Presented to the Board of Selectmen, School Committee, Finance Committee

Andrew Maylor Town AdministratorNovember 10, 2008

Town of SwampscottTown of Swampscott Fiscal 2010Fiscal 2010

Budget OverviewBudget Overview

Table of ContentsTable of ContentsI. Introduction

• FY2010 Budget Process• Goals and Priority Areas for FY10• Budget Pressures

II. Fiscal 2010 Budget• Pro Forma Assumptions- Revenue

• Pro Forma Assumptions- Expenses

• FY2010 Budget Projection- Revenue

• FY2010 Budget Projection- Expenses

• Revenue Sources

• Possibly More Bad News

III. What to Expect• Closing the Fiscal 2010 Budget Gap• Looking Ahead

IntroductionIntroductionFY2010 Budget ProcessFY2010 Budget Process

• Coordination and Communication are Essential to Develop the Financial Plan Required to Maintain the Town’s Fiscal Stability.

• Town Administrator will Distribute Budget Packages to Departments by November 21st.

• Budgets will be Due in the Town Accountant’s Office by Monday, January 5, 2009.

• School Committee Must Submit School Budget to the Town Administrator No Later than February 9, 2009.

IntroductionIntroductionFY2010 Budget Process FY2010 Budget Process

• Capital Improvement Committee Shall Recommend a Capital Improvement Program to the Town Administrator by February 1, 2009 Including:• A Clear and Concise Summary of its Contents;• Proposed Capital expenditures for the Ensuing Year;• A Five Year Capital Improvement Plan with Supporting

Information as to the Need, Cost and Method of Financing for Each Projected Capital Expenditure.

• Town Administrator will Submit Operating Budget to Selectmen and the Finance Committee in Accordance with Town Charter by the Third Week of February 2009.

• Selectmen Approval of a Balanced Budget by Majority Vote, by March 1, 2009.

• Financial Policies will be Used as Guideposts to Developing Financial Plan.

IntroductionIntroductionGoals and Priority Areas for FY10Goals and Priority Areas for FY10

• Present a Balanced Budget to the Board of Selectmen and the Finance Committee.

• Explore the Consolidation of Municipal Functions to Save Jobs.

• Find Additional Sources of Revenue.• Pursue Regional and Private Methods of Service Delivery.

• Avoid the Urge to Increase the Dependency on One-time Revenues.

• Stabilize Reserves Accounts.

• Continue the Investment in the Town’s Public Buildings and Open Spaces.

• Reduce Our Debt Service Costs Over the Next Five Years.

• Continue to Review, Evaluate, Track and Alter Policies that Define Local Government Operations.

IntroductionIntroductionBudget PressuresBudget Pressures

• $1.2Billion State Deficit Projected for FY2009.• The Recession Currently Being Felt at Both the National and

State Level has Impacted Tax Revenue Collections and Will lead to Flat or Reduced Local Aid in FY 2010.

• Despite the Town’s Ability to Control Discretionary Spending, Employee Wages and Benefits, Most Notably Health Insurance and Retirement, Continue to Create a Structural Imbalance within the Town’s Budget.

• The Decrease in Federal Reserve Interest Rates During the Past Year Plus has Significantly Reduced the Town’s Interest Income Revenue.

• A Decline in the Number of School Age Children Attending Swampscott Public Schools Has Led to a Decrease in Nahant Tuition and an Increase in Vocational and Charter School Charges.

IntroductionIntroductionBudget Pressures (cont.)Budget Pressures (cont.)

• The Town has Implemented A Significant Number of Cost-Cutting Measures And Revenue Enhancements During The Past Several Years.

• Significant Service Rollbacks Have Been Required During The Same Period, Specifically Last Year. Additional Service Cuts and Staff Reductions Should Be Expected in FY 2010.

• We Must Continue the Commitment to Restoring our Reserves to Appropriate Levels.

• Increased Structural Deficits will Impact the Town’s Financial Flexibility and Jeopardize the Town’s Bond Rating and Cost of Capital.

FY2010FY2010Pro Forma Assumptions - General Fund Pro Forma Assumptions - General Fund

RevenuesRevenues•State Aid is Projected to be Level Funded in FY2010.

•Tax Levy and Levy Limit will Grow Approximately by 3%.

•Charges, Licenses, Fees and Miscellaneous Revenue Projected at Either Level Funded or Minimal Increases.

•Fee Schedules are Analyzed Annually and Adjusted to Maximize Local Receipts.

•The Use of Free Cash is Expected to be Approximately $320,000 for FY2010.

•Nahant Tuition will be Reduced to $1,172,000 in FY2010.

•Other Sources of Revenue Include: Enterprise Fund Indirect Charges ($750,000).

FY2010FY2010Pro Forma Assumptions - General Fund Pro Forma Assumptions - General Fund

ExpensesExpenses•Salaries and Operating Expenses (Including Schools)

Projected to Increase by 0.7%.

•Health Insurance Costs Projected to Increase By 10% in FY2010.

•State and County Charges and Cherry Sheet Offsets are

Expected to Increase .

•Debt Service Based Upon Current and Future Capital Improvement Programs Cost Expected to Remain at Approximately 5% of the Tax Levy Exclusive of School Construction.

•Includes Sewer Debt Exclusion .

FY2010 Budget Projection FY2010 Budget Projection RevenueRevenue

PROJECTED YEAR OVER %

ADOPTED SCENARIO 2 CHANGE CHANGE

FY09 FY10 SCENARIO 2 SCENARIO 2

I. REVENUES  

TAX LEVY 34,116,547 35,251,336 1,134,789 3.33%

DEBT EXCLUSION 3,834,390 3,835,954 1,564 0.04%

NEW GROWTH 275,000 275,000 - 0.00%

SUBTOTAL 38,225,937 39,362,290 1,136,353 2.97%

 

LOCAL RECEIPTS 3,140,367 3,140,367 0 0.00%

OUTSIDE TUITIONS 1,220,125 1,172,000 (48,125) -3.94%

EST CHERRY SHEET 4,788,390 4,788,390 - 0.00%

INTERGOVERNMENTAL 750,000 750,000 0 0.00%

SUBTOTAL 9,898,882 9,850,757 (48,125) -0.49%

-  

TOTAL REVENUE 48,124,819 49,213,047 1,088,228 2.26%

FY2010FY2010 BudgetBudget Projection ExpensesProjection Expenses

II. EXPENSES  

TOWN BUDGETS 11,255,346 11,155,346 (100,000) -0.89%

SCHOOL BUDGET 22,200,000 22,552,200 352,200 1.59%

VOCATIONAL SCHOOL 290,885 314,156 23,271 8.00%

SHARED EXPENSES  

HEALTH INSURANCE 4,325,000 4,757,500 432,500 10.00%

RETIREMENT 3,063,309 3,341,973 278,664 9.10%

MEDICARE 355,000 363,875 8,875 2.50%

PROPERTY & CASUALTY INSURANCE 285,000 280,000 (5,000) -1.75%

WORKER'S COMPENSATION 180,000 184,500 4,500 2.50%

UNCOMPENSATED BALANCES 110,000 120,000 10,000 9.09%

RESERVE FUND 176,750 150,000 (26,750) -15.13%

DEBT 5,007,533 4,935,100 (72,433) -1.45%

TOWN AUDIT 45,000 45,000 0 0.00%

UNEMPLOYMENT 15,000 45,000 30,000 200.00%

STABILIZATION 70,000 70,000 0 0.00%

OVERLAY PROVISIONS 195,000 185,000 (10,000) -5.13%

ASSESSMENTS/OFFSETS 898,375 1,033,131 134,756 15.00%

TOTAL EXPENSES 48,462,198 49,532,781 1,070,583 2.21%

BALANCE AVAILABLE (337,379) (319,734) 17,645 -5.88%

ONE TIME REVENUES  

FREE CASH 340,000 320,000 (20,000) -5.88%

EXCESS/(DEFICIT) 2,621 266 (2,355)  

PROJECTED YEAR OVER %

ADOPTED SCENARIO 2 CHANGE CHANGE

FY09 FY10 SCENARIO 2 SCENARIO 2

Fiscal 2010 BudgetFiscal 2010 Budget Revenue Sources Revenue Sources

Revenues Projected for the FY10 Operating Budget Total $49,213,047

Revenues are Derived From The Following Re-Occurring Sources:• Taxes - $39,362,290• Nahant Tuition - $1,172,000• Motor Vehicle Excise - $1,865,367• Licenses and Permits – $160,000• Fines and Forfeits - $95,000• State Aid- $4,788,390 (Gross)• Local Receipts - $1,020,000• Enterprise Fund Charge Backs - $750,000

Note-Total Does not include Free Cash of $320,000

Possibly More Bad NewsPossibly More Bad News

State Aid Could Decrease by as much as $478,000.

State Assessments Could Increase more than Projected Depending on Charter School Headcounts and Other Factors.

What to expectWhat to expect

Closing the Fiscal 2010 Budget Gap

Looking Ahead

Closing the Fiscal 2010 Closing the Fiscal 2010 Budget GapBudget Gap

• State Aid Increase above Forecasted Amount.

• Nahant Tuition Increase.

• Health Insurance Premium Increase Less than Expected.

• Consolidate Functions.

• Privatize Services.

• Reduce Discretionary Spending wherever Possible.

• Reduce Staff.

Looking Ahead

• Reduce Long-Term Debt as a Percentage of Budget.

• Find Additional Sources of Revenue.

• Reduce the Dependency on One-Time Revenue.

• Join the Group Insurance Commission (GIC) program.

• Merge with Another Municipality (Swamphead/Marblescott).