Executive Summary FY 2020 Budget
While fiscal challenges remain, our resolve to overcome them is relentless.
The FY 20 proposed budget will be balanced with use of approximately $390,000 from our
Budget Stabilization Fund (Rainy Day account), which will bring the balance of that account to zero. Further, both the School Department and the Town will cut budgets to make ends meet While this will work for one year the FY 21 budget will require policy decisions on how to handle the budget shortfall. The fiscal forecast suggest a shortfall of approximately $4,000,000 +/-
We continue to face challenges in properly funding the annual operating budget, Other Post-Employment Benefits (OPEB) and roads. We should continue to maintain the capital plan and debt capacity in the annual operating budget to fund capital improvements.
The Town’s property tax revenue (not including debt exclusions) will increase by 2½ % plus new growth, or about $2.7 million. Local receipts, which include the excise tax and permit and license fees, etc. will increase $240,000, mostly due to increased motor vehicle commitments. Net State Aid (based on the House budget) will decrease $861,500. The FY 20 “net” revenue increase is estimated at about $2.5 million dollars. The final amount will not be known until the state has adopted a FY 20 budget
Proposed FY 20 Highlights
Town Administrator - The office will be reconfigured with the recent retirement of the Town Administrator. The staff will include the Town Administrator, Assistant to the Town Administrator and the Administrative Assistant/Marketing Coordinator. This will save money and help the town to continue to expand its communication and marketing efforts.
Police – The police have added five positions through the collective bargaining process while saving money from the new schedule change and the employees of the PD and Command staff should be commended for their innovative outside the box approach.
Regional Dispatch – The dispatch center opened in May 2019.
Franklin Schools – The recommended School budget is far short of the School Committees request by over $2 million dollars. The proposed FY 20 State Aid is about $900,000 less than in FY19. The reduction is related to the lack of proper funding for Charter Schools. We are working with our elected officials to try and mitigate the problem.
The Benjamin Franklin Classical Charter School – The school is relocating to its new location on Washington Street in 2019. The increase enrollment from Franklin diverts funds from the Franklin Public Schools to the Charter School. This is a flaw in the funding formula (see above)
in state law.
Library – The Library will continue to meet the Minimum Appropriation Requirement of the State
Library Commissioners.
Historic Museum - The part time archivist wages have been moved from the Town Administrators budget to this budget into a separate line item for the Museum.
Employee Wages/Benefits – All collective bargaining expire on June 30, 2019. The town is currently in negotiations with the Unions, Pension costs increased by about 10% or about $540,000, OPEB is funded at $600,000 and health insurance continues to be a challenge. Thanks once again to the employees for working together to constrain health insurance increases. This is critical to maintaining staffing levels.
Budget Overview
In compliance with Article Six, Sections 6-3-1 through 6-5-2 of the Franklin Town Charter, I am submitting the proposed FY 20 budget to the Town Council and Finance Committee.
Process
Each department is required to submit a proposed budget to the Town Administrator. The Town Administrator, the Comptroller, and the individual Department Heads review their budget request.
The Town Administrator also reviews the highlights of the Town’s fiscal plan with the budget subcommittee of the Town Council. Based on input and the meetings with the Department Head, the Town Administrator makes a budget recommendation to the Town Council and the Finance Committee. The Finance Committee reviews the Town Administrator’s proposed budget and forwards their recommendations to the Town Council. The Town Council holds two public hearings prior to adopting the budget.
Financial Policy Summary
While the budget process identifies issues and concerns that the Town will address on an annual basis, it also must do so based in a framework of sound financial management. The Town Council has adopted fiscal policies in the past and should continue to update and review them on a regular basis. The Finance Committee and Town Council reviewed and adopted new Financial policies in 2019. Below is a summary of current policies:
Balanced Budget
● Annual costs funded from current revenues.
● Do not defer current costs to future years.
Current status – Whenever possible we refrain from using one time funds to balance the budget. FY 20 is an exception due to extra challenges we face. We are all the funds left in the Budget Stabilization account, $390,000 to prevent further reductions in staff. We have not addressed our (post-retirement health insurance) although this year we have budgeted $600,000 to continue to fund the obligation of about $74 million (2018 actuarial study). (Editor's note: FY 2019 was also an exception as some of the Budget Stabilization Fund was used to balance the FY 2019 budget. The remainder of that fund is being used this year; hence two consecutive exceptions.)
Compensation and benefits
● Budget with current revenues
● Compensate at market rates
Current status – We have nine municipal unions. All unions have collective bargaining agreements through June 30, 2019.
Revenues
● Estimate annual revenues in detail and project for the following five years.
● Maintain full and fair market value of property assessments.
● Ensure fees charged cover costs incurred.
Current status – Future revenue projections are included in the budget. New growth and local receipts have been adjusted to reflect the trends in actual collections. Included in the projections are the enterprise funds direct and indirect charges that pay back the general fund for costs attributable to those funds. Again this year we are charging the water and sewer enterprise accounts for their OPEB obligation.
Financial Reserves
● Adequately fund and maintain reserves (Stabilization, Free Cash, Overlay Surplus)
● Maintain Stabilization account at $6 million or 5% of recurring general fund revenue (less debt exclusions and SBA reimbursement).
● Short-term revenue surpluses shall fund non-recurring projects.
● Free Cash will be used to fund the capital budget and for unforeseen expenses.
● Overlay surplus will be used for capital budgets and non-recurring expenses.
Current status - the General Stabilization fund balance is just about $6 million, which is recommended by our auditors and
Long-Term Debt - Proposed
● Reserved for large capital projects.
● Net general fund debt service (not including debt exclusions) shall be targeted at not more than 3.5% of recurring general fund revenue. We are currently well below that number.
Read the full message online
https://www.franklinma.gov/sites/franklinma/files/uploads/fiscal_year_2020_budget_message_0.pdf
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| Fiscal Year 2020 Budget pie by category of budget expenses |
