315,760 $ 109,542 4.97%
8500 Town Clerk $ 692,479 $ 680,998 $ (11,481) (1.66)%
8600 Innovation&Technology $ 3,376,124 $ 3,279,426 $ (96,698) (2.86)%
Total $ 9,397,192 $ 10,377,593 $ 980,401 10.43%
The Select Board budget increase of 7.92%is primarily due to increased expenses for LexMedia,the Town's public
access television provider. The FY2027 recommended budget for the Town's annual contract with LexMedia for
broadcasting public meetings and events is $862,708, which is a $97,951 or 12.81% increase from FY2026.
Additionally, the expenses relating to the printing and mailing of town meeting warrants has been moved into this
budget line from the Town Clerk budget(Line 8500).
The Town Manager budget reflects a 53.74% increase. This is driven by an increase of$800,000 for a set aside in
the Salary Adjustment account (8230). The amount budgeted for this item varies from year to year depending on
the status of collective bargaining settlements, other anticipated wage increases, and compensated leave payments
due to certain employees at retirement. Note that in FY2026, no appropriation was made into this account.
Excluding this set aside, the Town Manager budget is $1,674,736 reflecting a 4.04% increase. Compensation has
increased by $48,464 (3.99°/x) which is due to annual step increases and market adjustments that were identified
during the recent Class and Compensation Study. Expenses are projected to increase by $16,550 (4.19°/x) due to an
increase in professional services offset by some targeted reductions.
Line 8600 Innovation & Technology has a decrease of $(96,698) or (2.86)% related to a number of changes in
technology purchases. Please see the Brown Book (p. X-24)for details.
Article 5 Appropriate FY2027 Enterprise Funds Budgets
Funds Requested Funding Source Committee Recommendation
$12,070,061 Water EF
$12,206,358 Wastewater EF
Approve (9-0)
$3,660,757 Recreation EF
$267,810 Tax Levy
This article addresses the operating budgets 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. A fund
may be completely "stand alone" or it may 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, see Appendix B.
The operating and capital costs of the Water and Wastewater enterprises are "stand alone", funded exclusively by
rates and fees charged to users, with no support from the General Fund. The operating costs of the Recreation
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.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Water and Wastewater Enterprise Funds
Most of the operating costs of the water and wastewater enterprise funds, including salaries, expenses, debt service
and MWRA assessments, are appropriated under this article (Article 5). However, certain other recurring costs
included in the water and sewer rates — "indirect expenses" for support services provided by other Town
departments, costs for continuous system improvements raised as "cash capital" in the rates, and contributions to
fund post-employment health benefits (OPEB)— are addressed in other articles. For completeness,the table below
summarizes all of the line items which comprise the annual water and wastewater rate-making budgets (see the
Brown Book, pp. V-30, 34), showing changes from the prior fiscal year and the articles under which each item is
appropriated. Including these additional costs more accurately reflects the complete water and wastewater budgets
and year-over-year changes than the table in the Town Warrant summarizing the appropriations under Article 5.
Water Enterprise Fund FY2026 FY2027 $ %
Appropriated Requested Change Change
Compensation $ 1,074,990 $ 1,089,872 $ 14,882 1.38 %
Expenses $ 675,100 $ 694,600 $ 19,500 2.89 %
Debt Service $ 1,344,817 $ 1,390,315 $ 45,498 3.38 %
MWRA Assessment $ 8,650,822 $ 8,895,274 $ 244,452 2.83 %
Total Requested in Article 5 $ 11,745,729 $ 12,070,061 $ 324,332 2.76 %
Indirect Expenses (Article 4) $ 1,002,244 $ 1,091,745 $ 89,501 8.93 %
Cash Capital (Article 13) $ 1,200,000 $ 1,400,000 $ 200,000 16.67 %
OPEB Contribution (Article 17) $ 3,045 $ 3,045 $ %
Total Water Enterprise $ 13,951,018 $ 14,564,851 $ 613,833 4.40 %
Wastewater Enterprise Fund FY2026 FY2027 $ %
Appropriated Requested Change Change
Compensation $ 497,353 $ 502,884 $ 5,531 1.11%
Expenses $ 617,100 $ 632,400 $ 15,300 2.48%
Debt Service $ 1,530,176 $ 1,618,731 $ 88,555 5.79%
MWRA Assessment $ 9,333,555 $ 9,452,343 $ 118,788 1.27%
Total Requested in Article 5 $ 11,978,184 $ 12,206,358 $ 228,174 1.90%
Indirect Expenses (Article 4) $ 614,684 $ 627,572 $ 12,888 2.10%
Cash Capital (Article 14) $ 600,000 $ 700,000 $ 100,000 16.67%
OPEB Contribution (Article 17) $ 609 $ 609 $ %
Total Wastewater Enterprise $ 13,193,477 $ 13,534,539 $ 341,062 2.59%
As shown in this table, the complete FY2027 budget for the Water Fund is increasing by 4.40%, and that for the
Wastewater Fund by 2.59%, for a combined increase of approximately 3.5%.1 The most significant components of
these increases are addressed briefly below.
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 65% of the total combined
budgets. The Town is assessed a share of the MWRA's total FY2027 water budget based on its proportionate usage
in the most recent full calendar year(CY2025) relative to other towns in the MWRA community. (The wastewater
share formula is similar but a bit more complicated.) The MWRA assessments are changing this year by a relatively
modest amount, for a combined increase of just 2%. As has been the case for the last three years, Lexington's
system share in calendar year 2025 was slightly smaller than it was the previous year, helping to keep year-over-
year assessment increases modest.
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
1 The numerical and percentage changes shown in the table above are somewhat higher than those in the Brown Book at pp.
V-30 and V-34. This is because the Brown Book does not reflect amendments made at last fall's Special Town Meeting 2025-2
to reduce the originally appropriated FY2026 debt service in both the Water and Wastewater Enterprise Funds.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
water system and $1,000,000 annually for the wastewater system) from borrowing to cash raised in the rates
(referred to in the Brown Book as "cash capital"). The cash component, appropriated under Articles 13 and 14, is
treated as a recurring cost at rate-setting, much like debt service, even though applied to capital investment (see
Brown Book,pp. V-29, 33). To minimize the rate impact of the changeover—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. The transition is now in its seventh year and adds an additional 1%to this year's combined rate increase.
As the phase-in proceeds, the reduction in debt service should gradually offset the increase in cash capital costs,
reducing the impact on annual budget increases and saving interest costs. Once it is completed,the issuance of debt
by the water and wastewater enterprise funds should be needed only for major, one-time projects.
Water and Wastewater Rate-Setting Issues
Because the operating budgets of the water and wastewater enterprises approved at this annual town meeting will
ultimately form the basis of the FY2027 water and wastewater rates when set in the fall, a brief comment on the
rate-setting process and the impact of this year's budget is in order.
The goal at rate-setting is to establish rates that will generate sufficient revenue, given the anticipated usage, to
cover the budget previously established by Town Meeting for the fiscal year. If projected water usage is unchanged
from the prior fiscal year, 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
FY2011 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 FY2027,this fall's rate increase should be
slightly less than the average. However, water usage for non-irrigation purposes has been declining 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 FY2027.
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.
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 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 FY2027.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Retained Earnings: Appropriations and Year-End Balances
Annual Town Meeting 2023 2024 2025 2026
Water
Starting Balance(I) $ 769,999 $ 3,216,062 $ 2,813,094 $ 3,461,938
Appropriation for Rate Relief $ — $ — $ — $ —
Appropriation for Capital(2) $ 575,000 $ 1,488,900 $ 1,434,440 $ 1,206,639
Projected End Balance(3) $ 194,999 $ 1,727,162 $ 1,378,654 $ 2,255,299
Wastewater
Starting Balance(I) $ 1,807,854 $ 1,625,447 $ 1,617,019 $ 1,052,648
Appropriation for Rate Relief $ — $ — $ — $ —
Appropriation for Capital(2) $ 715,404 $ 310,000 $ 809,931 $ 200,000
Projected End Balance(3) $ 1,092,450 $ 1,315,447 $ 807,088 $ 852,648
(1) Certified retained earnings as of'the end of'the prior fiscal year (for this year, 613012025) and available for
appropriation at this annual town meeting
(2) Proposed appropriations for capital projects for the next fiscal year (FY2027 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.
(3) 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).
Recreation Enterprise Fund
The Recreation Enterprise Fund has, for many years, been the principal source of funding for Town-sponsored
recreational programs, most of which are fee-generating. Prior to 2015, recreation activities were managed by the
Recreation Department, whose operations were financed entirely through their enterprise fund. In 2015, following
the opening 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).
Originally, the Department was organized into four divisions: Recreation, Pine Meadows Golf Club, Community
Center, and the Administrative Division. In FY2026, a fifth division was added, the Therapeutic Recreation
Division, to centralize the services associated with the Department's inclusion and adaptive programs and
initiatives.
The proposed budget of the Department for FY2027, and changes from the prior fiscal year, are shown in the
following table. As with the other enterprise funds, indirect costs for services provided by other Town departments,
which are appropriated under Article 4, are included to show the complete costs of the enterprise.
Recreation and FY2026 FY2027 $ %
Community Programs Appropriated Requested Change Change
Compensation $ 1,816,854 $ 1,967,722 $ 150,868 8.30%
Expenses $ 1,670,835 $ 1,693,035 $ 22,200 1.33%
Debt Service – – $ —
Total Requested in Article 5 $ 3,487,689 $ 3,660,757 $ 173,068 4.96%
Indirect Expenses (Article 4) $ 318,261 $ 327,808 $ 9,547 3.00%
Total $ 3,805,950 $ 3,988,565 $ 182,615 4.80%
As the table shows,the total FY2027 budget is 4.8%higher than the previous year's budget. The main driver of that
increase is an 8.3% growth in compensation. While no addition to the number of full-time equivalent (FTE)
personnel is contemplated, compensation for both seasonal and permanent employees has been increased to remain
competitive with the current market(see Brown Book,p. VII-12).
The projected sources of funds to support the FY2027 operating budget of the Department, and the allocation of
those funds among the five Divisions, are set forth in the tables below. As can be seen, the vast majority of the
funding comes from user fees for the Pine Meadows Golf Course and other recreational activities, and is
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
appropriated from projected earnings of the enterprise fund. Because the opening of the LCC in 2015 added several
full-time employees who provide services to the community that are not supported by fees, a portion of the LCC's
costs is subsidized by the tax levy. The tax levy subsidy requested for FY2027, $267,810, represents only a modest
increase from the $217,000 originally appropriated from the General Fund for FY2016.
Funding Source Amount
Recreation retained earnings $ 475,000
Recreation user charges $ 1,605,255
Community Center user charges $ 430,000
Pine Meadows Golf Club user charges $ 1,200,000
Therapeutic Recreation user charges $ 10,500
Tax levy $ 267,810
Recreation and Therapeutic Recreation user charges are projected to be flat compared with FY2026, but golf user
charges are projected to increase by 9%, reflecting strong demand for golfing recreation, and Community Center
charges are expected to increase by 16.5%.
The planned allocation of revenues in FY2027 among the five divisions of the department, and for indirect costs
spread across all of the divisions, is as follows:
Expense Category Amount
Recreation $ 717,073
Pine Meadows Golf Course $ 1,405,308
Community Center $ 652,000
Administration $ 705,624
Therapeutic Recreation $ 180,752
Indirect Expenses $ 327,808
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 FY2025 (6/30/25), are
$2,300,755, compared with $2,201,101 as of the end of FY2024. As in prior years, $375,000 in retained earnings is
requested for appropriation under this article (Article 5) to help fund the Department's FY2027 operating budget.
An additional $100,000 in retained earnings is requested under this article to fund a one-time program improvement
request (PIR), included in the expense line of the Department's operating budget, to develop a strategic plan. The
use of retained earnings to fund recreation capital projects, which are appropriated under other articles, is addressed
below.
Capital Costs. The capital costs for new recreation projects are covered, to the extent eligible, from Community
Preservation Act (CPA) funds. This year, an appropriation of $2,630,000 is sought from the Community
Preservation Fund (CPF) under Article 10(e) for the construction of playing fields at the site of the old Harrington
School following the demolition of the school building. An additional CPF appropriation of$100,000 is requested
under Article 10(f) for playground infrastructure upgrades. For more detail on these recreation capital projects, see
the discussion of Article 10 (CPA)below.
Capital projects not eligible for CPA funding are supported by the Recreation Fund's retained earnings, to the
extent feasible, and may also receive support from the General Fund through the appropriation of free cash, within-
levy debt or excluded debt. See Appendix B. This year, an appropriation of$190,000 in Recreation Fund retained
earnings is requested under Article 11 (Recreation Capital), for Pine Meadows course improvements and
equipment. An appropriation of$100,000 from Recreation Fund retained earnings to help fund debt service costs
for improvements to recreational facilities that were financed by General Fund borrowing in prior years is requested
under Article 4 (Operating Budget).
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Article 6 Amend FY2026 Operating, Enterprise and CPA Budgets
Funds Requested Funding Source Committee Recommendation
$275,000 Free Cash Approve (9-0)
The following changes to the FY2026 operating budget have been requested:
Line FY2026 Appropriation Revised Request Change($)
8120 Legal Services $ 375,000 $ 450,000 $ 75,000
3230 Snow &Ice Removal $ 1,633,977 $ 1,833,977 $ 200,000
Total $ 275,000
During the current year, FY2026,the legal services budget line has been used to cover work on understanding how
Article 97 (M.G.L. c. 3, § 5A) may apply to the Lexington High School project, work for the Affordable Housing
Trust (AHT), responses to public records requests, and other legal issues including litigation. Some of the legal
expenses related to the high school project and the AHT may be moved out of the legal services budget line to the
high school project and AHT budget lines. Even so, the FY2026 legal services budget line will need to be
increased.
The snow and ice budget is likely to run into deficit by the end of the year, perhaps by as much as $500,000. The
present requested increase of$200,000 will reduce any year-end deficit to a level that likely will be able to be fully
addressed by a$400,000 set-aside for that purpose in the FY2027 budget.
Article 7 Sustainable Projects
Funds Requested Funding Source Committee Recommendation
$463,000 Free Cash Approve (9-0)
This article requests $463,000 for installing electric vehicle charging and infrastructure improvements at the Police
Station garage. This is based on the Town's Fleet Electrification Roadmap that requires the replacement of gas-
powered vehicles with electric models whenever possible.
The project involves the installation of two dual-port Level 3 chargers, two dual-port Level 2 charges, and
associated equipment that are required for the Police Department to support battery electric vehicle (BEV) cruisers
in a partially electrified fleet.
In addition to the purchase and installation of the chargers and supporting infrastructure,this article budget includes
the purchase and installation of a 225 KVA transformer and a 400 amp sub-panel. This electrical equipment was
part of the police station design but the expense was deferred from the original building budget. The building was
designed to accommodate these electrical upgrades, as the design team understood those electrical upgrades would
be required to add chargers in the garage.
The Police Department fleet currently has seven internal combustion engine (ICE) vehicles for administrative use,
five hybrid vehicles for administrative use, five electric vehicles for administrative use,and nine hybrid cruisers.
The Police Department currently has no BEV cruisers, but the BEV cruiser market has matured faster than
anticipated when the Lexington Fleet Electrification Roadmap was first published. Several communities in
Massachusetts, including Acton, Beverly and Wareham, already have experience operating and maintaining BEV
police cruisers.
During the transition to a fully electric fleet, a partially electrified fleet is planned to include two ICE vehicles for
administrative use,three hybrid vehicles for administrative use,twelve electric vehicles for administrative use, five
hybrid cruisers, and four electric cruisers. Converting the current fleet of ICE vehicles to more BEV platforms is
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
expected to result in operational savings, primarily a result of reduced fuel and maintenance costs. Compared with
the current fleet operational expenses,the fully electrified fleet is expected to yield a savings of nearly $200,000 per
year.
Additionally, the MassEVIP incentive program offers one-time rebates for converting from ICE vehicle to BEV
platforms. These incentives may be reduced or discontinued by the time the new vehicles are purchased.
Additional chargers will be required to support the Police Department's planned transition to a fully electrified
fleet, which is anticipated to include seventeen electric vehicles for administrative use and nine BEV police
cruisers.
Article 8 Appropriate for Vision for Lexington Survey
Funds Requested Funding Source Committee Recommendation
$75,000 Free Cash Approve (8-1)
The Vision for Lexington Committee is requesting $75,000 to fund a town-wide survey to be administered in spring
2027. The survey has two primary goals: first, to engage Lexington residents in reflecting on the town's
opportunities, challenges, and long-term future; and second, to generate concrete data to inform the town's
decision-making bodies. This will be the fourth iteration of the survey, following prior administrations in 2012,
2017, and 2022.
The survey aims to engage residents in the town's challenges and future priorities and to provide data to guide town
decision-making. Most of the funding will support hiring a contractor through an RFP process in spring 2026 to
design, administer, and analyze the survey, which will be offered both online and in print. Additional funds will
support community outreach, focus groups, and publicity to ensure strong participation. The present request is an
increase of 50%from the appropriation for the previous survey, which reflects rising costs since 2022. Some work,
such as translations,will be handled by volunteers.
Article 9 Establish and Continue Departmental Revolving Funds
Funds Requested Funding Source Committee Recommendation
See below See below Approve (9-0)
This article seeks reauthorization of all existing revolving funds that require approval by Town Meetingz.
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 FY2025 and the first half of FY2026 can be found in Appendix C-2 of the Brown
Book.
2 Certain revolving funds, such as the Wetlands Protection revolving fund and several managed by the School
Department,have been authorized under other statutes.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
FY2027
Program or Purpose for Revolving Funds Authorization
School Bus Transportation RF $ 1,300,000
Building Rental RF $ 683,000
Lexington Tree Fund RF $ 150,000
DPW Burial Containers RF $ 60,000
DPW Compost Operations RF $ 1,039,000
Minuteman Household Hazardous Waste Program RF $ 250,000
Senior Services RF $ 75,000
Residential Engineering Review RF $ 57,600
Health Programs RF $ 155,000
Lab Inspections RF $ 95,000
Tourism RF $ 599,000
Refuse and Recycling Collection RF $ —
The Refuse and Recycling Collection Revolving Fund was created three years ago to receive fees for certain types
of refuse collection. If Article 31 passes, which would revise Section 90-9 of the Code of Lexington to allow the
imposition of fees for refuse collection, the Select Board would be authorized to establish such fees. Authorization
to spend monies in this revolving fund could be requested at a future town meeting.
Article 10 Appropriate for the FY2027 Community Preservation Committee
Operating Budget and CPA Projects
Funds Requested Funding Source Committee Recommendation
$8,495,355 CPF Approve (9-0)
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 surcharge of 3%
(percentage chosen by the Town) applied to property tax bills, and a variable annual state match of surcharge
revenues collected by the Town. In the 18 years since the Town enacted the CPA,the state match has averaged out
to roughly 35%, and only once met the full 100% allowed by the Community Preservation Act. Limited resources
at the state level have resulted in a low state match for FY2026 with an even lower projection for FY2027.
The funds available for appropriation in the CPF include an anticipated carry-forward balance of$4,780,566 from
FY2026. The local surcharge revenue, interest revenue, and an estimated FY2027 state match of 15% results in
budgeted revenue of$8,670,000, and total available funds of$13,450,566. The CPF appropriations requested in this
article total $8,495,355, of which $150,000 is for administrative expenses, which would leave a balance of
$4,955,211. This adheres to CPC policy to maintain a balance of around $1.5 million or more as a reserve for
unanticipated requests during the year.
23
2026 ATM APnzoPnoAnowCoxmmTTuu 23MARCH 2026
Annual CPA Revenue& State Matching Rate
8.000.000 100%
0.000.000 75%
4.000.000
50%
2.000.000 25%
0 0%
[l Local Surcharge [_� State Match '-a' Mutch/o
has received$|,2|5,638 in state matching funds inFY2026based onu |749Y6match rate.
Funding requests for the FY2027CPA projects urudutai|udhu|orr.
Item Funding
Request
Article 10(a) Document Conservation $ 20,000
Article 10(b) Munroe Center for the Arts Cash Refinancing $ 2,000,000
Article 10(c) Affordable Housing Trust Funding $ 3,200,000
Article 10(d) LexHAB Affordable Housing Support,Restoration, and Preservation $ 395,355
Article 10(e) Park Improvements—Athletic Fields—Harrington: Phase 2 $ 2,630,000
Article 10(f) Playground Infrastructure Upgrades $ 100,000
Article 10(g) Administrative Budget $ 150,000
Article 10(a) Document Conservation
This request for$20,000 is intended to continue the preservation of historic municipal documents and records. The
current request will fund preservation of Police Department Journal, Book |, June 1923 to 0uounuhur 1925; Police
Department Journal, Book 2, January 1926 to July 1927; Marriage Intention Ledger, 1918-1923; Muntugu Intention
Ledger, |923-|927; Police Department Arrest Ledger No. 2, |92|-|926; Tax Collector's Book, |899.
Significant progress has been made in preserving Lexington's historic documents. There is u continuing need to
preserve remaining old records and records from the 1800s and early |900y� The preservation and conservation of
permanent records for archiving creates the huyiy for documenting Lexington's doh history for the future. These
historic documents are also backed upand stored offsite inthe cloud.
Article ION Munroe Center for the Arts Cash Refinancin
This request is for$2,000,000 for Munroe Center for the Arts cash refinancing. Atthe 2023 Annual Town Meeting,
$6,635,191 was uuthodzud to improve accessibility and install u new, energy-efficient 14l/AC system for the
rehabilitation and preservation of the historic Munroe Center for the A/iy building. Of that total, $2 million was
uuthodzud to be funded via CPA debt. Following the CPC's FY2027 application process, the Committee's
remaining funds are adequate to support replacement ofthe debt funding with cash and still maintain u healthy
reserve for revenue shortfalls, supplemental funding requests, orother opportunities.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Article 10(c) Affordable Housing Trust Funding
The Affordable Housing Trust (AHT) seeks $3,200,000 for its work supporting affordable housing. Established at
Special Town Meeting 2022-3, the AHT acts as a funding entity for the Town's affordable housing needs. This
money would be added to the Trust's current fund balance of$6,345,588 (as of 1/31/26) and support its goal of
creating cost-effective affordable units and increasing the diversity of housing choices in Lexington.
The AHT has received funding from multiple sources. Its CPA funding includes: $1,500,000 in FY2024,
$3,200,000 in FY2025, and $3,000,000 in FY2026. In FY2024 the balance of the Affordable Housing Stabilization
Fund was transferred to the AHT. The AHT received $10,000 in state funding in September 2023 to fund a long
overdue housing needs assessment. The AHT received $1,600,000 of additional state funding in September 2025 as
a grant from the Commonwealth One Stop for Growth Housing Works Infrastructure Program.
The AHT FY2027 revenue plan consists of the $3,200,000 of CPA funds requested here, the annual Brookhaven
mitigation payment of$137,000, an $11,789 transfer from the Affordable Housing Stabilization Fund, and $5,000
from Short Term Rental fees. The Trust continues to pursue state grants. A summary of the financial plan can be
found in the Brown Book Appendix C(p. C-4).
Based on the AHT's capital plan, if the anticipated funding requests materialize, a majority of the Trust's fund
balance—including this appropriation—could be designated for specific projects by the end of FY2027. As of press
time,prior year commitments include $1,000,000 to LexHAB for the construction of 3 accessory dwelling units and
renovation of a donated currently unlivable single family home, $100,000 for a pilot rental assistance program,
$100,000 budgeted for administrative expenses, and a $500,000 loan to facilitate the Lexington Woods
development(Lowell St. Parcel 68-44).
Potential FY2026 uses of AHT and grant funds include $3,325,000 budgeted for "buydowns", to increase the
affordability of units or the number of affordable units, in MBTA Communities or Special Residential Development
(SRD)projects.
Potential FY2027 projects include supporting LexHAB's acquisition of properties on the open market, adding
accessory dwelling units (ADUs) onto existing LexHAB sites, funding the construction of affordable housing at
116 Vine Street, funding initial designs and pre-development work to enable the Lexington Housing Authority to
add units to its scattered-site portfolio, continuing and expanding the rental assistance subsidy program, and
continuing "buydown" subsidies in future MBTA Communities or SRD developments. The FY2027 budget also
increases administrative expenses to $200,000,primarily due to increased legal expenses.
In FY2027, the AHT request represents 38% of the CPA appropriations proposed under Article 10, with all
Community Housing requests comprising 42% of the FY2027 total. Over the last 20 years, Community Housing
accounted for 18% of all CPA spending, less than the other eligible CPA categories, but this ratio has been
growing, especially since the creation of the AHT. Over the past five years, Community Housing accounted for
26% of CPA spending. During the same five-year period, 40% of CPA funds were appropriated for recreation
facilities and 26%for historic resources, largely for the rehabilitation of municipal facilities. The AHT expects that
future CPA requests will be comparable to this year's.
The goals, restrictions, operating methods, and funding requests of the AHT are consistent with the presentations
made to the Town Meeting during debate of the AHT's approval. This request is within the expected range that
Town Meeting considered when approving the Trust.
Article 10(d) LexHAB Affordable Housing Support,Restoration, and Preservation
Article 10(d) requests the appropriation of$395,355 to support LexHAB's affordable housing. LexHAB, originally
established as a quasi-municipal organization, became an independent non-profit organization on September 4,
2024, with the same mission to provide affordable housing in Lexington. This change in organizational structure
now means that this appropriation would grant CPA funds to a private organization, similar to how it has funded
Lexington Historical Society projects,which is an allowable use of CPA funds.
This CPA request has three components:
• Preservation, rehabilitation and restoration for eight CPA-funded units
• Preservation for 23 non-CPA-funded units
• A subsidy for the rents of LexHAB's lowest income tenants
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
The amount requested for preservation, rehabilitation and restoration of LexHAB units totals $200,700. The
rehabilitation of CPA-funded units would begin in July 2026 with waterproofing of the basement at 1001-1003
Mass Ave. The preservation would begin in July 2026 at 2-3 Spencer St. with replacement of the roof.
The request for community housing support includes $144,480 to subsidize the rents of tenants who cannot meet
minimum rent requirements. The use of these funds would begin in July 2026. Additional subsidies may be
awarded throughout the year in order of most critical need.
An amount for contingencies of 25% ($50,175) allows for inflation and the impact of tariffs on supplies as well as
fluctuations in tenant incomes.
The requested appropriation will be augmented by $400,000 from other sources. LexHAB will contribute $360,000
of its own funds. Additional support will come from other organizations to help offset the costs of preservation,
rehabilitation, and restoration along with expenses that are not eligible for CPC funds: general maintenance and
renovations to improve accessibility for aging and disabled tenants. Mass Save will contribute $20,000 and the
Dana Home Foundation will contribute $20,000.
Article 10(e) Park Improvements—Athletic Fields—Harrington: Phase 2
The Recreation Committee is requesting $2,630,000 in CPA funds in FY2027 to construct new athletic fields at 146
Maple Street, the site of the building that was used until recently for the Lexington Public Schools Central Office.
Schematic design funding of$100,000 for this project was approved at the Fall 2024 Special Town Meeting. In
addition, $1,197,904 in CPA funds was appropriated at the 2025 Annual Town Meeting and designated for design
and engineering, project management and construction administration, and a portion of construction and
contingency costs. Due to limited Community Preservation Committee (CPC) funds at the time, the appropriation
was significantly reduced from the initial request to the CPC. This FY2027 request would supplement the prior
appropriations and bring the total appropriations for the new fields to $3,927,904.
Note that Article 16(e) at the 2026 Annual Town Meeting appropriated $3,550,000 for the demolition of the
existing building, which was deemed necessary regardless of whether new fields were constructed. The presence of
hazardous materials, such as asbestos, in the existing building increased the demolition and disposal costs.
The 2021-2022 Comprehensive Study of Athletic and Outdoor Recreation Facilities identified an annual shortfall
of approximately 5,100 field hours between available and requested athletic field use. Recent installation of athletic
lighting at Lincoln Fields#1 and 43 yields approximately 1,000 field hours annually,partially mitigating the deficit.
However, the Town continues to experience a shortage equivalent to one full-size, multi-purpose rectangular field
and fourteen small rectangular multi-purpose fields.
The proposed project includes the construction of two full-size, sand-based, natural grass, multi-purpose athletic
fields. One field would measure approximately 330 feet by 210 feet, and the second approximately 310 feet by 210
feet. A single full-size cricket field overlapping the two rectangular fields is an alternate configuration. The project
includes installation of conduit to allow for future athletic lighting, as well as additional amenities such as expanded
parking outside of school traffic lanes, benches, bike racks, a shelter area, and ADA-accessible pathways
connecting parking areas to the fields. The site design would allow for independent and concurrent use of the fields.
This project is expected to add approximately 1,200 hours of field availability annually, helping to address the
Town's ongoing athletic field shortage and to mitigate the anticipated loss of fields for 5-6 years at the Center
Recreation Complex due to the Lexington High School building project.
Article 10(f) Playground Infrastructure Upgrades
The Department of Public Facilities is requesting $100,000 in FY2027 to install playground fencing at Bridge
Elementary School and Fiske Elementary School. These improvements will enable playground aides to better
maintain a secure perimeter and ensure student safety.
Currently, both playgrounds lack fencing, which has allowed dogs, local walkers, and even a coyote to enter the
play areas. The proposed improvements include installing standard 4-foot black vinyl fencing commonly used at
elementary schools, gates, and associated hardware. Approximately 400 linear feet of fencing is needed at Bridge
Elementary School, and 550 linear feet at Fiske Elementary School. The scope of work includes installation and
inspection.
The fencing will help create a safer,healthier, and more controlled environment in the playground areas.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Article 10(g) Administrative Budget
The requested appropriation of$150,000 will be used, as has been done in previous years,to fund the Committee's
administrative assistant, member dues to the Community Preservation Coalition, administrative expenses, legal and
miscellaneous expenses, and will be available for unanticipated administrative costs, such as planning, conceptual
plan development, legal, survey and appraisal work associated with the proposed acquisition of real property.
The budget for this money is mostly undetermined and much of it would only be used in a contingent event for one
of the purposes outlined above. Since the 2007 acceptance of CPA,the average annual administrative expenditures
have been $69,851, and $1,287,540 of the total amount of appropriated administrative money has been returned and
then made available to fund other projects.
Article 11 Appropriate for Recreation Capital Projects
Funds Requested Funding Source Committee Recommendation
$190,000 Recreation EF Approve (9-0)
The Appropriation Committee concurs with the Capital Expenditures Committee on this article, and refers readers
to their report.
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).
Description Amount Funding Brown
Source Book Page
Article 11(a) Pine Meadows Improvements $ 130,000 Recreation EF XI-15
Article 11(b) Pine Meadows Equipment $ 60,000 Recreation EF XI-14
Article 12 Appropriate for Municipal Capital Projects and Equipment
Funds Requested Funding Source Committee Recommendation
$11,669,235 See below Approve (9-0)
The Appropriation Committee concurs with the Capital Expenditures Committee on this article, and refers readers
to their report.
The requested appropriations are listed below together with funding sources. 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
12(a) Transportation Mitigation $80,000 Free Cash,TNC XI-14
Funds
12(b) Bicycle-Pedestrian Plan Implementation: Minuteman $180,000 Free Cash XI-14
Bikeway to LHS
12(c) Townwide Bicycle-Pedestrian Plan Implementation $100,000 Free Cash XI-14
12(d) Fire Ladder Truck $2,500,000 GF Debt XI-6
12(e) Equipment Replacement $1,700,000 Free Cash,Water XI-15
EF
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Brown
Article Description Amount Funding Source Book
Page
12(f) Sidewalk Improvements $820,000 Free Cash XI-16
12(g) Hydrant Replacement $150,000 Free Cash,Water XI-17
EF
12(h) Street Improvements $2,746,777 Tax Levy XI-16
12(1) Stormwater Management Program $2,665,000 Free Cash XI-17
120) DPW Building Floor Repairs $220,000 Free Cash XI-18
12(k) Burlington &North Streets Sidewalk $60,000 Free Cash XI-18
12(1) Adams Street Intersection Improvements at East& N/A N/A N/A
Hancock Streets
12(m) Hartwell Training Facility Paving $67,458 Free Cash XI-18
12(n) Municipal Technology Improvement Program $145,000 Free Cash XI-19
12(o) Application Implementation $115,000 Free Cash XI-19
12(p) Network Technology Improvements $120,000 Free Cash XI-19
Article 12(1) will be indefinitely postponed. The street improvements planned under this item will require some
land acquisitions,but the specific pieces of land and their associated costs have not yet been identified.
Article 12(o)funds a recommended Program Improvement Request(see this report's Introduction).
Article 13 Appropriate for Water System Improvements
Funds Requested Funding Source Committee Recommendation
$1,400,000 Water User Rates
$981,639 Water EF RE Approve (9-0)
$2,381,639 Total
This article addresses proposed capital expenditures 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 $2,381,639 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-17. 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). 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-21).
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
The funding proposed for this year's program is a combination of user charges raised in the rates ($1,400,000) and
retained earnings ($981,639). The user charge component continues a plan initiated seven 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 seventh such increase (see the
discussion under Article 5 above and the Brown Book, pp. V-29, XI-18). The Town continues to use retained
earnings,when adequate amounts are available,to reduce the need for debt and associated interest 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 $150,000 is requested from water
retained earnings under Article 12(e) for the replacement of a utility truck (Brown Book, p. XI-15). Also, an
appropriation of$75,000 is requested from water retained earnings under Article 12(g)to cover half the cost of the
Town's annual hydrant replacement program (Brown Book, p. XI-19). 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.
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 has resulted 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
$700,000 Wastewater User Rates
$200,000 Wastewater EF RE
$404,080 Wastewater EF Debt Approve (9-0)
$1,304,080 Total
This article addresses proposed capital expenditures as part of a continuing program to upgrade and keep current
the assets of the Wastewater Enterprise Fund, including both sewer mains and pump 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$1,104,080 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-7. It is proposed that this year's program be funded with a combination of
wastewater debt($404,080) and user charges ($700,000).
The user charge component continues a plan initiated seven 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 interest 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 seventh such increase (see the discussion under Article 5 above and the Brown Book, pp. V-33, XI-7).
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
The Town continues to use retained earnings, when adequate amounts are available,to reduce the need for debt and
associated interest costs.
Pump Station Building Improvements. The Town recently completed a plan to upgrade the Town's ten sewer pump
stations in accordance with an asset management plan developed in 2013 by the Wright-Pierce engineering firm.
Going forward, investments will be made to support renovations of those pump stations. The requested FY2027
appropriation will be used to replace HVAC and electrical systems at the main pump station (Brown Book, p.
XI-18). It is proposed to fund the entire project with an appropriation of $200,000 from the Wastewater Fund's
retained earnings.
Miscellaneous Appropriations under Other Articles. Certain capital items necessary for sewer operations, such as
trucks and equipment, are typically funded under other articles,particularly Article 12 (Municipal Capital).No such
appropriations are requested this year.
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 15 Appropriate for School Capital Projects and Equipment
Funds Requested Funding Source Committee Recommendation
$1,425,657 Free Cash Approve (9-0)
This article presents the School Department's annual request for funding to address the strategic goal of enhancing
the capacity to utilize technology for instructional and administrative purposes. The request this year is for
$1,425,657. The items that would be purchased using the requested funding will support continued 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. Detailed information is available in the Brown Book on pp. XI-12,
XI-13.
Description Amount
Tech Workstations $ 220,050
PreK-5 Mobile Devices $ 104,000
1:1 Middle School Program $ 251,428
1:1 Lexington High School $ 246,768
STEM/Art/Computer Science $ 12,500
Interactive Projectors/Whiteboard Units and Document Cameras $ 135,861
District and Building Network Infrastructure $ 435,050
Server/Storage Infrastructure $ 20,000
Total Amount Requested $ 1,425,657
The "1:1"programs refer to a policy to issue a Chromebook to each student for the duration of their time in middle
school or high school. Functional Chromebooks are allocated to staff members after students return the devices.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Article 16 Appropriate for Public Facilities Capital Projects
Funds Requested Funding Source Committee Recommendation
$5,801,720 See below Approve (9-0)
The Appropriation Committee concurs with the Capital Expenditures Committee on this article, and refers readers
to their report.
This article requests funds for the facilities projects summarized below. For further discussion of these items,please
see the report of the Capital Expenditures Committee and the Brown Book pp. XI-13,XI-14.
Item Description Free Cash Funding Source
16(a) Public Facilities Bid Documents $ 125,000 Free Cash
16(b) Public Facilities Interior Finishes $ 486,720 Free Cash
16(c) School Paving and Sidewalks $ 225,000 Free Cash
$ 4,083,459 Free Cash
16(d) Public Facilities Mechanical/Electrical/Plumbing $ 242,332 Tax Levy
Replacements
$ 239,209 Bond Proceeds
16(e) LHS Emergency Equipment Funds $ 400,000 Free Cash
Total $ 5,801,720
For FY2027, Article 16(d) will fund the replacement of energy recovery units and partial gas-to-electric HVAC
conversion at Fiske Elementary School.
The funding source of"Bond Proceeds"refers to unexpended amounts from previously issued bond authorizations.
Article 17 Appropriate to Post-Employment Insurance Liability Fund
Funds Requested Funding Source Committee Recommendation
$2,129,721 Free Cash
$3,045 Water EF
$609 Wastewater EF Approve (9-0)
$2,133,375 Total
This article requests the appropriation of$2,133,375 into the Post Employment Insurance Liability (PEIL) Fund. Of
the requested amount, $2,129,721 would come from free cash, $3,045 from the Water Enterprise Fund, and $609
from the Wastewater Enterprise Fund.
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. No payments are currently being made from the fund. For a more detailed
discussion of OPEB,the present status of the PEIL Fund, and related issues,please see Appendix F.
The amount sought in this article from the General Fund is $50,000 more than the amount appropriated from the
General Fund at the 2025 Annual Town Meeting, which represents a 2.4% increase over last year. The Town has
been incrementing its contribution from the General Fund to the PEIL Fund by $50,000 each year since FY2019,
except for the pandemic years FY2021 and FY2022.
The amounts requested from the two enterprise funds will go toward funding the Town's obligation to cover post-
employment health insurance benefits earned by employees of the Water and Wastewater Departments, and are
unchanged from the corresponding amounts appropriated at the 2025 Annual Town Meeting.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
The Town of Lexington's future OPEB liabilities are not fully funded. The total actuarial liability for such benefits
as of June 30, 2024 was approximately $266,000,000. 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.
One key benefit of contributing to the PEIL Fund is that, like the pension fund, it can be invested in equities that
earn a higher rate of return than most Town-managed funds, thus reducing future liabilities. Thanks to favorable
investment returns, the PEIL Fund balance had reached $46,328,662 as of December 31, 2025, an amount
approximately double the total of the appropriations made to the fund since its inception (see Appendix F).
Although the Committee recognizes that there are valid alternative priorities to which some portion of these funds
could be allocated, it supports this year's proposed PEIL appropriation request.
Article 18 Rescind Prior Borrowing Authorizations
Funds Requested Funding Source Committee Recommendation
See below See below Approve (9-0)
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. Rescinding
these authorizations is the final bookkeeping task for every debt-based appropriation.
The staff recommends the following borrowing authorizations for rescission. The first three projects are complete,
staff has reconciled the accounts and verified that all bills have been paid.
Article Town Meeting Project Description Rescission
10(h) 2018 ATM Center Track&Field Reconstruction $44,840
16(h) 2019 ATM Hill Street New Sidewalk $389,310
12(f) 2020 ATM Equipment Replacement $190,700
10(b) 2023 ATM Munroe Center for the Arts $2,000,000
The Community Preservation Committee recommends rescinding the $2,000,000 borrowing authorization approved
for the Munroe Center for the Arts, and funding the project with a cash appropriation from the Community
Preservation Fund. See Article 10(b) for the corresponding request. Replacing this borrowing authorization with
cash funding will eliminate borrowing and interest costs for this project.
Article 19 Establish, Amend, Dissolve, and Appropriate To and From
Specified Stabilization Funds
Funds Requested Funding Source Committee Recommendation
See below See below Approve (9-0)
Article Source Destination Appropriation
19(a) Tax Levy Capital SF $6,580,908
19(b) Capital SF General Fund $800,000
19(c) TMOD Special Revenue Fund Transportation Management Overlay District SF $738,191
19(d) Affordable Housing SF Affordable Housing Trust Fund $11,789
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
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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 for stabilization funds
not specifically requested in other warrant articles are acted on under this article.
This article requests an appropriation of$6,580,908 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. The balance has been growing from regular annual appropriations with the intent to cover portions of the
annual debt service for the project to replace Lexington High School. With this appropriation, the balance in the
Capital Stabilization Fund is expected to be $56,645,849 by the end of FY2026 (see Brown Book,p. x).
The amount requested for appropriation to the Capital Stabilization Fund from the tax levy corresponds to the
revenue that is generated under a policy proposed by the Town Manager and adopted by the Select Board in 2022.
This policy dedicates to the CSF that portion of"new growth" tax revenue attributable to projects approved via a
rezoning under a Preliminary Site Use and Development Plan (PSDUP), or pursuant to the recent changes in the
dimensional controls in the Hartwell Avenue zoning district. It enables steady and reliable appropriations from the
tax levy into the CSF (or, going forward, directly to defray the excluded debt service costs of the high school
project). It also creates the potential for an increase of the revenue stream each year, depending on the Town's new
commercial development activity.
This article also requests an appropriation of$800,000 from the Capital Stabilization Fund to the General Fund for
excluded debt service tax mitigation for the LHS project.
This article seeks to appropriate $738,191.25 from the Transportation Management Overlay District (TMOD)
Special Revenue Fund to the TMOD Stabilization Fund.
This article seeks to appropriate $11,789.09 from the Affordable Housing Stabilization Fund to the Affordable
Housing Trust Fund; direct all future Community Impact Fees received from short-term rentals to the Affordable
Housing Trust Fund; and subsequently dissolve the Affordable Housing Stabilization Fund. This action is permitted
under the Municipal Modernization Act, which allows the dedication of specified revenue streams into a special
purpose stabilization fund by a two-thirds vote of town meeting.
Note that the Affordable Housing Stabilization Fund was established before the Affordable Housing Trust, and that
Town Meeting's prior dedication all Community Impact Fees into that stabilization fund was required by state law
to continue for at least three years. The three years having elapsed,the Town may now transfer the revenue stream
to the Affordable Housing Trust and dissolve the special purpose stabilization fund.
Article 20 Appropriate for Prior Years' Unpaid Bills
Funds Requested Funding Source Committee Recommendation
$10,000 Free Cash Approve (9-0)
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.
This article would authorize the Town to pay an invoice for $10,000 to South Middlesex Hospital Association Inc.
for services rendered in FY2025.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Article 21 Appropriate for Authorized Capital Improvements
Funds Requested Funding Source Committee Recommendation
N/A N/A IP (9-0)
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 22 Street Acceptance
Funds Requested Funding Source Committee Recommendation
N/A N/A Approve (9-0)
This article requests Town Meeting acceptance of several newly constructed streets that would put the streets under
Town jurisdiction. The streets meet Town standards and require no physical work or betterments, since they were
built under Subdivision Control through the Planning Board and have been inspected by the Engineering Division.
This article does not request any appropriation of funds.
Article 23 Appropriate for Trash/Recycling Bins
Funds Requested Funding Source Committee Recommendation
$1,204,000 Free Cash Approve (9-0)
This article seeks an appropriation of$1,204,000 for the purchase of 11,000 trash bins and 11,000 recycling bins
that will be necessary for a planned conversion to automated trash collection when the Town's current waste
collection contract expires in 2027. Automated collection requires a standard waste cart that is compatible with an
automated truck arm.
The decision to change to automated collection results from factors beyond the Town's control. Haulers are starting
to phase out the option of manual collection as labor and disposal costs have risen, in part because Massachusetts
landfills are beginning to reach capacity. Automated trash collection should result in more competitive bids and
operational cost savings, thereby mitigating the Town's rapidly rising trash budget. The conversion would also
reduce greenhouse gas emissions, require less idling, increase the number of households served by each truck, and
enhance worker safety.
Article 24 Elderly and Disabled Taxation Aid Fund & Committee (GL c. 60,
§ 3D)
Funds Requested Funding Source Committee Recommendation
N/A N/A Approve (9-0)
This article asks Town Meeting to accept the provisions of MGL Ch. 60, § 31), a local option statute that authorizes
the establishment of an Elderly and Disabled Taxation Aid Fund to which voluntary contributions may be made
"for the purpose of defraying the real estate taxes of elderly and disabled persons of low income." Technically, the
statute requires funds to be raised through a check-off form that would allow taxpayers to increase the amount
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
otherwise due on their tax bill. As a practical matter, however, most towns that have accepted this local option
solicit and accept contributions independently from the tax collection process.
To administer the fund,the statute requires the creation of a"taxation aid committee"consisting of the Chair of the
Board of Assessors,the Town Treasurer, and three town residents appointed by the Select Board. That committee is
tasked with broad discretion to "adopt rules and regulations" for administration of the statute and to identify the
recipients of aid.
Existing Tax Relief for the Elderly and Disabled
Over the last two decades, thanks largely to the efforts of the now-discontinued Property Tax Deferral and
Exemption Study Committee, Town Meeting has adopted a number of local options with the goal of maximizing
property exemptions available under state law for the elderly and disabled. Some of the costs of those exemptions
are reimbursed by the state, but most are funded from the Town's overlay account.3 The total net cost to the Town
in FY2025 of exemptions for qualifying elderly, disabled and veteran taxpayers, including an exemption from the
Community Preservation Act surcharge for moderate income residents over 60 and low income residents of any
age,was approximately $180,000.
In addition, through a home rule amendment granted in 2008, the Town has significantly increased the number of
residents 65 and older eligible, under a state program, to defer their property taxes until the property is sold or
otherwise transferred. In FY2025, 43 homeowners qualified for property tax deferrals totaling approximately
$535,000. Deferrals are particularly advantageous because they can reduce or entirely eliminate an elderly
homeowner's property tax burden for life. At the same time, there is no net cost to the Town because they are
essentially well-secured loans that will eventually be repaid in full with interest.
An overview of the currently available programs for exemption and deferral of property taxes can be found in
Appendix B to this report. A more detailed summary of available exemption and deferral opportunities, and the
requirements to establish eligibility, can be found in a guide entitled Property Tax Relief Programs, which is
updated each year by the Assessor's Office and published on the Town website.4
Discussion
Acceptance of the local option fund under G.L. c. 60, §31) would provide yet another opportunity to provide tax
relief, in this case at a minimal cost to the Town. If Town residents were to respond generously, it could have a
meaningful impact.
Because the statute grants the administrative committee substantial latitude to establish eligibility criteria and make
individualized awards,the fund could target relief that is not available under other state law programs. Although the
statute was not explicitly designed for or limited to this purpose, the Town Manager envisions that the fund could
address "edge" cases where homeowners narrowly fail to qualify for existing tax relief programs but nevertheless
are experiencing genuine financial hardship.
Whether a Section 3D fund would offer a significant advantage over other charitable endeavors is unclear. In
particular, it could compete for funds with the existing Fund for Lexington. which was established by the Select
Board in 1995 to, among other things, "assist those in our community who may need help to overcome a financial
crisis". While a Section 3D fund is limited to providing tax relief, money is fungible and an award for food or
medical care relief would free up money for tax relief and vice versa. It is not clear whether a Section 3D fund
could receive an appropriation from Town Meeting, since it can only accept voluntary contributions.
The creation and administration of the proposed Elderly and Disabled Taxation Aid Fund and Committee would not
be entirely without cost to the Town as it would require staff time and some expense to assemble a committee,
create its governing rules, publicize the program, solicit contributions, prepare meeting minutes, and make awards.
These costs are not substantial, however, and in view of the urgent need for additional tax relief in the community,
3 The overlay account is a fund set aside annually in the budget,without the need for appropriation,in an amount recommended
by the Board of Assessors. This reserve account is intended primarily to cover the anticipated expenses of successful requests
for abatement from the local property tax, but also covers property tax exemptions that are not otherwise funded. After all
outstanding abatement and exemption issues have been resolved, surplus funds in the overlay account may be released for
appropriation by Town Meeting.
4 Property Tax Relief Programs-https://www.lexingtonma.gov/168/Elderly-Other-Tax-Relief
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
particularly after passage of the high school debt exclusion, the Committee believes that adoption of the local
option would be of some net benefit to the Town and recommends its passage.
Article 25 Surcharge on Specific Residential Development (Citizen Petition)
Funds Requested Funding Source Committee Recommendation
N/A N/A Approve (9-0)
This article seeks to reauthorize a home rule petition originally authorized by Town Meeting in 2020 that would
mitigate the loss of moderate-income housing in Lexington by establishing a surcharge on specific residential
development activities. Because the Massachusetts legislature did not enact the legislation within the required
sessions, local approval must be obtained again. This surcharge would help fund the creation of community
housing.
The residential housing market in Lexington has been strong for the past fifteen years due to the abundance of high-
paying jobs in the greater Boston area, proximity to cultural and historical attractions, high-performing Lexington
public schools, and a high level of municipal services. With a declining number of buildable lots and an increasing
rate of teardowns of existing old homes, residential houses for sale have tended to become bigger and more
expensive,putting them out of reach for most low-and moderate-income buyers in the area.
To mitigate the loss of moderate-income housing resulting from the high demand for buildable parcels of land,this
article would establish a residential fee, "the residential development community housing surcharge", or "the
surcharge"to be added to building permit fees for all new single- and two-family residential construction where an
existing single- or two-family dwelling has been demolished to create a single buildable lot or multiple buildable
lots.
The surcharge will not apply to structures permitted for the creation of community housing or to permits for
reconstruction if the new structure has the same or less gross floor area than the old structure.
The Select Board would determine the amount of the community housing surcharge. That charge would be applied
on a dollars-per-square-foot basis on the total gross floor area of the structure or structures permitted by an
applicable building permit. The Select Board would evaluate and adjust the rate of the surcharge for inflation
annually. The Select Board would be authorized to adopt additional requirements, exemptions, and regulations to
implement or enforce the community housing surcharge.
The Committee notes that the article does not specify a limit on the magnitude of the surcharge, but this could be
amended by the Select Board.
The Building Commissioner of the Town of Lexington would not issue a certificate of occupancy for a building
until the applicable community housing surcharge required is paid in full.
All received surcharges would be deposited into the Town of Lexington Affordable Housing Trust Fund. The Town
Manager of Lexington or their designee would prepare and issue a periodic report that identifies surcharge receipts
and quantifies the attributes of community housing projects funded by the community housing surcharge.
Article 26 Oversee Financial Expenditures Lexington High School Project
(Citizen Petition)
Funds Requested Funding Source Committee Recommendation
None N/A Disapprove(1-8)
Background
This article directs the Select Board, in collaboration with the School Building Committee (SBC) and Permanent
Building Committee (PBC), to appoint a committee of Lexington residents with relevant professional backgrounds
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
to provide the public with information on the Lexington High School new building project. The February 27, 2026,
version of the motion for Article 26 states that the purpose of the committee is to:
... provide timely
(a) easy to understand, accessible, frequent and periodic communications to all Lexington residents
explaining expenditures, financial control procedures and their impact, financial tradeoffs,progress towards
timelines, any impending issues, interesting facts,trends,town debt levels, etc. as regular status reports.
(b)non-binding, advice on project expenditures and progress to town committees and staff.
The project to replace Lexington High School effectively commenced when the Town was invited to participate in
the effort together with the Massachusetts School Building Authority (MSBA) early in 2022. The SBC was formed
later in 2022 per MSBA requirements. The SBC, in turn, retained Dore & Whittier to act as the Owner's Project
Manager (OPM) and Symmes, Maim, McKee Associates (SMMA) was selected as the architectural firm. In 2025,
Turner Construction was chosen as the Construction Manager.
The project has now proceeded through the MSBA modules entitled "Eligibility Period", "Project Team",
"Feasibility Study", "Schematic Design", and "Funding the Project", and has nearly completed the detailed design
portion of the "Detailed Design" module. The remaining portions of the "Detailed Design" module include
preparation of construction drawings and documents, bid procurement, and the awarding of construction contracts.
The modules that will follow are "Construction", "Completing the Project", and"Post Occupancy Evaluation."
Preparation of construction documents is slated to begin within several months, and work has commenced on
packages for the solicitation of early bids that will enable site preparation, foundation work, and long-lead item
procurement to proceed before the completion of all construction drawings.
Due to the strict formal process imposed by the MSBA in earlier stages of this project, nearly all high- and mid-
level design decisions have already been made, and there is very limited flexibility to adjust the design any further.
Observations
Given the current phase of the project, it seems unlikely that a yet-to-be-formed committee of volunteers will be
able to make suggestions that would affect the project cost or efficiency.
We are also concerned that the proposed committee would face a steep learning curve, and that providing detailed
answers to their questions would burden Town and OPM staff.
The efforts of the proposed new committee would duplicate efforts of the SBC and the finance subcommittee that
the SBC has recently formed.Also,there is considerable overlap with the goals of Article 27.
Conclusion
Given the above considerations, we cannot recommend the formation of a new committee as proposed under this
article. However, we would welcome the periodic publication of accessible and easy-to-understand financial
reports. We encourage the proponents of this article and other interested persons to make constructive suggestions
on how to improve the financial information on the LHS project that is made available.
We urge the SBC,the SBC finance subcommittee, and the OPM to explore ways to keep the public informed about
the progress and spending on the LHS project.
Article 27 Procurement for Online Capital Project Platform (Citizen Petition)
Funds Requested Funding Source Committee Recommendation
$50,000 Free Cash Disapprove(0-9)
This article would authorize the Town Manager to provide a web-based interface to browse project-level budget
information and related documents for major active capital projects of the Town. It would appropriate $50,000 for
the purchase of services and software needed to implement this service. The Committee understands that the goal is
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
to improve financial transparency for major capital projects by making information about project progress and
spending accessible in a timely manner.
This Committee recognizes that several nearby communities do publish this kind of information in various formats
and at differing levels of detail and scope. Proponents assert that implementing such a system in Lexington would
be feasible with the requested appropriation.
Currently, Town staff use a combination of Munis ERP, other task-specific software products, and manual methods
to track capital projects. These methods vary across projects, and they are not configured to support a shared online
platform for publishing comprehensive, user-friendly reports that would include non-financial and other supporting
information.We do not have a clear idea of how difficult it would be to achieve this.
We wish to emphasize that the Committee strongly supports the goal of providing better and more accessible
information on capital projects. However, Committee members have several concerns regarding the current motion:
(a) The motion requires the system to publish "related supporting financial records to the extent available and
legally permissible,"but this is a very open-ended and potentially overwhelming requirement for staff, particularly
if manual redactions of sensitive information are required.
(b) The motion stipulates that the Town must first"define functional and reporting requirements". This is a critical
early phase in any project like this, and it has not been completed. Without a clear and comprehensive set of
requirements, much less a design that is compatible with Lexington's current financial systems, it is unclear if this
appropriation would be adequate to complete the project.
Proponents have cited three commercially available solutions in use by other towns that could fulfill this request,
two of which have a baseline vendor cost that is within the appropriation. However, there will be additional costs
for configuring and adapting any new system to the Town's current financial management systems and procedures.
We note that Town staff have commented on the difficulty of interfacing Munis with external systems. In addition,
all commercially supported systems charge annual subscription fees that would need to be incorporated into future
operating budgets.
A potentially lower-cost alternative might be to develop a system in-house but, without additional hiring, the staff
time needed to develop and maintain this kind of system would affect other work.
(c)The total cost of implementing an online platform includes the cost of doing a detailed system design,the cost to
procure a commercial system, if any, the cost of loading information into the platform, ongoing operational costs
including software or package licensing fees, and the staff time to implement and maintain the platform including
making periodic information updates. No total cost estimate has yet been developed, nor can one be made prior to
the development of an implementation plan. We would like to see such an estimate before a decision is made to
proceed with this project.
(d) It is possible that substantial Town staff time will be needed for the initial implementation, and for regular data
updates to the new system. Additionally, redaction and exclusion of confidential data as detailed in the motion, may
need additional staff time. The amount of staff time needed for implementation, periodic updates, and system
maintenance should be quantified before embarking on this project.
(e) While developing the next fiscal year's budget, the Town Manager reviews a list of Program Improvement
Requests (PIRs) from the senior management team and determines which requests have high enough priority and
the necessary funding to be part of the recommended budget. This project is basically a PIR, but it has not been
evaluated relative to the other PIRs that were considered for the FY2027 budget, most of which were not
recommended due to budget constraints. Approval of this article would effectively put this project ahead of those
other requests.We would prefer to see a full discussion of the relative priorities.
The Committee strongly suggests adopting a phased approach that would task staff, possibly with outside support,
to:
• Develop a prioritized set of requirements for a system to share information with the public about capital
projects in Lexington.
• Investigate commercially available systems and/or in-house solutions that could satisfy those requirements.
• Develop a project timeline and budget, including initial setup and ongoing expenses.
A motion with this more limited scope would be more reasonable and practical.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Article 28 Speed Humps — Walnut St (Citizen Petition)
Funds Requested Funding Source Committee Recommendation
None N/A Disapprove(0-8-1)
This article requests funding to install vertical speed control elements such as speed humps or speed cushions on
Walnut Street. A motion for a pilot speed hump program on Walnut Street was discussed at STM 2023-1 under
Article 8, but failed to obtain the 2/3 majority required for a debt-based appropriation (84 in favor— 73 opposed— 6
abstaining).
There is general agreement by the members of this Committee, the article proponents, and Town staff, that Walnut
Street would benefit from traffic-calming measures due to heavy cut-through traffic that frequently ignores the
posted speed limit on a very narrow and hilly road. The street also lacks a sidewalk, which makes pedestrian access
treacherous.
The proponent's request is counter to the plans of the Department of Public Works, which is following the
recommendations of the Town's Transportation Safety Group (TSG). The TSG hired the consulting firm, TEC, to
analyze the traffic on Walnut St, and their report evaluated several alternative traffic-calming methods, including
median islands, speed humps, and speed cushions. The TEC report did not recommend one traffic-calming method
over all others, but it did rule out some alternatives as impractical. All viable options were presented in a matrix of
pros and cons. Based on this report, the TSG chose median islands as their preferred option, and the design and
construction of median islands is already funded in the street improvement budget.
The proponent of this article asserts that speed humps/cushions would be a better solution, since median islands will
be difficult to install and will be less effective at traffic-calming. Town staff acknowledges that the narrow paved
roadway will limit the locations where median islands can be installed. The proponent also notes that median
islands are often damaged, as demonstrated by the median island currently at the intersection of Walnut Street and
Concord Ave.
Either approach would help to calm traffic, but Lexington's Fire Chief notes that they differ in their impact on
emergency vehicles, i.e., fire trucks and ambulances. Fire trucks are heavy vehicles, and even more so when
carrying a load of water. Even modest bumps in the road surface can produce significant mechanical stress on these
vehicles. Ambulances carrying patients would also like to avoid unnecessary bumps. Slowing down for speed
humps to reduce their impact delays response times.
The Fire Chief also noted that there are several group-living residences accessible only via Walnut St. that
frequently require emergency services, and that Waltham Fire Engine 8 sits at the intersection of Woburn St. and
Trapelo Rd., which is at the southern end of Walnut St in Waltham. The Lexington Fire Department is responsible
for emergency responses on Walnut Street and in adjacent neighborhoods within Lexington. In the uncommon
instances when the Lexington department cannot respond, Lexington may request Waltham Fire to respond.
Town staff indicated that either approach could be funded under the street improvement budget and would cost
roughly the same amount.
This committee notes that the TSG,the consulting firm TEC, and Town staff have carefully considered the pros and
cons of multiple traffic-calming measures, and strongly recommend median islands in this situation. The TSG will
evaluate the effectiveness of the median islands within the first year of installation.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Article 31 Amendment— Chapter 90, § 9 "Regulation of Refuse Disposal"
Funds Requested Funding Source Committee Recommendation
N/A N/A Approve (8-1)
This article seeks to amend Chapter 90, Section 9 of Lexington's bylaws to authorize the Select Board to implement
fees related to waste disposal and to modernize the language. The goals are to provide relief from rapidly growing
costs for waste collection and disposal, and to reduce the overall amount of waste the Town generates.
When this section of the bylaws was originally adopted, Lexington gave residents the ability to dispose of trash at
very low cost by allowing them to bring their waste to Town-operated, unlined landfills located on municipal
property. Since 1980, Lexington has provided curbside trash pickup, which is then trucked to the Wheelabrator
North Andover waste-to-energy facility for incineration. In 1988 the Town implemented curbside collection of
recycled items. The bylaw was amended each time to reflect the change in service.
Since the 1970s, federal and state waste regulations have been continuously updated and tightened. Each successive
change has increased the Town's cost of disposal. Most recently, state regulations have added mattresses and
textiles to the list of materials banned from disposal, requiring that they be recycled instead.
In 1992,the Town grappled with the financial implications of rising disposal costs by considering the creation of a
trash enterprise fund to move these costs outside the tax levy. Instead, Town Meeting chose to preserve "free"trash
collection and disposal, making the trash budget contingent on an operating override. The June 1992 vote approved
the $2,718,092 override by a margin of 6,247 to 3,654. The present value of this amount, if increased annually by
2.5%,would be approximately$6,143,000.
In 2001, in an attempt to offset escalating disposal costs,the Town implemented a fee-based "Pay-As-You-Throw"
system for trash disposal. However, residents sued the Town, claiming the program violated this section of the
bylaws. Following a court trial,the PAYT program was found to be a violation of the bylaw and declared illegal. In
response, Article 3 was passed by a vote of 118-61 at the 2002 Special Town Meeting, amending the bylaw to
remove the word, "free", and authorizing fees for the collection and disposal of non-recycled waste. This Town
Meeting vote was then challenged by referendum and the action was reversed by a vote of 6,931 to 3,618.
The Department of Public Works' categorization of waste collection and disposal expenses has evolved as costs
have increased, as seen below:
REFUSE and RECYCLING COSTS
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027
Actual Actual Actual Actual Budget Budget
Trash Collection $ 983,448 $ 1,010,426 $ 1,165,644 $ 1,295,849 $ 1,437,563 $ 1,520,467
Trash Disposal $ 722,697 $ 688,418 $ 698,237 $ 695,216 $ 805,930 $ 810,244
Recycling Collection $ 711,829 $ 731,355 $ 1,165,644 $ 1,295,849 $ 1,153,845 $ 1,187,977
Recycling Processing $ 88,814 $ 255,393 $ 242,612 $ 261,754 $ 390,975 $ 390,000
Bulky Item Disposal $ 46,831 $ 81,011 $ 113,423 $ 121,063 $ 137,694 $ 222,908
Compost Collection $ — $ — $ — $ — $ 231,000 $ 350,000
Total $ 2,553,619 $ 2,766,603 $ 3,385,560 $ 3,669,731 $ 4,157,007 $ 4,481,596
note:FY2027-Bulky Item Disposal cost is proposed to be offset by fees.
note:FY2026-Curbside Compost collection added to General Fund
note:FY2024-started Curbside Compost collection funded via ABPA;started Capital Waste contract
note:FY2023-started contract with UTEC for mattress collection
Since FY2022, the percentage increase in these costs has exceeded the percentage growth in the funding available
for the municipal budget. As a result, funds that could have supported other municipal services have been redirected
to cover rising waste-related expenses.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
Annual Increase ,,,,, Refuse/Recycling vs Municipal Revenue
%
0%
15%
10%
5% IN
0%
FY2023 FY2024 FY2025 FY2026 FY2027
❑ (IIFrowth of Refuse & Recyling Costs (IIFr owth of Municipal Revenue
It is anticipated that collection and disposal costs will continue to rise at a rate that outpaces the growth of the
municipal budget. The Town's trash and recycling collection contracts will be up for renewal in FY2028. Trash
disposal tipping fees at the Wheelabrator North Andover incinerator have been set via a contract through FY2030,
with a fixed 4% annual increase. However, the facility is expected to close at that time, requiring the Town to
transition to an alternative disposal method at a significantly higher per-ton cost.
Removing the word "free" from the bylaw would provide the Select Board with the flexibility to implement
volume-based fees to help reduce trash tonnage in anticipation of rising disposal costs. It would also allow the
Town to pass along the direct costs associated with collecting bulky items,which the State now considers ineligible
for traditional disposal. The Select Board has not yet proposed any specific fees for trash disposal. It's important to
note that State law limits the size of fees charged to the related costs incurred. The impact on individual households
cannot be determined until a schedule of fees has been published.
The current plan, if this change is approved, is to implement bulky item fees beginning July 1, 2026,and to evaluate
volume-based pricing of trash collection for possible implementation in July 2027; however, these details are still
under review. If this article is approved, any final decision to adopt fees will be made by the Select Board.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Appendix A: 5-Year Budget Projections
The Town's Finance Department prepares a 5-year forecast for use in the process of developing 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 FY2024 and FY2025, revised budget
figures for FY2026 (still underway), the proposed budget for FY2027 presented in the Brown Book, and projected
figures for FY2028-FY2031. The bottom line shows net surpluses (deficits).
For FY2024 and FY2025 the Town ran substantial overall surpluses, about 6.6% of expenses in FY2024 and about
3.1% in FY2025. These surpluses flowed to free cash in the following year, and were available to fund one-time
expenses. For the current fiscal year (FY2026), 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,
FY2026, 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, at the end of the fiscal year, expenses will exceed revenues. Towns may not run a deficit during the fiscal year,
except in very limited circumstances.
Similarly, the recommended budget for FY2027 is balanced, and it seems likely that the final actual end-of-fiscal-
year figures will result in a surplus due to the Town's conservative budgeting policy. However, future budgets may
remain affected by persistent inflation that drives expenses to rise at greater than 2.5% annually. If so, surpluses
may decrease and contribute to less Free Cash being available in the out-year budgets.
It is also important to point out that these projections do not attempt to capture the effects the MBTA Communities
developments may have on future revenues or expenses. While it is acknowledged that they will have an effect, at
this time the ranges of estimates are too large to determine numbers with any accuracy. Below you will find
references to items that may be important for future projections. Once some of these developments have been
constructed and occupied, their demographic and financial characteristics will provide more of a basis for gauging
their effects on Town budgets.
Table A-1. Actual and Projected Revenues and Expenses ($1,000s)
FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Revenue Category Actual Actual Revised Proposed Projection Projection Projection Projection
Total Revenues $ 290,054 $ 303,204 $ 313,149 $ 321,534 $ 322,472 $ 329,017 $ 337,842 $ 348,409
Total Expenses $ 272,140 $ 294,215 $ 313,149 $ 321,534 $ 325,266 $ 337,476 $ 346,660 $ 356,126
Revenue-Expenses $ 17,914 $ 8,989 $ — $ — $ (2,794) $ (8,459) $ (8,818) $ (7,717)
As%of expenses 6.6 % 3.1 % —% —% (0.9)% (2.5)% (2.5)% (2.2)%
The projections beyond the FY2027 budget under consideration show expenses exceeding revenues, yielding
deficits ranging from 0.9% of expenses in FY2028 to 2.2% in FY2031. 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, such as
limiting program improvements, increasing the use of available funds, reducing services, fee increases, or even a
Proposition 2 1/2 override.
While projections, particularly those several years out and those made in times of uncertain inflationary pressures,
are subject to substantial uncertainties,the projected deficits nonetheless suggest a modest revenue increase and the
need to control costs.We present the projections in more detail below.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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 FY2025 (actuals) rising to
85% in the projection for FY2031. As a result, the assumptions concerning property tax revenues are critical to the
projections. Not captured in the revenue projections are the increased revenues in the areas of Local Receipts
(building permits, excise taxes) or Property Tax that future MBTA Communities development will generate.
Table A-2a. Projected Revenues by Category ($1,000s)
FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Revenue Category Actual Actual Revised Proposed Projected Projected Projected Projected
1 Property Tax $ 227,334 $ 239,714 $ 249,047 $ 258,362 $ 267,321 $ 276,504 $ 285,916 $ 295,564
Levy
2 State Aid $ 19,696 $ 20,580 $ 21,533 $ 22,053 $ 22,913 $ 23,612 $ 24,304 $ 24,995
3 Local Receipts $ 25,615 $ 25,740 $ 17,198 $ 18,821 $ 19,130 $ 18,865 $ 19,106 $ 19,354
4 Available Funds $ 17,329 $ 17,250 $ 25,612 $ 22,612 $ 13,447 $ 10,356 $ 8,815 $ 8,774
5 Revenue Offsets $ (1,814) $ (1,954) $ (2,176) $ (2,361) $ (2,447) $ (2,491) $ (2,536) $ (2,583)
6 Other Revenues $ 1,894 $ 1,874 $ 1,935 $ 2,047 $ 2,109 $ 2,172 $ 2,237 $ 2,304
Total Revenues S 290,054 S 303,204 S 313,149 S 321,534 S 322,472 S 329,017 S 337,842 S 348,409
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 million
Levy annually.
2 State Aid Increases at$30 per pupil for FY2028-31.(minimum aid). Enrollment based on School
Dept projections. UGGA projected to increase by 2%per year.
3 Local Receipts Assumes modest growth in local receipts based on evaluation of historical averages.
Assume$2.5M in investment income in FY2028;$2M in FY2029-31.
4 Available Funds Free Cash estimate of$12,000,000 available for FY2028,and$9,000,000 for FY29-2031.
Annual contribution of$171,000 from TDM Stabilization Fund to support Lexpress and the
Alewife Shuttle. $50,000 in FY2028 from the Visitors Center Stabilization Fund.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 FY2028-31. $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 FY2027 Enterprise Indirects increasing by 3%annually.
Table A-2b shows the projected year-to-year percentage increases in the various revenue categories. Note that the
Property Tax Levy grows more slowly from FY2028-FY2031 than in the earlier years. Chapter 70 State Aid
growth is projected at lower levels in the interval FY2029-FY2031 due to uncertainty in the State's future financial
condition. Additionally, it is still uncertain how revenue generated by the Fair Share Amendment, also known as the
"Millionaire's Tax",will affect Lexington's future aid and this is not factored in this projection. Local Receipts also
show modest growth in the proposed FY2027 budget and beyond, after a steep decline in FY2026 when building
permits fell due to the halt of development in the lab/office market . 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 use of conservative assumptions regarding
revenues which lowers levels of free cash, and may actually trend lower due to growing budgetary constraints.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Table A-2b. Annual Rates of Increase in Revenues
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Revenue Category Actual Revised Proposed Projected Projected Projected Projected
1 Property Tax Levy 5.4% 3.9% 3.7% 3.5% 3.4% 3.4% 3.4%
2 State Aid 4.5% 4.6% 2.4% 3.9% 3.0% 2.9% 2.8%
3 Local Receipts 0.5% (33.2)% 9.4% 1.6% (1.4)% 1.3% 1.3%
4 Available Funds (0.5)% 48.5% (11.7)% (40.5)% (23.0)% (14.9)% (0.5)%
5 Revenue Offsets 7.7% 11.4% 8.5% 3.7% 1.8% 1.8% 1.8%
6 Other Revenues (1.1)% 3.3% 5.8% 3.0% 3.0% 3.0% 3.0%
Total Revenues 4.5% 3.3% 2.7% 0.3% 2.0% 2.7% 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 was 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
program suspended in FY2022 due to the pandemic,then completed in FY2023. This transition had the net effect of
having $700,000 more available in each of these years to fund items such as capital investments, OPEB, or the
Capital Stabilization Fund. The increased use of cash for capital projects has reduced within-levy debt service 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 available for general fund
operations will be $2 million per year in future years. This projections is slightly lower than the $2.75 million
assumed in FY2021-2023 and $3 million projected for FY2024-2025 as commercial and industrial new growth has
slowed and is not expected to trend back up for several years. As shown in the figure below, this assumption is
conservative in the sense that actual new growth has been higher than projections in nine of the last ten fiscal years.
Projected growth does not consider new growth that may result from MBTA residential development.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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 — —Bijdget Asswupdoll for New Growth
Based on a fiscal guideline adopted in 2022, the New Growth resulting from town meeting approval of re-zonings
of specific parcels or the change in dimensional controls that applies to the entire Hartwell Ave. commercial/
manufacturing 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 $6,774,000 New Growth in FY2025 (the dotted line
in the chart), $2,527,000 was in this category. The difference between total New Growth and the amount set aside
into the CSF is the new growth for operations which was $4,247,000 for FY2025 (the solid line in the chart). In
FY2026 total New Growth was $3,331,122 with only $17,858 in new commercial growth. New growth each year
permanently increases the tax levy allowed in future years, and the adopted fiscal guideline assumes that the
amount of new growth dedicated to the CSF each year will also be set aside in future years. The annual amount of
tax levy set-aside to the CSF has accumulated to $6,563,050 from FY2022-FY2025. In FY2023 $1,060,000 in new
growth resulted from a one-time change in tax status of the personal property assets held at the Spring St. properties
of Takeda Pharmaceuticals. The unexpected revenue from Takeda has been allocated to the Retirement Fund
(pensions).
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.
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, in the last three completed fiscal years (FY2023-FY2025), realized total revenues have been higher than
projected values, especially relative to projections made several years in advance. For example, the projection for
FY2023 made in 2019 was 9.9%below the actual value and that for FY2024 made in 2020 was 12.2% lower than
the actual value.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
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)
FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Expense Category Actual Actual Revised Projection Projection Projection Projection Projection
Education S 137,704 S 144,752 S 149,603 S 155,825 S 162,720 S 169,399 S 175,407 S 181,908
8 LPS Wages $ 114,299 $ 123,343 $ 127,184 $ 131,524 $ 136,074 $ 139,813 $ 144,008 $ 148,616
9 LPS Expenses $ 19,903 $ 18,002 $ 18,850 $ 20,205 $ 22,222 $ 24,808 $ 26,240 $ 27,720
10 Minuteman $ 3,502 $ 3,406 $ 3,569 $ 4,096 $ 4,424 $ 4,777 $ 5,160 $ 5,572
Municipal S 59,705 S 62,737 S 66,551 S 68,902 S 70,598 S 72,582 S 74,477 S 76,371
11 Municipal Wages $ 38,029 $ 39,766 $ 40,506 $ 42,478 $ 43,360 $ 44,488 $ 45,484 $ 46,432
12 Municipal Expenses $ 21,677 $ 22,971 $ 26,045 $ 26,424 $ 27,238 $ 28,094 $ 28,993 $ 29,939
Shared Expenses S 18,522 S 18,302 S 19,584 S 20,705 S 20,451 S 22,265 S 19,849 S 15,216
13 Debt Service $ 6,558 $ 5,529 $ 5,983 $ 6,275 $ 5,072 $ 6,056 $ 6,717 $ 7,351
14 Mitigate Within Levy $ - $ - $ - $ - $ - $ - $ - $ -
15 OPEB $ 1,980 $ 2,030 $ 2,080 $ 2,130 $ 2,180 $ 2,230 $ 2,280 $ 4,830
16 Retirement $ 9,985 $ 10,743 $ 11,522 $ 12,300 $ 13,199 $ 13,979 $ 10,853 $ 3,036
Benefits S 32,346 S 36,043 S 41,147 S 44,372 S 48,635 S 53,315 S 58,452 S 64,093
17a Medicare $ 2,272 $ 2,388 $ 2,420 $ 2,541 $ 2,694 $ 2,855 $ 3,027 $ 3,208
17b Health Insurance $ 29,000 $ 32,467 $ 37,401 $ 40,400 $ 44,440 $ 48,884 $ 53,772 $ 59,150
17c Dental $ 1,057 $ 1,167 $ 1,301 $ 1,405 $ 1,476 $ 1,549 $ 1,627 $ 1,708
17d Life $ 17 $ 22 $ 25 $ 25 $ 26 $ 26 $ 27 $ 27
18 Reserve Fund $ - $ - $ 850 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
19 Workers'Comp. $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500
20 Unemployment $ 49 $ 47 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200
21 Property&Lib.Ins. $ 1,017 $ 1,183 $ 1,278 $ 1,454 $ 1,526 $ 1,603 $ 1,683 $ 1,767
22 Uninsured Losses $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200
23 Solar Production $ 352 $ 364 $ 390 $ 390 $ 390 $ 390 $ 390 $ 390
24 Capital $ 16,813 $ 19,649 $ 19,524 $ 17,839 $ 11,186 $ 8,163 $ 6,641 $ 6,620
25 Other $ 500 $ 2,039 $ 3,124 $ 1,025 $ 280 $ 280 $ 280 $ 280
26 Approp.to Capital Stab $ 396 $ 1,836 $ 917 $ - $ - $ - $ - $ -
27 Unallocated Revenue $ - $ - $ 2,700 $ 2,542 $ 1,000 $ 1,000 $ 1,000 $ 1,000
28 Tax Levy Dedicated to $ 4,036 $ 6,563 $ 6,581 $ 6,581 $ 6,581 $ 6,581 $ 6,581 $ 6,581
CSF
Total Expenditures $ 272,140 $ 294,215 $ 313,149 $ 321,534 $ 325,266 $ 337,476 $ 346,660 $ 356,126
Note:Amounts in italics are subtotals.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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 Based on LPS 5-Year Budget Projections
9 LPS Expenses Based on LPS 5-Year Budget Projections
10 Minuteman FY2028-31 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
2%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 FY2027-2030 above 5%may 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.In FY2031,additional$2.5M contribution
offsetting decrease in Contributory Retirement assessment.
16 Retirement Contributory Retirement assessment(based on 2030 amortization of unfunded liability and 7.25%interest rate
assumption).Pension obligation is expected to decrease once full funding is reached in FY2031
Benefits
17a Medicare 6%increase in Medicare,reflecting an increase in the number of eligible employees and increases in wages.
17b Health Insurance FY2027,growing at 10%annually.
17c Dental FY2027,growing at 5%annually.
17d Life FY2027,growing at 2%annually.
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. FY2027,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,$2.75M for Street Improvement and$242K for Municipal Building Envelope,portions of
which grow at 2.5%through FY2030.
25 Other Reflects various warrant articles such as Senior Tax Work-Off and$250K in unanticipated needs in
FY2028-31
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.Additional growth is not
to CSF anticipated for the next several years.
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.
The effects that upcoming MBTA Communities developments will have on expenses is not included in these
projections. Once the MBTA projects start to be occupied the Town will be better able to enumerate and extrapolate
how tax revenues as well as municipal, school, shared expenses and capital investments will change.
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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
Table A-5a. Expense Projections Aggregated
FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Expense Category Actual Actual Revised Projection Projection Projection Projection Projection
Education S 137,704 S 144,752 S 149,603 S 155,825 S 162,720 S 169,399 S 175,407 S 181,908
LPS $ 134,202 $ 141,345 $ 146,033 $ 151,729 $ 158,296 $ 164,621 $ 170,247 $ 176,336
Minuteman $ 3,502 $ 3,406 $ 3,569 $ 4,096 $ 4,424 $ 4,777 $ 5,160 $ 5,572
Municipal S 59,705 S 62,737 S 66,551 S 68,902 S 70,598 S 72,582 S 74,477 S 76,371
Shared Expenses S 78,767 S 93,290 S 96,995 S 96,807 S 91,948 S 95,496 S 96,776 S 97,847
OPEB $ 1,980 $ 2,030 $ 2,080 $ 2,130 $ 2,180 $ 2,230 $ 2,280 $ 4,830
Capital $ 16,813 $ 19,649 $ 19,524 $ 17,839 $ 11,186 $ 8,163 $ 6,641 $ 6,620
Capital Stabil.Fund $ 4,433 $ 8,399 $ 7,498 $ 6,581 $ 6,581 $ 6,581 $ 6,581 $ 6,581
Other $ 55,542 $ 63,212 $ 67,894 $ 70,257 $ 72,002 $ 78,522 $ 81,275 $ 79,817
Grand Total S 276,177 S 300,778 S 313,149 S 321,534 S 325,266 S 337,476 S 346,660 S 356,126
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, as the number of Lexington
students attending Minuteman continues to grow. The plan shown here increases the size of the annual OPEB
contribution by $50,000 each year FY2027-FY2030, a modest annual rate of about 2.5%. In FY2031, funding is
proposed to increase by$2.5 million, offset by an anticipated decrease in the Contributory Retirement appropriation
that is expected to occur when the Retirement Fund reaches the point of full funding of the Town's pension
obligations.
Table A-5b. Annual Rates of Increase in Expenses
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Expense Category Actual Revised Projection Projection Projection Projection Projection
Education 5.1% 3.4% 4.2% 4.4% 4.1% 3.5% 3.7%
LPS 5.3% 3.3% 3.9% 4.3% 4.0% 3.4% 3.6%
Minuteman (2.7)% 4.8% 14.7% 8.0% 8.0% 8.0% 8.0%
Municipal 5.1% 6.1% 3.5% 2.5% 2.8% 2.6% 2.5%
Shared Expenses 18.4% 4.0% (0.2)% (5.0)% 3.9% 1.3% 1.1%
OPEB 2.5% 2.5% 2.4% 2.3% 2.3% 2.2% 111.9%
Capital 16.9% (0.6)% (8.6)% (37.3)% (27.0)% (18.6)% (0.3)%
Capital Stabilization Fund 89.5% (10.7)% (12.2)% _% _% _% _%
Other 13.8% 7.4% 3.5% 2.5% 9.1% 3.5% (1.8)%
Grand Total 8.9% 4.1% 2.7% 12% 3.8% 2.7% 2.7%
Note:Each entry shows the percentage change from the previous year, calculated from Table A-5a.
Contributions to the Capital Stabilization Fund to reduce the future impacts on taxes of the High School project
show the greatest variation, going from $4.4 million in FY2024 to $8.4 million in FY2025 then down to $7.5
million in FY2026. It then drops to $6.5 million in FY2027 and for the last 4 years of the projection, which
represents 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 will only increase if the development slump in the lab/office sector
ends. The Town may also elect to appropriate free cash or other available funds to the Capital Stabilization Fund,
which is not reflected in this projection. Capital spending is projected to drop off in FY2027,which correlates to the
decrease in projected free cash available in those periods. However capital spending would increase if 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 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, the actual rate of inflation may exceed the assumptions used in these projections. Energy prices have also
been rising rapidly,which tends to increase the cost of all goods and services. An extended period of inflation could
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
also trigger wage increases that are much larger than those assumed by these projections. It is unclear how long
high interest rates will persist, which increase both the carrying cost of our debt funding and our investment
income. The projections do not attempt to capture how new MBTA Communities development will change
revenues and expenses. 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 realistic 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.
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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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
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 1980s.
The Purpose of Enterprise Funds
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". Accounted for on an accrual basis
instead of a cash 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. A municipal
enterprise fund may be operated on a stand-alone basis, i.e., supported entirely by user 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, on the other hand, is partially stand-alone. Created to fund the Recreation
Department, its operational expenses were originally covered exclusively by recreational user fees, such as charges
for the rental of playing fields. In 2015, with the opening of the new Community Center on Marrett Road, the
Recreation Department was reorganized to include the Community Center and renamed the Department of
Recreation and Community Programs. Since the Community Center provides a range of services to Town residents
without fees, the salaries and benefits of most Community Center employees are funded by an annual contribution
from the tax levy.
Most Recreation Fund capital costs have been covered by the General Fund since the Recreation Fund's inception.
User fees at the Pine Meadows golf course are typically sufficient to cover not only its operational costs but also its
capital costs for maintenance, improvements and equipment. The capital costs of most other recreational programs,
however, such as the replacement and renovation of the playing fields at Lincoln Park, have been funded through a
combination of tax levy funding, Community Preservation Act (CPA) funding, within-levy borrowing, 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 fund 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. State law requires that any operating surplus 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 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, including salaries, expenses and debt service costs. (Previously, appropriations
for the enterprise funds were commingled with those for the General Fund). This presentation makes it easier to
understand the budgets of the enterprise funds. However, it should be noted that a number of components of the
enterprise fund budgets, including indirect costs charged by the General Fund for accounting and other support
services, contributions to fund other post-employment benefits (OPEB), and "cash capital" expenditures raised in
the water and wastewater rates, are appropriated in other articles. For the complete operating budgets of the
enterprise funds, including indirect costs, OPEB contributions and cash applied toward capital projects, see the
Brown Book sections on the Water,Wastewater, and Recreation funds.
To present a more meaningful picture of the complete enterprise fund operating budgets, the tables included in our
discussion of the enterprise fund operating budget article have been expanded to show all components of the
budget, and the articles under which they are appropriated.
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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. This method of accounting for fee-based programs allows municipalities to deposit, access
and deploy immediately fees that are collected for specific services. It also helps to assure that such fees are
commensurate with associated costs.
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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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
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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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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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2026 ATM APPROPRIATION CONMTTEE 23 MARCH 2026
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 Fund
Lexington's Affordable Housing Trust (AHT) is a municipal entity that accumulates and distributes funds in the
Affordable Housing Trust Fund (AHTF) to support affordable housing in the Town. The AHTF 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. The latter bill expired after six
years without action by the legislature. Article 25 at this meeting asks the Town to renew the home rule petition.
The primary source of AHT funding is through annual CPA requests for prefunding monies. While prefunding will
allow the AHT to use 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.
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.
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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 represent a financial
liability. The obligation extends over the lifetimes of currently vested employees and retirees. The size of the
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 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 present-day dollars to pay for
present-day expenses arising from benefits earned in prior years. The Town's pay-as-you-go OPEB cost for
FY2027 is projected to be approximately $10.4 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 contributions for future benefits are appropriated into a trust
fund, the Post-Employment Insurance Liability Fund (PEIL Fund), and current-year expenses are appropriated out
of that same fund. Note that the PEIL Fund is referred to as the "OPEB Trust Fund" in the Brown Book; the two
names refer to the same fund.
The Town is currently transitioning from the pay-as-you-go to the pre-funded model. During this transition,
appropriations into the PEIL Fund reduce the size of the unfunded liability, but current-year OPEB expenses are
still funded entirely from the operating budget(pay-as-you-go).
The unfunded liability is the difference between the current balance in the PEIL Fund and the fully funded level.
The fully funded level is determined by an actuarial calculation based on data on past and present Town employees,
Massachusetts law, Town employment policies, and an extensive set of actuarial and economic assumptions. This
calculation is sensitive to many variables such as the lifespans of retirees, the expected growth in the number of
Town employees, and the rate at which the Town contributes to the fund. The full funding level is the amount
needed on a given date for the Town to be able to cover all of the future retiree health/dental/life insurance expenses
required by the benefits that have been earned up to that date.
Once the PEIL Fund is fully funded, annual withdrawals from the fund will be used to cover the current year's
OPEB expenses. At the same time,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 present-day dollars, is also how the Retirement Fund (for
employee pensions)will operate once it is fully funded.
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
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investment earnings pay for a substantial portion of the costs. Building up the trust fund results in higher expenses
during the transition period,but it will ultimately lower the 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 pre-funding,the projected cost of benefits is accounted and paid for in the current year.
Even partial pre-funding 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 acts as a reserve that can fund a portion of
retiree health costs in challenging fiscal years. In addition,the size of the fund and the Town's routine contributions
to it are considered when bond rating agencies evaluate the Town.
On the other hand, appropriating money into the trust fund for future obligations comes with an opportunity cost.
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 could
lead to 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.
Starting in 2014 the Town made annual contributions of roughly 20%to 35%of the OPEB normal cost to the PEIL
Fund, with the exception of 2020 when the contribution was lowered due to uncertainty about the impact of the
Covid-19 pandemic.
In 2022, the Town began increasing the annual appropriation into the fund by $50,000 from the prior year. As the
balance of the fund has grown, investment earnings have begun to outstrip the Town's contributions. Going
forward, investment earnings will dominate the growth rate of the fund.
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. Town Meeting may only appropriate monies out of the PEIL Fund 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
official financial statements. In regard to OPEB accounting, GASB statements 74 and 75 (GASB 74 and GASB 75)
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2026 ATM APPROPRIATION COXMTTEE 23 MARCH 2026
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;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.
Every two years,the Town engages an actuarial consultant to produce a full report according to GASB standards. A
brief update based on the previous year's full analysis is produced in intervening years. These reports are
incorporated into the Town's annual financial statements. This informs potential investors about one aspect of the
Town's financial health, and it enables a more uniform comparison to other municipalities.
A secondary use of the actuarial reports is to guide municipalities as they consider policies regarding their OPEB
liability. 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 expectations.
Recent Status of OPEB Funding
The most recent actuarial analysis report, received in April, 2025,presents the Town's OPEB liabilities and funding
as of June 30, 2024. This and several 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 5.57% which is the equivalent of a 6.75% rate for a certain
interval (roughly 39 years) followed by a 3.93% rate that is representative of the rate of interest on 20-year general
obligation municipal bonds. Using this discount rate,the total OPEB liability as of June 30, 2024, was estimated at
approximately$266 million. Since the balance in the fund on June 30, 2024,was approximately$34 million,the net
liability was about$231 million. While this actuarial analysis is required to satisfy GASB requirements, it provides
no guidance on a practical pre-funding schedule.
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 with the market,but it remains significantly larger than the sum of all past
appropriations into the fund. The balance was $46,328,662 as of December 31, 2025, while the sum of the previous
appropriations (2008-2025) is $23,170,891. This reflects the accumulated investment earnings for the fund since its
inception.
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 2024 Annual Town Meeting $ 2,033,375
2015 Annual Town Meeting $ 1,200,000 2025 Annual Town Meeting $ 2,083,375
2016 Annual Town Meeting $ 1,512,318 2026 Annual Town Meeting* $ 2,133,375
2017 Annual Town Meeting $ 1,842,895
*proposed
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