May 29, 2026
To: Finance Committee
From: Jamie Hellen, Town Administrator
RE: Revised FY27 Budget
The revised TA budget shows a structural budget deficit of $1,104,132, which is the free cash amount needed to produce a balanced budget without any staff reductions or cuts for the town or schools. This is just shy of half of the deficit the town began the year with.
I have included the entire recommendation by the Finance Committee in the revised calculations. Their recommendation is online here and a net reduction of $196,000 in the budget.
As a reminder, this budget is a blueprint for the upcoming fiscal year. Many factors could alter these numbers throughout the year. We give periodic updates to the Finance Committee on year-to-date expense reports, revenues, state and federal policy impacts and global economics. The Council will look at a final fiscal year budget in November prior to the tax rate hearing, which is required by law.
Staff have provided a Control Sheet/Voting Document with Increase/Decrease columns (with associated notes to transparently and clearly depict what accounts have been altered in the assumptions or revenue or spending). Staff have also prepared a “clean” copy as an official voting document for June 10th consideration by the Council. Major highlights are also listed in this memo.
Revenue assumption changes
● The New Growth assumption has been increased $65,010 due to the full time administrative assistant for the Board of Assessors, which allows all full time appraisers to capture more property value. The increase covers the full cost of the position and health benefits.
● State Aid has been increased $638,405 over Governor Healey’s H2 budget and will follow the Senate local aid numbers (who notably invested $53 million into UGGA, which was a top priority for the Town Council, MMA and many cities and towns statewide).
Expenditure assumption changes (increases) major highlights
● $341,180 increase to the Tri-County operating budget (this does not include the debt exclusion building project). Costs went up $1,202 per pupil and the school added 6 students. The total is 186 students.
● MECC assessment increased $74,336.
● Animal Control increased $21,431.
Expenditure assumption changes (decreases) major highlights
● The proposed restored positions, including the two SRO’s, Deputy Town Administrator, Assessors Administrative Assistant and Munis Administrator are effective 10/4/26 as it is impossible to have those positions hired this summer. This saved $147,637.
910 Benefits and Health Insurance major highlights:
Overall, the benefits budget is $459,671 lower than what was anticipated in the original FY27 budget proposal in February.
● A proposed $150,000 reduction in OPEB contribution (made by the Finance Committee);
● Pension and Retirement was reduced $158,491 due to a July 1st pre-pay rebate on the final pension assessment;
● Workers Compensation was reduced $151,800 due to a strong portfolio and large claims coming off the books;
● The Unemployment budget was reduced $21,000 from $171,000 to $150,000. We had originally put in a 14% increase as a hold, but do not anticipate needing an increase.
● Health insurance benefits for all active employees and retirees (both Town and School) are spread out across several different line items within the Benefits Budget (910). When creating the FY27 budget, we assumed a 14% increase across all health insurance related lines. For the ease of discussion, the original health insurance budget for FY27 back in January 2026 was
$15,506,392. After reviewing enrollment data and estimating enrollment based on the GIC data, we are now budgeting for $15,514,010.32. This is an increase of only $21,618.32 over what we had anticipated, which is less than one FTE benefits cost.
● Pursuant to Massachusetts General Laws Chapter 32B, Sections 21-23, municipalities that achieve savings through health insurance plan changes, including joining the Group Insurance Commission (GIC), are required to share a portion of those savings with employees and retirees through the Public Employee Committee (PEC) process (MGL Chap. 32B, Section 19). As part of that process, the Town negotiated an agreement with the PEC to return a portion of the projected savings to subscribers through a one-month premium holiday. The premium holiday is a very common method to share cost savings in Municipalities. This approach allows the Town to realize long-term savings, while also providing a direct financial benefit to employees and retirees during the transition to the GIC. Employees and non-Medicare retirees will not be required to pay their portion of premiums for health insurance in January 2027. This is a one-time cost of $435,781, which will not carry forward into FY28.
Retiree Health Care
Direct comparisons between the original FY26 health insurance budget and the proposed FY27 budget should be viewed cautiously, as mid-fiscal year changes to retiree health insurance costs altered the Town’s actual FY26 costs and complicated year-over-year comparisons.
When the FY26 budget was developed, the premium for the Aetna Medicare Advantage plan for retirees over age 65 was $336.19 per month, with the Town paying 68% of the premium ($228.61) and retirees paying 32% ($107.58). For budgeting purposes, the Town anticipated a 12.5% premium increase effective January 1, 2026, which would have increased the Aetna monthly premium to approximately $378.21. Instead, the actual premium increased to $559.93 effective January 1, 2025 — a 66.6% increase over the original rate. Prior to the reduction of federal subsidies, the Town contribution increased from 68% to 70%, increasing the Town’s monthly share from approximately $228.61 to $391.95 per subscriber, an increase of approximately 71.4%. As a result, FY26 retiree insurance costs were substantially higher than the assumptions used to develop the original budget.
Under the Group Insurance Commission (GIC), the most utilized Medicare plan (Harvard Pilgrim Medicare Enhance) premium will decrease to $503.50 per month, which is approximately 10.1% lower than the current Aetna rate. The Town will continue to pay 70% of the cost, which means that the Town will pay $352.45 per subscriber, per month, a savings of $38.55 per month per subscriber ($462.60 annually). For perspective, we will have approximately 470 retirees and spouses on the plan at the 70/30 split (not including the grandfathered “Trust” retirees), which results in a savings of at least $217,422.
While the GIC rates remain higher than the original FY26 budget projection, they are significantly lower than the actual costs currently being experienced, resulting in meaningful savings compared to the Town’s current rates.
Finally, the main reason for the large spike in retiree costs are the reduction or elimination of federal subsidies toward the Affordable Care Act (ACA), Medicare and Medicaid in legislation passed last year by Congress.
PDF version of this memo -
Full Finance Committee agenda for the June 3, 2026 session -
