The FY 19 proposed budget will be balanced with use of approximately $1,500,000 from our Budget Stabilization Fund (Rainy Day account). While this will work for one year the FY 20 budget will require policy decisions on how to handle the budget shortfall.
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 $2.65 million. Local receipts, which include the excise tax and permit and license fees, etc., will increase $300,000, mostly due to increased motor vehicle commitments. Net State Aid (based on the Governor’s budget) will increase by $206,000. The FY 19 “net” revenue increase is estimated at $3.2 million.
Proposed FY 19 Highlights
Treasurer Collector – The budget partially funds a Deputy Treasurer Collector in preparation of the retirement of the current Deputy Treasurer Collector in 2019.
Police – We are reviewing the options to staff the police department when the Dispatch center moves in the middle of the fiscal year.
Regional Dispatch – The target date to open the new center is January 2019. The building is currently under construction.
Franklin Schools – We have provided the largest year over year increase ($3,000,000) in school funding in a decade. This will help relief much of the pressure of the school use of revolving funds but will not resolve the long term funding issues the Town/school face.
The Benjamin Franklin Classical Charter School – The school is relocating to its new location on Washington Street in 2019. This may increase busing costs for the schools when they open.
DPW – We increased the snow and ice Budget by $50,000 for a total of $1,003,500. This is still below the five year rolling average.
Board of Health – The Health office is merging with the Inspectional services
This will eliminate a part time clerk while providing full office coverage for the Health Department. Further we will be contracting for percolation tests and septic inspections.
Library – The opening of the renovated/addition to the library requires additional staffing. Further we are trying to close the gap between our current funding and the Minimum Appropriation Requirement (MAR) of the State Library Board. If the budget is approved we will close the gap from .85% to 90% of the minimum. We would need an additional
$100,000 to meet the requirement. The last time we were in compliance was FY 09.
Employee Wages/Benefits –Wages are generally increasing 3%, Pension costs increased by about 10% or about $450,000, OPEB is funded at $550,000 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 19 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. 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. FY19 is an exception due to extra challenges we face. We have not addressed our GASB 45 obligation (post-retirement health insurance) although this year we have budgeted $550,000 to continue to fund the obligation of about $70 million (2017 actuarial study).
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 three 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 projection 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 $5 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 $5.1 million dollars which is slightly under the Town’s policy of 5% of general fund revenue.
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.
Current Status
- The FY 19 budget calls for a general fund debt service of$6,843,101. According to the independent bond rating agency Standard and Poor’s, our debt level is moderate and manageable. Our debt plan will help to obtain our goal of improving the infrastructure of the Town without the need for debt exclusions (except schools) while maintaining a reasonable debt level. We were recently upgraded to AA+ one grade below the highest rating of AAA.
https://drive.google.com/open?id=1srWLWOHO81af4aQq8cNWIJcLAtImjRJG
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| Franklin, MA: Executive Summary FY 2019 Budget |
