Franklin Matters: Frequently Asked Questions: FY 2026 Override -> Questions 21

Thursday, May 8, 2025

Frequently Asked Questions: FY 2026 Override -> Questions 21 - 24

Frequently Asked Questions - shared from the Town of Franklin FY 2026 Override Information page. There are 40 and a form to ask another question if it is not already listed there -> https://ma-franklin.civicplus.com/Faq.aspx?TID=41

21.Why is the town facing such a budget crunch?

The community has been made aware of the ongoing structural financial deficit transpiring over the years. Please find budget documents here illustrating numerous cautionary budget narratives. As you will see, Town and School Administrations have deftly documented the declining financial trends for years and this news should come as no surprise to anyone.

The last two years of inflation have exacerbated costs and the Town has seen significant increases in shared costs and very limited options for supplementing the budget with one-time money. Increases in fixed costs such as health insurance, retirement, and debt service are using virtually the entire increase in revenues.

22.What is a structural deficit?

A structural deficit occurs when expenses are increasing faster than revenues. For the past several years, Franklin’s expenses have been larger than incoming revenues. This deficit has been addressed each year with budget cuts and use of one-time sources of money. Without a significant increase in revenue, the town’s structural deficit will only continue to get worse.

23.What are the main factors in the town deficit?

Property tax is one of the largest revenue streams available to the town, and increases in property tax are limited by Proposition 2 ½. Additionally, the funding that local communities receive from the state has not kept pace with costs. On the cost side of the equation, the town is faced with skyrocketing inflation and many unfunded mandates, particularly for education. The costs to educate students have been rising quickly. Finally, health insurance and retirement costs generally increase each year at a rate higher than the increase in revenues.

24.Can Free Cash be used to help the budget?

“Free Cash” is the state’s term for money left over from previous fiscal years. There may be extra money because a department doesn’t spend its entire budget or because revenues are slightly higher than anticipated. Each year, in the fall, the state certifies the amount of free cash from the previous year. In recent years (FY18, FY19 & FY25), Franklin has been using free cash to supplement the operating budget for the next budget year. If free cash is available, best fiscal practice is to use that money for one-time expenses and small capital items, not to supplement the operating budget. Over time, this should reduce dependence on borrowing and lower debt service expenses.