Continuing to share Town administrator Jamie Hellen's Executive Summary for the FY 2025 budget. The first part is here -> https://www.franklinmatters.org/2024/04/executive-summary-part-1-for-fy-2025.html
Link to the full summary and budget doc -> https://www.franklinma.gov/sites/g/files/vyhlif10036/f/uploads/fy_25_budget_message_narrative_updated_links_2.pdf
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Expenditures Highlights
● The Franklin Public School District will see an increase in their budget of $3,000,000 over FY24, which is a 4.2% increase and tied for the largest single year increase the Schools have ever received. Further analysis is in the Future Trends section below.
● The budget includes a 2.5% Cost of Living Adjustment (COLA) for all municipal personnel, including collective bargaining agreement commitments, which amounts to $625,000. School salaries are located in the school budget.
● Municipal employee pension costs will absorb almost $388,320 in new revenue for municipal departments and some non-teacher school employees.
● What is NOT in the budget compared to the Preliminary Budget Model presented on March 6th, 2024:
○ $378,000 in additional DPW expenses;○ $85,000 (plus benefits) in the Facilities Budget for a Sustainability Coordinator;○ $200,000 in additional Public Property and Buildings expenses (School related);○ $2,000 in additional Town Council expenses;○ $5,000 in additional Cultural Council grant money;○ $5,000 in additional Historical Museum expenses; and○ $6.3 million for Franklin Public Schools Level Service plus Restoration of cuts.
● What is NOT in the budget with regard to long-term planning:
○ Additional resources toward Debt & Interest. In 2026, we anticipate borrowing for a Remington-Jefferson remodel and the Horace Mann Roof replacement;○ Additional public infrastructure costs for roads, sidewalks, parking lots, trails, crosswalks, tree trimming to prevent power outages, bike lanes, traffic calming to slow people down; pedestrian crosswalks and other public works improvements;○ $2 million in annual capital needs transferred to the operating budget - costs for Police and Fire safety gear, school curriculum, school and town technology, school and town fleet, and DPW apparatus.○ Funds to address an increasing demand and reliance on Technology, mostly in our Schools.○ Additional staffing investments for green and sustainability goals, open space planning, conservation efforts, and net zero initiatives.○ Funding for Municipal Capital Projects: Police Station, Beaver Street Recycling Facility and other community requests, such as an Arts Center.○ An additional $4.3 million for level service for Schools or $6.3 million to restore some previous cuts in 2023-24 to the Schools;○ Additional Strategic investments toward Franklin Public Schools, such as foreign language, capital, facilities, clubs, academies, and arts related curriculum; and○ Assumptions related to collective bargaining negotiations for the Town's unions, as these contracts expire at the end of FY25. CBA’s will be for FY26, FY27 and FY28.
Future Trends
The constant pressure on local government to fund all of the work that needs to get done is becoming unsustainable. The Massachusetts Municipal Association continues to advocate for greater investment in infrastructure from the state and to relieve the many unfunded mandates the state is placing on local governments. Municipal and School departments work hard managing their budgets, investing in value added services and adapting to citizen feedback and a changing world. Moving into FY25 and the following fiscal years, we see a handful of issues that need to be monitored, most notably cost increases to residents in the form of stormwater utility rates, sewer rates and other major capital investments in town.
1. Affordability for all residents. Residents have seen costs increase across all aspects of their lives. As outlined at the March 6, 2024 Joint Budget Subcommittee meeting, as leaders in the community we have to be conscious of the effects the costs of doing business have on our residents. In addition to the likelihood of an override ballot question for a new Franklin Police Station, residents will also see an increase in the following areas:
○ Sewer Rates. Effective July 1, 2024, there will be a 15% increase in sewer rates. We are required to raise rates to create surety behind the loan for the Beaver Street Interceptor. The interceptor was first built and paid for 109 years ago and lasted for generations. The time has come for the residents of Franklin today to pay for a new interceptor and pay the debt for current and future generations of Franklinites.○ Stormwater. FY24 represents year one of the Stormwater Utility to address the federal unfunded EPA mandates. As each year progresses, the permit becomes shockingly more expensive. A rate increase will be required to stay up-to-date with the permit. We estimate a minor increase of about $1.50 per billing unit, which is on average $10-$20 a year for most households. This rate increase will ensure solvency of the stormwater utility budget. However, in the next few years, a much more detailed public discussion must take place on the expense associated with the Town’s Phosphorus Control Plan, which is estimated to cost $30 million over five years. Addressing this issue is not optional, as these are unfunded federal mandates. The town has already sued the federal government over this issue.○ Water Rates. Residents can also expect to see an 8% water rate increase in each of the next three years. Two major federal and state regulatory required projects are expected to come online in the form of a $25 million water filtration project (water tank membrane to protect from manganese and iron) and the first of the Polyfluorinated Substances (PFAS) required projects - a $6.5 million PFAS Filtration Plant (with a zero % interest loan from the state). Rate payers will see an approximate $50 increase per year over the next three years.○ The Tri-County School Project. In November 2023, 61% of residents that participated in the election voted in affirmative to raise property taxes through a debt exclusion to pay for Franklin’s anticipated $2.1 million per year assessment. Congratulations to the Tri-County School community for their campaign to build a new facility and successfully navigate the MSBA process. Approximately ⅓ of the project is paid for by the state. The tax impact for this project will begin in FY25 and is reflected in the debt exclusion budget model and expenditure line item with an increase of $132,298. The tax rate will be adjusted later this year to reflect the increase in levy for Franklin's portion. This project is budget neutral. At full maturity in FY27, an average ($650,377) Franklin household will have taxes raised by $169/year to pay for this. That rate will decline over the life of the project.
While I am sure these messages of rate increases are hard to handle, residents must also realize every city and town in Massachusetts is going through similar situations managing severe cost drivers related to public infrastructure. We are fortunate to have ample and clean resources, we do pay for it in Massachusetts.
2. The Franklin Public Schools have informed us that in order to maintain “level” or “status quo” services from the current year to FY25, a budget increase of $7.3 million, or 10.13% is required. A level services budget plus restoration of FY24 cuts yields an increase of $9.3 million, or 12.92% Please review the Budget Update from the School Committee meeting on February 13, 2024 for additional information. Below are some additional informational points that relate to the fiscal challenges of the public schools:
● The state’s Chapter 70 Formula is not in the Towns’ favor and will continue to be a pressure point, especially if the Legislature is forced to alter the formula due to the Town’s increasing “Hold Harmless” situation.● Significant fixed costs and capital costs to technology, facilities, and fleet will compete with operating costs to education and classrooms. These costs are not a part of the preliminary budget model, but still need funding sources.● Collective bargaining looms in FY26 with Franklin Education Association (FEA) and other unions. Labor and personnel costs have risen significantly for the schools, but this is also a trend affecting all municipalities statewide.● Unsustainable special education cost increases, which put pressure on all aspects of the school budget.● Central office staffing capacity in Administration, Finance and Human Resources and technology investments.● School Revolving Funds solvency at the end of FY24 heading into FY25 and having some respectable reserves.● Town and School federal ARPA and ESSR money expires at the end of this calendar year.● Continued declining enrollment. In 2008, the school district enrollment was 6,464. The most recent enrollment for the 2023-2024 school year is 4,721 (as of Feb 2024). The school district is losing 100-150 students a year in district enrollment and this trend is expected throughout most of the rest of the decade. In 2022, the School Committee hosted a redistricting exercise and looked at future enrollment projections and facilities needs, but that resulted in no action. They have reenaged McKibben Consulting to relook at the district demographics; however even the assumptions used in that study does not not offer a clear picture. Town staff have worked closely with the Schools to ensure the correct development and growth assumptions are made in any final study that may shape redistricting and the better use of town and school facility space. The objective is to streamline operations and maximize space to alleviate increasing fixed costs.
● It is also important to note that portions of the municipal budget are made up of school related costs in the amount of approximately $20 million when fully funded (Note: It is important to note that figure is based on conservative assumptions. This figure could be much higher). Both the Facilities Department and the DPW have seen consistent increases to their budgets specific to school related costs. While these costs continue to increase, it is important to note that their budgets have not been fully restored to pre pandemic levels for school or municipal costs. The “Municipal” budget pays for all school building debt & interest, property and casualty insurance, worker’s compensation, snow removal, non-teacher pension costs, grounds & building maintenance, utilities, OPEB costs, fuel for the school van fleet, unemployment insurance, retired teacher health and life insurance, some staff, and much more.
3. Budget capacity to fund future projects. The Debt and Interest budget remains one of our most pressing budgetary concerns. At 1.59% of recurring general fund revenues, this slice of the budget is far below town goals and has been trending in the wrong direction for years, due to previous borrowing costs coming off the schedule and high interest rates to quell inflation. It should increase through the rest of the decade to maintain our Public Schools and Town facilities. Other scheduled capital facilities or infrastructure projects that would be paid for in these budget line items over the next five years are the Remington-Jefferson rehabilitation, the High School ten-year update, Washington Street to Grove Street sidewalk, Beaver Street Recycling Center and Solid Waste Master Plan, and the Police Station. If the town borrows to do any of these projects in the future, debt and interest will rise and leave fewer dollars available for other areas of the budget.
4. Sustainability. Also looming around the corner for FY26 is a new round of collective bargaining negotiations for the Town's unions - teachers, police patrol, police sergeants, fire, public works, police sergeants, custodians, maintenance/trades, and librarians - as these contracts expire at the end of FY25. If we are to avoid sizable layoffs and/or cuts to all town services this fiscal year, and certainly in FY26 and beyond, the community must recognize that we are all in this together. It is imperative that residents take the time to learn and understand the budgeting pressures on both the schools and the municipality at large, and how these cost pressures counterbalance affordability to all citizens, businesses, and stakeholders in the Town of Franklin. We hope to avoid an “Us v. Them” debate. As we have suggested for many years, the Joint Budget Subcommittee may want to endorse a Cost-of-Living Adjustment (COLA) Equity Goal to avoid deepening budget deficits in future fiscal years. Otherwise, an escalation of budget increases in personnel and labor will most certainly result in unsustainable costs to the town, including the schools. This issue does not even include a calculation that additional staff investments may be needed for school and municipal services based on what the community desires. The town will be in a painful position of extensive layoffs or service reductions if we do not (1) start to manage expectations on the capacity of the town’s service limits and (2) start to coordinate and better strategically plan town and school operating budget finances.
For the full FY 2025 budget and narrative sections ->
All the FY 2025 budget materials can be found ->
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| Executive Summary (Part 2) for the FY 2025 Town of Franklin Budget |
