Showing posts with label 5 year. Show all posts
Showing posts with label 5 year. Show all posts

Saturday, July 29, 2023

Preliminary Five-Year Fiscal Forecast Budget Model for the Joint Budget Subcommittee - Aug 2, 2023

To: Joint Budget Subcommittee 

From: Jamie Hellen, Town Administrator
Amy Frigulietti, Deputy Town Administrator

Re: Preliminary Five-Year Fiscal Forecast Budget Model

Attached is the latest five-year fiscal forecast for Fiscal Year 2025 (FY25) through Fiscal Year 2029 (FY29). This is a preliminary model based on a series of assumptions outlined below. These assumptions are based on Proposition 2 ½, trends, market conditions and a couple strategic initiatives (mainly capital facility and infrastructure costs).

This forecast is only intended to be a guideline for strategic budget development and discussion. It is important to emphasize that if the Town has further needs for bond rating evaluations, items will need to be cut out of the budget in order to demonstrate to the ratings agencies a solvent, balanced budget.

The current FY24 Budget baseline is highlighted in light yellow. The five-year forecast is highlighted in light blue. The sections highlighted in light green will be the center of the discussion at the meeting and represent the most challenging areas in the next five years.

Revenue assumptions

The model makes the following revenue assumptions:

New Growth - The model assumes $1,100,000 in annual New Growth revenue from year to year. Town policy is to use a ten-year aggregate average for annual new growth calculations. While this number will fluctuate, the town has seen a drop in private sector and residential homeowner property improvement investments in recent years. There is a lot of risk in the marketplace due to supply chain uncertainty, high interest rates, inflation, and increasing costs. The model assumes an increase in New Growth. In FY24, New Growth revenue is expected to decline. FY25 could see a similar decline.

For those interested in reading analysis about the Massachusetts economy, please take a look at the UMass Donahue Institutes’ MassBenchmarks series here. This publication represents a coalition of economic experts, including our state's most preeminent financial and academic  
institutions, who publish their independent analysis of the Massachusetts economy.

Tax Levy - The anticipated tax levy growth increases by 2.5% per year. Staff anticipates a reduction in the tax levy of approximately $630,000 over the next five years, due to debt exclusions “sunsetting” off the tax rolls as projects are paid off.

Local Receipts - The model assumes a 2% growth in local receipts per year.

State Aid - The model assumes a 1% growth in state aid per year. Education aid from the state has been well documented by the town for a decade. The public should not expect a large infusion of state education aid in the foreseeable future.

Other Revenues - The model assumes a 2.5% increase in indirects per year. The model assumes a 2% increase in state assessments per year.

Expenses Assumptions

The model makes the following expenditure assumptions:

Assumes a 2.5% Cost of Living Adjustment (COLA) for all municipal personnel line items each year for five years. Please note most union contracts, including FEA, Police, Fire, DPW, Custodian, and Library expire Summer of 2025. A 2.5% increase is modeled to stay within the tax levy.

The Franklin Public School district budget increases 2.5% per year, or approximately $1.8 to $2 million per year.

All municipal expense budgets increase 2.5% per year.

Norfolk County Retirement System budget assumes a rate of growth at 5% and health care costs are projected at 7%.

A full year assessment of $1.5 million for regional dispatch in FY25 and a rate of growth of 2.5% each year thereafter.

Tri-County Vocational School building project estimated assessment of $2.1 annually for 30 years at an interest rate of 4.25%. The Town will have to consider funding this project through a debt exclusion vote at the ballot. A debt exclusion will increase taxes for citizens over the next 30 years in order to pay for the new school building. Tri-County is entering the Massachusetts School Building Authority (MSBA) process now and a districtwide authorizing vote (on the project, not the financing) is scheduled for October 24, 2023. The financial forecast illustrates in the light green section an increase of almost $2.1 million in FY27 for this building and a 2.5% increase in the following years. Given the construction and planning processes, this will likely not be the funding schedule. However,it is important to put this project in the model as a placeholder to illustrate costs as well as competing demands. It is important to note that if a debt exclusion is not passed or another financing mechanism is not found, the town will see structural cuts of about $2.1 million in FY27 and beyond.

Includes anticipated borrowing for projects that were authorized by the Town Council in 2020, which includes the Washington Street sidewalk ($3 million), High School improvements ($2.5 million, including visitor bleachers), Remington-Jefferson remodel ($4 million), and recycling center ($4 million). These project estimates will need reauthorization to accommodate for a 25% increase in costs from the original 2020 authorization. Of note, these numbers are preliminary and could be greater, once finalized. Staff anticipated a 4+% interest rate for these projects, even with our AAA Bond Rating.

There is also $1 million authorized to borrow for the Parmenter School’s mechanical upgrades. This is NOT included in the model. A review of the costs to rehabilitate Parmenter needs to be explored at a deeper level, as Parmenter will need a new roof, mechanicals, and other improvements. If Parmenter is to maintain its use as a school for the foreseeable future (meaning 20-30 years), then the community should expect a complete upgrade of approximately $5 million. The Town will need to borrow for this project as well.

It is also important to reference that our staff capacity may not be able to coordinate this number of capital projects in such a short time. Also, the debt and interest line items have quickly decreased the last two fiscal years due to sunsetting debt exclusions and other borrowing coming off the books. The community is going to have to make some judicious decisons and prioritize projects in the coming years.

Includes the borrowing for the Fire Department ladder truck, authorized earlier in the year.

What does this model NOT include?

A short list of items that have been discussed publicly in some variation (not in this order):

Costs associated with the Police Station and Davis-Thayer Building. These projects will each cost tens of millions of dollars and will certainly require debt exclusion votes of the public to raise taxes (and then sunset).

Additional strategic investments toward Franklin Public Schools.

Additional public infrastructure costs for roads, sidewalks, parking lots, trails, and green energy commitments.

$500,000-$1,000,000 in additional annual capital needs that have been requested to be put into the operating budget as annual operating costs, such as public safety protection gear, equipment, fleet, vehicles, and school curriculum.

Funding relative to an increasing demand and reliance on technology. Whether it's cyber security, computers for students and/or employees, the proper recruitment and retention of exceptional technology staff, or required fiber and equipment upgrades, technology is a necessary cost driver. This is an area of significant underfunding, and the Town has not invested nearly enough in what is needed to build a sustainable technology environment.

New investments in social services, regional transportation investments, personnel, clean energy, or any of the other requests the community may have.

Off-budget accounts, such as utilities and community preservation.
Where do we go from here?

The community has several choices to address public school finance:

1. The municipal and school departments must live within the means of 2.5% revenue and expenditure growth. Ultimately, this presents challenging choices, but is the most sustainable option at the current time.

2. Work toward an override ballot question to permanently raise property taxes to pay for a defined set of service investments.

3. Shift resources from the municipal departments to the Franklin Public School Department.

4. Redesign the service delivery of the School Department. In other words, the District will reevaluate what services it offers, what is required, and what are the projections moving forward with cost drivers. One exercise that would prove valuable for the Franklin Public School District is to create a five to ten year strategic financial plan that addresses the balancing and shifting needs in public education with considerations given to the district's declining enrollment.

The model, as shown, illustrates a significant structural deficit in FY26 and beyond. FY25 also shows a deficit, but appears manageable, due to healthy local receipts and stable new growth. Barring any unforeseen global circumstance, FY25 will likely be manageable.

The community has a flood of expensive projects and competing demands coming up in a very challenging market to borrow money. The Town does not have any unused tax levy capacity, and has rebuilt its reserves to a baseline level in order to obtain a AAA Bond rating. Town and School reserves should not be withdrawn. While it may feel like a rainy day, it is not. The future likely holds more turbulent waters given the geopolitical state of our world.

The Town of Franklin (and the Commonwealth of Massachusetts) currently enjoys some of the best overall quality of life in the United States. As demonstrated again this month, it is rated as one of the safest communities in the country against violent crime. The community has an elite school district with exceptional teachers and educators, incredible special education services, championship athletics, and diverse extracurricular and recreational opportunities, a vibrant and jam-packed senior center, and a public library that is second to none. The community has worked hard to rebuild its most critical infrastructure over the past 2 decades to ensure quality and clean drinking water, great roads and sidewalks, exceptional parks and grounds, and to ensure the community has plenty of sewer capacity for the next several generations; hopefully another 100 years! The Town has preserved over 200 acres of open space in the last two years and has been awarded the highest bond rating at AAA for incredible financial management for the first time in the Town’s history.

The community enjoys a healthy, strong and supportive social fabric with events for all ages, economic classes and tastes. The Town has a robust diversity of retail shopping, restaurants, basic needs, social services support, and amenities. Franklin also enjoys a government that shows its citizens that it can act in compromise, humility and a dedicated focus on decisions that enhance the quality of life in the community. While many very difficult decisions will be here for the rest of the decade, we also think it is important that the community recognizes, and does not take for granted, the current state of the town.

The numbers to support this narrative along with the remainder of the package released for the August 2 meeting can be found ->

Preliminary Five-Year Fiscal Forecast Budget Model for the Joint Budget Subcommittee - Aug 2, 2023
Preliminary Five-Year Fiscal Forecast Budget Model for the Joint Budget Subcommittee - Aug 2, 2023

Thursday, September 29, 2022

Franklin TV: Finance Committee meeting available for replay - 09/28/22 (video)

The Finance Committee met and did their business in about thirty minutes before the Town Council came into the Council Chambers for their meeting to start at 7 PM on Wednesday, September 28, 2022.

The Finance meeting did start a little after 6, so you get to listen to the intro of my radio show interview with Health Director Cathleen Liberty before the live stream of the meeting jumps into YouTube. If you want to continue listening to the health episode follow this link ->   or find Franklin Matters on your favorite podcast app.

Finance Committee link to YouTube ->

Meeting agenda and documents released for this meeting ->

Franklin TV: Finance Committee meeting available for replay - 09/28/22 (video)
Franklin TV: Finance Committee meeting available for replay - 09/28/22 (video)

Thursday, September 1, 2022

Talk Franklin: Jamie Hellen and I talk the 5 year fiscal forecast and #1 complaint to the Town (speeding) (audio)

FM #836 = This is the Franklin Matters radio show, number 836 in the series. 

This session of the radio show shares my "Talk Franklin" conversation with Town Administrator Jamie Hellen. We had our conversation via conference bridge.  

Topics for this session

  • EDC prioritized their ‘short list’ at Aug 10 meeting

  • Green community & Cultural Council presentations at August 17 Town Council meeting

  • Dean College President/Chancellor scheduled for the Sep 7 Council meeting

  • 5 year fiscal outlook published 

  • #1 complaint to the Town - speeding

The conversation runs about 33 minutes. Let’s listen to my conversation with Jamie. Audio file ->


Franklin for All webpage

Cultural Council presentation -> 

Green Community presentation -> 

Green Community story map 

5 year fiscal outlook -> 

Town budget page 

Community & Cultural District calendar 


We are now producing this in collaboration with Franklin.TV and Franklin Public Radio ( or 102.9 on the Franklin area radio dial.  

This podcast is my public service effort for Franklin but we can't do it alone. We can always use your help.

How can you help?

  • If you can use the information that you find here, please tell your friends and neighbors

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Through this feedback loop we can continue to make improvements. I thank you for listening.

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If you have questions or comments you can reach me directly at shersteve @ gmail dot com

The music for the intro and exit was provided by Michael Clark and the group "East of Shirley". The piece is titled "Ernesto, manana"  c. Michael Clark & Tintype Tunes, 2008 and used with their permission.

I hope you enjoy!


You can also subscribe and listen to Franklin Matters audio on iTunes or your favorite podcast app; search in "podcasts" for "Franklin Matters"

Talk Franklin: Jamie Hellen and I talk the 5 year fiscal forecast and #1 complaint to the Town (speeding) (audio)
Talk Franklin: Jamie Hellen and I talk the 5 year fiscal forecast and #1 complaint to the Town (speeding) (audio)

Wednesday, August 31, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2026 & beyond (part 5 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY26 and Beyond Financial Outlook

After reading the first eight pages of this document and with the adversity and challenges we are experiencing in our own personal lives, I can relate to most readers who feel as if FY26 is an eon away! Yet, our professional perspective is to always keep a keen eye into the future. But what we do know is:

As long as property revenues continue to increase, the town should see steady growth in order to work within the Proposition 2 ½ constraints. Without any adjustments to the tax levy, it is critical for the community to understand real estate values are the key sustainability factor to local expenses in the budget. The Town cannot count on a state aid bailout and should not count any additional federal assistance.

FY26 will see collective bargaining return for most school and municipal unions.

One-time federal assistance in the form of ARPA and ESSER funds will be exhausted.

The status of the Beaver Street Interceptor project and other capital projects will still be in development.

After the busy “end of fiscal year/start of the fiscal year” this summer, I will prepare a full five year revenue forecast before the FY23 tax rate hearing on November 30th, 2022.

How can I learn more?

All municipal budget matters will always be posted on our town budget archive

The School Department budget page is here.

Finance committee meetings can be found on their website.
Town Council meeting agendas, Town Blog News, Legal Notices, Job Postings and more on the Town’s email notifications page.

The School Committee connections are here.

As a savings to each homeowner, call your homeowners insurance company to get a savings on the Fire Department’s ISO-1 designation. Many property owners will see a reduction in their homeowners insurance. Just print out the linked paperwork and submit it to your insurer.

What can I do to help TODAY?

Let’s end the forecast on a fun note; and maybe some homework!

People always ask me what we can do today to support the Town today? Answer: Eat Local!

Like many towns, Franklin has a .75 percent of every one cent out local option tax on meals purchased in Franklin. It’s the one area of our “local receipts” revenue source that is driven by consumer choice. Since the pandemic, the town has been fortunate to see most of its restaurants continue in business today. We have also seen an influx of new places to eat out and more will be opening in 2022 & 2023. It’s an excellent opportunity to eat local, support our large profile of locally owned restaurants and also support the town budget.

So have fun eating out in Franklin with your family and friends and ultimately support the town’s schools, public safety, DPW, roads and other excellent town services!

Note: Pages 1-11 covers the fiscal forecast and outlook. Pages 12-18 is the Standard & Poors AAA rating letter. Pages 19-20 is the ISO 1 award letter on the Fire Department achievement.

Part 4 (FY 2025)

Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating

Tuesday, August 30, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2025 (part 4 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY25 Financial Outlook

It is impossible to predict the state of our economy or world next week, let alone three years from now. Regardless of those factors, FY25 is when the confluence of flooded rivers are likely to converge for a very challenging year. Those factors are:

FY25 will be a full two fiscal years into a 40-plus year high of inflation with most costs rising;

There will not be any remaining authorized federal stimulus money and there will be less one-time revenues to plug gaps;

Difficult choices will need to be made regarding investments in schools, public safety, public works and capital projects and equipment;

The full assessment of the regional dispatch center (“The MECC”) will be coming back on the town's operating budget at about $1.5 million; and, most notably

The Franklin School Department’s financial sustainability on one-time revenues, continued declining enrollment and the required net school spending dynamic sets up a possible budget deficit in FY25. The outgoing Superintendent warned that FY25 could be facing “more [financial] challenges given the continued needs of the district, the local fiscal forecast and the expiration of the local coronavirus relief funding.”

Franklin Public School District

The Franklin School Department has three current trends that should give the community a pause for concern over the long term financial sustainability and challenges of the department.

1. Declining Enrollment. At its peak in 2008, the District had 6,464 students enrolled. The enrollment in 2021-2022 was 4,764 students, or a decrease of 24% in 14 years. The Kaestle Boos Associates, Inc study suggests the District is projected to lose enrollment throughout the rest of the decade. In the 2029-2030 school year, the district is estimated to have 4,458 students enrolled - a near 2,000 student enrollment drop in two decades.

The Kaestle Boos analysis also “indicates that the Franklin Public Schools facilities are currently 26% under capacity and are anticipated to continue to decline to 31% in the next 10 years. If no changes were to occur the school facilities would: all continue to operate under capacity, continue to create a financial burden in the maintenance of these underutilized facilities [and] suffer reduced educational adequacy in schools built prior to 1996.” Closing Davis-Thayer has produced some savings and space, but not nearly the amount of savings envisioned.

The Kaestle Boos Associates, Inc. study released on December 1, 2020 shows plenty of data on this topic and the options before the School Committee. A Space Needs and Facilities Use Subcommittee of the School Committee has been established and will be charged to “analyze data sources and forecast space utilization to comprehensively review Franklin's school facilities' needs.” A redistricting analysis has also commenced to follow up on the Kaestle Boos study from last December.

2. Net School Spending. As has been discussed at many legislative and local forums, the Franklin Public School District is seeing a very unique dynamic in its finances relative to state aid. This dynamic is real and is a result of the extreme spike in growth and enrollment in the 1980’s through 2010, followed by an significant pause in growth and enrollment in the 2010’s continuing on in the 2020’s.

In short, due to state education finance law, the “required local district contribution” is accelerating at a pace that far exceeds the rate of state aid increases. Please view the Superintendent's slide on page 12 to see this trend. This dynamic presents some short and long term sustainability concerns.
Despite these two dynamics, local investments have continued in the School Department budget by almost $15 million in total dollars since 2015, an average of over
$1.8 million a year, despite the two lower pandemic years.

3. One-time revenues. The schools will be using one-time revenues from revolving funds and federal assistance to augment their operating budget for at least the next two fiscal years. The good news is the School Department has its highest amount of reserves in at least the past five fiscal years. Even if the Town does not have enough revenue to maintain a $2.4 million-a-year increase, which will be challenging, the Schools should have enough reserves in those one-time sources to meet their budget projections over the next two years.

Part 1 (FY 2022 closing)

Part 2 (FY 2023)

Part 3 (FY 2024)

Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating

Monday, August 29, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2024 (part 3 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY24 Financial Outlook

FY24 will be the fiscal year to monitor the new impacts of inflation and/or a recession on the quantity of town services that can be delivered. FY24 will also be the year to monitor the overall condition of the economy, consumer spending and trends on residential households and their ability to withstand the cost increases that we know will be going into effect: stormwater and the Beaver Street Interceptor. A year from now, all town officials should keep a close eye on the ability of residents to afford the increases that are coming from these mandatory projects. These projects could have an effect on other town services.
As written above, rising costs will likely set up a sustainability imbalance with what the purchasing power was in FY22 versus FY24. The Town will begin its FY24 budget process later this fall where we will look at our local summer and fall revenue trends, as well as take a cautiously optimistic gaze toward how the global economy modifies over the next six months. Keep your fingers crossed!

I would expect a Joint Budget Subcommittee meeting sometime in October to check in on FY23 revenues and early prospects for FY24.

Areas of expected operational increases due to inflation include: roads, snow and ice removal, construction supplies, all basic goods and services, and personnel and labor costs. The DPW and Facilities Departments will see the greatest impacts from rising inflation on expenses.
Most departments will feel this increase as both of their departments supply basic services such as fuel, gas, electricity, water to other departments. All departments will see an increase in personnel costs due to the competitive labor market and the successful performance of our current staff.

The stormwater utility fee goes into effect townwide for all property owners on July 1, 2023. The average fee per household on a half-acre lot will be about $56. As a result, stormwater expenditures from the DPW will be transferred to the utility. A significant reduction in the DPW budget will show in FY24. This dynamic will be deceiving given the cost increases coming from goods, services, and labor/personnel throughout the entire organization, but most notably the DPW. Also, additional funds will be needed for roads and infrastructure due to rising costs. Most of the reduction of stormwater will likely give way to overall cost increases from inflation.

Lastly, FY24 is when the effects of interest rates will possibly alter town services. As I have pointed out in every budget narrative in recent years, the ratio of debt and interest as a percentage of the town budget has been slowly shrinking as old debt and interest are paid off. Of all seven major budget categories, Debt & Interest was the only category to decrease in the FY23 budget. As a result, other services are taking up a larger percentage of the budget pie, leaving less room for capital projects that require borrowing. With rising interest rates and rising project costs, future capital projects may be in jeopardy if they require borrowing. For more information, please read the Budget Narratives on Debt & Interest from previous fiscal years.

FY23 debt levels are currently at about 2.5% of recurring general fund revenues. These line items support both school and municipal projects.

The town will have some difficult decisions to possibly postpone projects. These projects will undoubtedly become much more complicated, expensive and difficult to fund based on rising interest rates and costs. The following projects will require some borrowing authority, which will increase interest in the operating budget or enterprise funds:
Beaver Street Interceptor;
The future of Davis-Thayer;
A future decision on a new or renovated police station;
A future decision on the Remington-Jefferson School renovation; and
A future decision on a new recycling center.

Those are just the large projects that have been in the pipeline for years. This list is obviously not exhaustive and this is even before we tackle the issues of infrastructure, roads, sidewalks, parks, open space plans, staffing investments, among many other things the community has on its wishlist.

The Town recently received a 3.38% interest rate with the AAA bond rating. I suspect those rates will climb closer to five percent (at best) in FY23 and FY24.

In short, FY24 will likely begin a harsh reality in the community. There will likely be choices to postpone capital projects or move forward with those projects and operating services may need to be adjusted to reflect the costs of services. Unless the economy can hit a rhythmic state, some difficult financial decisions will have to be made.

Sunday, August 28, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2023 (part 2 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY23 Financial Outlook


As the Town enters FY23, revenues look to be stable in all areas: local receipts, state aid, and new growth. Up until FY23, state aid has remained at less than a 1% annual increase due to the dynamics of the Chapter 70 formula, town demographics and the Town’s growing affluence. Local receipts have remained on a steady increase due to the incredible work of our municipal staff due to an increased demand in services, such as ambulance, EMS services and permitting. FY22 saw a decrease in New Growth from FY19, FY20 and FY21. I expect a modest, stable year again. It is important to reemphasize that our permitting boards continue to see a lukewarm construction market relative to the pre-pandemic years with a notable leveling off of applications before the permitting boards. With supply chain problems continuing globally, I expect property improvement investments will maintain a plateau until there is greater confidence in those goods being provided and/or cost increases subside.

Property values, which are the foundation of the entire town budget through the property tax levy, remain strong due to supply and demand dynamics in the real estate and housing markets. Property taxes are the baseline, as well as largest source of revenue, for the town's services. As long as property values maintain a high value, the town will see decent stability in the budget.

As usual, once the state legislature is done with the legislative session and the various legislative packages being considered are complete, including the state budget, staff will see where all the numbers fall later this summer and propose any adjustments to the Town budget prior to the tax rate hearing in December. I anticipate an increase in state aid, but as discussed for years, not by enough to make a significant new investment impact in the local budget. Any additional revenues will be used to cover shortfalls in other areas due to rising costs of goods and services and labor/personnel.


As of this publication, the main fiscal concerns and challenges for the Town in FY23 are the issues we are all seeing in the news: rising interest rates; inflation; gas/diesel and electricity/gas costs; rising costs of goods and services; health care costs; labor and personnel costs; and the overall uncertainty of the economy. FY23 appears to be a “settle into a new normal” year of actually feeling the impacts of inflation within the local budget.

There will be stress on the FY23 budget due to inflation and increased costs. For example, the Town is looking at a doubling of the cost of fuel/diesel over FY22. Additionally, we are looking at escalating electricity rates of possibly two-plus cents a KW higher. As basic operating costs, such as utilities rise, this will have an impact on other areas of the budget.

We are also seeing bids for construction projects coming in much higher than anticipated. For example, the recent SNETT trail project we are working on with the state DCR was estimated at $200,000 a year ago when the work was designed and approved by the Conservation Commission. The bids came in between $400,000 to $800,000 - double to four times the estimated cost from one year ago! We are seeing similar issues on smaller projects. The Red Brick Schoolhouse bids came in $50,000 to $250,000 over the estimated cost, which was just designed four months ago! These examples depict an environment everyone will need to get used to: money will not be going “as far” as it did a year ago. The Town is only one month into the fiscal year and inflation is going to settle into the budget.

To weather this storm, the Town must use nimble strategies throughout the fiscal year to make sure there are no significant cost overruns by next spring. The community should be prepared
that costs for basic services, such as snow and ice removal, parts, supplies, personnel, goods, services, etc., will all place a strain on the FY23 budget throughout the year and therefore may require services to be reduced in areas of the budget. FY23 has all the markings of an adjustment year in terms of what levels of service the tax levy can support and how consistent the economy can be for revenues.

FY23 should also see all major collective bargaining agreements being resolved, which is good for labor relations and recruitment, staff morale, as well as financial predictability. The downside is that to complete these contracts, the use of one-time revenues for the school and town unions sets up an inflationary situation within the Town’s operating budget come the expiration of those funds in the next couple of years.

FY23 capital projects

To ensure the Town is ready for the altering dynamics in FY23, any new capital improvement projects (facilities, roads, infrastructure, borrowing) that come to our attention after August 1st, 2022 will be postponed and put on hold for discussion to ensure the Town has the accurate resources to fund current projects. All capital projects currently authorized by the Town Council or in the Town Council’s goals for 2022-2023 will continue to move forward. However, as we move through the phases of a project (design, procurement, borrowing, awarding contracts, beginning work), I will not commit to any new projects until the town has greater certainty around the cost effects of that project. In other words, unless there is a significant public emergency, do not expect new projects entering the pipeline. As described above, inflation is caused by the high demand in spending with not enough supply to accommodate the demand. Franklin will need to consider doing our part to decrease the demand in the marketplace.

I will have to evaluate and view the FY22 capital program in a new light when free cash is certified later this fall. I cannot make any commitments for new projects due to rising interest rates and the fact that many of the projects currently in the pipeline are seeing cost increases that may need to be augmented from capital funding later this fall and winter.

The American Rescue Plan Act (ARPA) federal stimulus money is proving to be a bridge for the town on many fiscal obligations that could have had a negative effect on the town’s budget and delivery of services. ARPA money allowed the town to push the implementation date of the new stormwater utility fee out one year to FY24 (July 1, 2023), which has provided financial relief to all citizens for this upcoming FY23. Other financial obligations such as water main infrastructure, sewer infrastructure, personnel and labor costs, and the mental health crisis are all areas that the Town would not have been able to subsidize or invest in without these funds.

Speaking of sewer, an issue to watch in FY23 is the Beaver Street Interceptor project: the 109-year old pipe that hauls ⅔ of all town sewerage to the Charles River Pollution Control District. This will be one of the most expensive and complicated public works projects in town history. Sewer rates are expected to rise in late FY23/FY24 to pay off the borrowing with this project. While some may say to put a project like this on hold, the truth is the cost of inaction will be far more expensive and damaging to the community than the cost of the rate increases. Nonetheless, a project of this size and importance will be taken step by step to ensure the best return on investment for the ratepayers and may require nimble decision making based on market conditions as the project moves forward. These rate increases will only affect sewer system customers, not private septic residents.

In closing, FY23 appears to be a transitional year toward a new, inflated normal with inflation, interest rates and rising costs. I remind all readers, what happens in the news on a daily basis around the economy can take months or years to actually settle in at the local level. That relates to both the good and bad news. Also, reversal of these trends also can take months or years (even decades) to recover from. As everyone knows, every day has both positive and negative signs for future economic fortunes. I have provided a few economy related reference points as the fiscal year starts to offer context as to how international and national affairs have an impact on the state and local budgets:

On July 27, 2022, WBUR provided a great summary on the national economics and the Federal Reserve. Many of the trends in this story ring true in Franklin.
Massbenchmarks’ latest “Current and Leading Index” report shows what we all know: inflation, labor supply, labor and personnel costs, and uncertainty weigh on consumers in Massachusetts.
The message coming from Fortune 500 CEOs shows a recession is inevitable.

One thing is for certain: economic volatility and mixed signals will continue for the foreseeable future, as the country struggles to get into a pre-pandemic economic rhythm. ALL departments need to be cautious about overspending. The effects of inflation could be significant as the fiscal year evolves.

Part 1 (FY 2022 closing) was shared previously

Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating

Saturday, August 27, 2022

Town of Franklin (MA): Five Year Fiscal Forecast (FY 2023-2027) Now Available

The Office of the Town Administrator has released the Five Year Fiscal Forecast for FY23-27. This memorandum provides a synopsis of the financial outlook for each year as well as a "snapshot" of the town today. 


August 15, 2022

To: Town of Franklin

From: Jamie Hellen, Town Administrator

Re: Town Administrator Five-Year Fiscal Forecast FY23-FY27

Welcome to the first “Five-Year Fiscal Forecast” from my office in almost three years. Due to the immense time pressures put on the office during the pandemic in 2020 and 2021, as well as the consistent economic shifts, it was difficult to depict an accurate picture of future town fiscal affairs. As mentioned in this year's budget narrative, I’m committed to getting back on a regular routine with this traditional update now that the country is moving past the regulatory structure of the COVID-19 pandemic. With the global and national economy in the center of everyone’s minds and the start of the new fiscal year (FY23) upon us, summer is a perfect time to hit a quick reset on town fiscal matters and get the view from 30,000 feet. I am hopeful to publish a more comprehensive version later this fall/winter as the Town approaches its annual tax rate hearing in December. By then, staff will have revenue trends through the first quarter of the fiscal year, finalized state aid numbers, and expected new growth figures. The forecast is also a requirement of bond rating agencies.

Quality of life and organization stability in Franklin

Before I dive into the forecast details, I believe it is worth taking a step back for a moment to pause and reflect. Over the past few years, our community, like the rest of the world, has gone through a tremendous disruption. Everyone has dealt with unforeseen adversity, challenge, and loss. Yet despite these professionally and personally challenging times for everyone, the overall quality of life in Franklin, as well as Massachusetts as a whole, could be considered some of the best in the United States.

The Town has exceptional, diverse schools and education opportunities, unprecedented achievement in public education, one of the most prepared local public safety operations in the state, a dedicated and well-trained public works department and countless exceptional

amenities for families and citizens of all ages and backgrounds. The Town is an attractive area for major corporate businesses and has a strong local economy with many diverse economic sectors. The Town continues to make historic investments in open space and recreation to add to the great quality of life in town.

The Town has developed a proven financial management strategy. We have had strong financial audits for many consecutive years. For the first time in the Town’s history, a AAA Bond rating was awarded due to prudent financial management, a diverse economy and well executed financial policies. For details, please visit the S&P Global Rating from May 2022 for the facts surrounding the AAA Bond rating. It is one of the most important documents to read for any member of the community.

From a bird’s eye view, everyone should feel an incredible sense of achievement for being a model community that is supportive, innovative and full of continued promise. We owe an immense amount of gratitude to our municipal and school employees for their incredible dedication over the last three years, by not only weathering a global pandemic, but improving the organization and continuing to succeed at an elite level. The social fabric of the community and citizens remains very good with a positive outlook given the countless events, festivals, community organizations and opportunities for all. As we move into a fiscal year without any COVID-19 restrictions or regulations for the first time in three years, I believe Franklin is more resilient and prepared for the future than we were three years ago. The organization remains very stable.

FY22 Closeout

Fiscal Year 2022 (FY22) closed out on June 30th. July is one of the busiest times for the Finance staff closing out the past fiscal year, entering the new one, working on state required reporting and closing out budgets. I am pleased to report that all departments did a phenomenal job managing their budgets in FY22. As a result, very few year end transfers were required and another sterling financial audit was presented in May for FY21.

The revenue source with the greatest fluctuation to economic conditions, “Local Receipts”, ended up coming in at pre-pandemic levels, which is very good news. This dynamic was predicted and reflected in the FY23 budget revenue assumptions.

This trend is bolstered by a slowly returning local economy. Hotel revenues are now about 60% back to pre-pandemic numbers. The new cannabis excise (sales) tax provided an additional $104,000 in new revenue for less than a half a year of collections. Motor vehicle excise taxes were higher than budgeted due to the valuation of cars increasing. Ambulance receipts have increased due to higher demand for EMS services. As the Town enters FY23, revenues remain steady in this category, but FY24 may need some expenditure adjustments in order to deliver the services that we see trending in demand.

That said, Local Receipts are revenues mostly generated based on consumer behavior (hotels, meals, cannabis, licenses) and public demand (such as ambulance runs or building permits). Thus, they can stabilize or decrease with the changes in consumer patterns and the broader economy. They can also increase, which the Town must consider that staffing or equipment may be needed to adjust to meet those demands. The fees in this category need to mirror the capacity at the staff level to deliver the services.

Indications from the Federal Reserve and leading local economists acknowledge that to quell inflation, policy will be focused on reducing demand for goods, services and products to help ease cost increases. I tend to believe any policy action at the federal or state levels will take a while to settle into the local consumer patterns that drive revenues in local receipts.

Nonetheless, this is an area of revenue that the Town will need to monitor in FY23 heading into FY24 to ensure we have the capacities to meet the demand for services. We'll also need to monitor any major declines in revenues from attempts to quell inflation.

A couple of final statistics to close out FY22: only ten (10) single family homes were built in Franklin during Fiscal Year 2022. By comparison, in 1994, at the Town’s peak, the Town built 172 single family homes. Population in 2021 decreased for the 1st time in over four decades.

Population in 2021 decreased for the 1st time in over four decades
Population in 2021 decreased for the 1st time in over four decades

Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating