Morning everyone. the uh December 15th meeting of the uh financial forecasting work group. Depending on how many people we have, potentially the budget coordinating committee will come to order. 2:33 a.m.
Uh, the first thing on the agenda was to continue our discussion of the various revenue forecast and expenditure forecast assumptions that uh Nick and Amy put together. That is available in
the uh folder that Nick continues to update. So, if you don't have it in front of you, might be helpful to pull that out if you're remote. Um, start at the top. The revenue forecast
assumptions, property tax levy assumption is 2.5% increase per year. It's what we're legally um restricted to. So, don't think there's much discussion
there. Any comments? I don't I don't have a comment on that point, but I just want to flag I see um Rob Milt is listed as an attendee. If he could be promoted to a panelist, that would be great. >> Sorry, I just want to flag up.
>> Yeah, I I did it a couple times. So, >> okay, no problem. uh new growth 1 million a year um is the forecast. The one question I had there is whether
um says for fiscal 23 to fiscal 26 we've exceeded 1 million. The question there is is uh is that conservative enough? Have we looked at a long enough period? Can we be reasonably certain that
continue to exceed $1 million every year? >> Uh I think in the near term we feel more confident in that than we do in the outer years. Um so when we had plugged it we had plugged it at that amount um each year but um we haven't yet
revisited in terms of those out years but we do have a number of large projects underway in construction as we speak that'll be um adding growth in 27 and 28. Um and then the pipeline for 29
and beyond is less um is less known at this time. There's no large projects even that we're aware of at this point that would be like commencing any kind of land use body permitting that would then turn into building permits along that that trajectory. So everything that's being
built is was permitted through land use bodies several years ago at this point. >> Great. Okay. So fiscal 27 and fiscal 28. You're confident? >> We feel better about that. I'm we asked the assessors to to run through it. So,
um, where we've done that and we'll report back once they have any adjustment. >> Okay. The 27 new growth is based on what's going on today. So, they that gives them a better line of sight as to where that should land. And um, nothing has really
slowed down as of yet in terms of immediate growth. >> Okay. >> What exclusions? Sorry, just on the new growth piece. I um Nick, I know you've shared previously in some like presentations on the kind of bar chart,
right, with like new growth year-over-year. It looks like we've surpassed a million dollars in 23, 24, 25, and then if I'm not mistaken, 26 we are expecting. Is that is that right? But prior to that,
we had never uh surpassed kind of a million dollars. We were pretty close in 22 21. >> Yes, that's right. And then in 26, so the certified value of new growth for 26, which is included in the um that was
1 point just shy of 1.5 million. So if you don't have the final number, it's 1,499 something. Gotcha. So the last four years, we've been over 1.2, but prior to that, we've never broken a million.
>> Okay. So million feels conservative based upon and based on recent trends at least unless obviously construction totally shuts down in the city. Tell >> exclusions the way the forecast uh was written is
that the debt exclusions don't assume anything new. It just assumes that what is what is out there and declining will decline and then the fire station hurly amendment fund would subsume that. So it doesn't we didn't add any debt exclusion
projects to the spending side of the budget nor did we add it to the revenue side. So if the Athens fire station requires debt exclusion over above hurly amendment that would be new cost but also new revenue. the school project would be new cost plus new new revenue.
So we didn't roll that into the forecast as of today. Um just because those costs are unknown for the >> where's the new revenue >> uh because it would be debt excluded tax revenue. So if if it was a million dollars in debt service, we would be able to raise that on the tax levy. Um
so in terms of how it would affect the budget overall from a surplus deficit perspective, it didn't it doesn't. It should be it should net out. Sorry, we didn't adjust or bring anything in for that. Okay. Um I don't think this is breaking news, but um on the fire
station building committee, we're assuming that you may have exhausted the hurly fund so that that's not going to be available as a source. Correct. uh legally obligated medical expenses.
Doesn't that go away? >> Uh no. Until um that's for a firefighter who was injured in line of duty and those expenses are continuing. So that's what that additional >> That's not Thomas. Okay. >> Local receipts uh 1% a year.
Yes. Uh so in order to remain conservative, we've kept the local receipts at 1% a year, I think. Um and we had a a conversation about this at the finance committee level. Um we're digging a little deeper into it to see where we feel comfortable for 27.
Um where that our revenue has exceeded um forecast. There's been a couple of sources that um are recurring. There's a couple of sources that are non-recurring. Interest income is the obvious one where we've been um so much higher than our history
has been, but that's also due to um high rates, high amounts of budget uh money in in our funds. So um we haven't adjusted that beyond that 1% increase to keep it conservative at this point. >> Everyone's benefit.
of the major contributors that are in there. >> Uh motor vehicle excise tax um is the biggest interest income. Um the trash fees which has gone up because we increased the trash fees. Um building
permits um those are the largest contributors to that. >> Restaurant, >> I'm sorry, >> restaurant. >> The meals tax is about 300 grand, 380 grand I think at this point. The excisement has gone up way up in the last two years. Right. >> Correct.
>> Pilot payments also go that one. Um can you share Oh, this might be it. >> Yeah. I was wondering if you could share how the 1% compares to what we've actually seen, you know, over the last decade, right? Going back to like 2015
or so. So this figure I just plugged in 10.35 million would be 1% over 26. And then you can see how that um harder for folks in their own apologies. But um in 23 we brought in 10.7 million in local receipts.
Um 24 and 25 have been um significantly above that. >> Do we know? I guess we're only three months into it. >> I'm sorry. So, which of those is more predictable? Like, is motor vehicle
excise tax something that's predictable? >> Uh, I have the other >> I can like look at those numbers and say, well, let's take the average of the latest five, but I don't know if somebody in town hall has a list of all the motor vehicles. And >> we do commitments throughout the year. the largest commitment is done around
the new year. So that's when we have a real sense of what the um the rest of our fiscal year will look like. So the data we have to year to date isn't great. It's after the turn of the new year where we get better data on how we're tracking for the year. Um if that makes more sense and I did add Joanna in
case she had anything any additional color commentary to add to that. It it makes some sense, but even I'm just inferring what the word commitment means. But I you know, can't you just take last year's data and say assume nobody buys or sells their car?
If everybody owns the same car as last year, what are we going to collect? For example, um is that what we're saying? We could just the depreciation on cars is so quick. Okay. That it is really the
new car purchase and turnover. And um Joanna, if you want to fill in or better answer that question, feel free. >> Yeah. No, I think it's a great idea, Jay. We were talking about this at the select board finance committee meeting too. Um I I think that there are some analytics that we can do. the the
commitment thing means that like anybody who owns a car as of January 1st will get a bill in the first commitment of the calendar year. So those bills will go out in January and they will be due in March and then every couple months subsequent to that we kind of uh catch
up with new vehicles that the RMV tells us are registered in town. I think um we we can do some work off of January's commitment from last year to kind of see the age of the vehicles and and like um Nick had just said, the depreciation
really factors in quickly on these. So So it's $25 on every thousand, but there's a whole like it ratchets down for 5 years. Uh I think that we'll have a better predictor on this uh come January, mid January when we get the file from the RMV of all the cars that
are owned in town as of January 1st. >> So are you saying if you do what I suggested, which is just take last year's cars, it would be unrealistically low because of all the depreciation. Well, so if you just took last year's cars, if we just took the amount that we
had last year, that that would that would >> and depreciated them. >> Well, so that's tricky because that it's not it's not equal. It's based on the model year. So, um I mean, I think we could do some work off of it. I'm
working on getting the the the file from the um the assessor's office of the vehicles owned in town as of January 1st last year. But so so to give you an idea that January 1st last year we build out about 18,000 cars but um we just sent
out another commitment for um you know cars towards the you know that that I think we're on our sixth commitment of calendar year 2025 and our bill numbers are up to like almost 24,000. So there's about 6,000 of new purchases subsequent
to January 1st. So, it's it's not perfect, but I really think that the be the best number and the best gauge that we'll be able to see is um is something that will come to us in about a month. >> Okay. And I'm sorry for getting into the weeds. I shouldn't >> fine
>> focus on telling you how to do your job. I guess what I meant was can we do something other than look at the last three years and average them? And it sounds like got some ideas. >> No, and I think that like car values have gone up too, right? So, so with this in particular, I I just don't think that that's that's the realistic way to
budget this. >> Okay. >> Thanks, Johanna. Um I I guess my only thought on it like 1% seems conservative again, right? And so, you
know, I know within our projections we want to be conservative in many ways. I just want to make sure we're being purposeful on where we're being conservative in naming it. And and looking at these numbers, the overall local receipts it looks like have varied between, you know, from 2019 to 2020
increased by 1% then 4% then 4% then 10 then 16 then 10. So like we've been pretty substantially above 1%. Obviously, your projections right now for 26 show a pretty remarkable decrease, which, you know, maybe is is
true. It doesn't seem to be what we've seen since 2019. Um, so I I guess I'm still just wondering where where exactly the 1% number comes from, why we wouldn't be more comfortable with something like 3
or 4% given that that history. Um even just to Jay's point the kind of motoral vehicle excise which is the largest portion that seems to be going up 3% 3% 2% 7% 12% so you know that is also jumping we had one year where it
did dip from 19 to 20 um >> co that that would be yeah June 30th 2020 was yeah after the pandemic had just started so um so I I don't know if that explains that but yeah anyways was just wondering why why the 1% is that too
conservative honestly or is that what's the thinking >> since yeah I'd agree since co you have 3.6% 6% up is your average. >> So I I'll uh I think I don't necessarily disagree that it's conservative over the top. I think what we're trying to get a
better sense of if once you extract out things that aren't necessarily recurring that won't be here in 2829 and beyond without any you know more certainty. I wouldn't want to bill in operating expenses against those. I mean, just off the top, if you look at penalties and interest, um
almost 600 grand over the prior year, plus the interest income, which is almost a million dollars over, uh where we've been, you know, that's 1.6 million over and above the $10 million estimate. So, you start to erode nearly half of what looks like an outlier amount. Um
and then just wanting to have a better grasp of the motor vehicle piece because again, that that contributed almost 900 grand over where the budget was. So those three accounts together account for a lot of the variation. Um so I I would just say that we this is where
we've kept our initial forecast in. As we get better information um we will revisit um for fiscal 27 specifically um especially you know what's coming out this month and next actually tomorrow. the um states having their consensus
revenue forecast so we'll have a sense of where they think the overall um state economy is headed what their income will be um and we'll have better data um as we noted as after we turn the year in terms of 26 anyway so I I would just view it as an open
item for 27 to come back and discuss I think that a better question for this group might be what do we want to build in for the long-term forecast >> that doesn't feel too conservative I totally >> Yes, that I think that last point was
what I was say like not not informing your FY27 budget specifically, Nick, because obviously there's details within in any individual year, which you have more context to than I do, but just if we look at the long-term how this has worked out and we're trying to build a
long-term forecast, 1% just seemed a little uh a little conservative for that projection. But I'm sorry I interrupted you, Brian. >> That's I interrupted you, I think. Um, but yeah, I mean, the more accurate you can get each individual piece, if you can, I know there's a lot of guesses in
here that you don't know, the more accurate you might be able to get like motor vehicle taxes or local meal taxes. If each one of those things is as accurate as possible, the o overall picture will be more accurate. And I think, you know, try to that's what I would try to aim
for. Anything you can well predict, you should go to in detail. That's what I theory, budget theory. >> Yeah, Mark, you raised a good issue which we which has come up at this meeting previously and I don't know how to express it very well. But I feel like
there's two forecasts we're looking at. There's the forecast for next year's budget in which we should be conservative because if we're not that could be really bad. But then there's like a five-year forecast and which case if conservatism builds on conservatism
builds on conservatism, you know, I'd much I'd much rather have a realistic five-year forecast and a conservative one-year forecast. I don't know how those two work together exactly, but but I I I think you I think I agree with what you expressed.
Well, that that's that's an important discussion. Because so there's two things at play here. As you said, we need to be sure that we are being so conservative and this is with regard to the 5-year forecast. We
are being so conservative that we are constraining our ability to fund necessary resources. At the same time, the the
consequences of of being wrong are that we end up with a a crisis that um could have avoided maybe. And and the other
factor there is and and I want to get this is further down the list, but how how we think about the operating budget and stabilization fund. Right now the assumption there is we're going to exhaust that fund uh completely. I'm not
sure that's the right approach. So um so I think Nick what what what would be helpful um particularly with regard to this particular uh local receipt is um and and you've kind of talked about
this but detail for us not not now but detail for us um how you calculated or or or the assumptions that you use. This is detail under the detail um how the assumptions
that you use to calculate or to arrive at the 1% um recommendation and to Jay and Mark's point whether as we're looking out over a longer period of time and I think this
would only apply to those recurring revenue sources but um would it would it be prudent to or as Brian said look at what the average has been over the last five maybe seven or eight years and see whether that gives us something higher
than 1%. it probably will. But but again, I think at the end of the day, and so we might make some we might have ideas, we might make some suggestions, but this is your decision, the select
board's decision to to make, but we'd like to be comfortable with where you are. So um the ask is um a little more of a deeper dive on how you for those recurring sources how you what
assumptions you have about how they will um deliver over the next four or five years and let's take a look at that and see whether there are areas where we could be perhaps less conservative. Winston, you okay with that?
>> See, I see Joanna has her hand up. I think she has a lot more sort of input on this piece, but looking in the discussion on where we change here in our discussion in the select board finance meeting, we didn't take as much uh sort of
umbrage with this conservative view in that in most of these categories, we're really going back to where we were in 23. our biggest outliers being motor vehicle excise as well as the investment income. Um, which really we're rolling back to about where we saw things in
2023. Uh, not predicting that the receipts we've gotten in 24 and 25 are going to be as close. I understand if folks wanted to say we want to go back and look. Um, Joanna, we talked about the motor vehicle um, tax and I think the
others are kind of in line, right? What are the ones that are kind of out of whack? Like penalties and interest going back to 650. Um, investment income because of the changing in the interest rates back to 450 feels about right to us. But I
understand if this group if there are certain categories you want to drill into, but I think at this point I am very very okay with this kind of more conservative outlook. And if we do exceed the receipts again, then I would be willing
to call it a trend. >> I think I I I I'm sorry. Go ahead, Joanna. >> No, that's fine. Um I was just going to say I was going to sort of suggest the same thing that Winston just um remarked because I I I feel like my my personal
opinion is a lot of these bigger numbers here are are very market driven. So, when you're going to think about projecting this out for 5 years, it could be a very different interest rate landscape, a very different building landscape. Um, people could could be hanging on to the cars that they have
and not buying new ones. Uh, there's a whole lot of variables here that that um are are tricky to estimate in a a longer term forecast. I do think that and and and as Winston just mentioned the the we've capitalized on on in on some um
on some different rate products that have bumped our interest or investment income up in the last couple years and will be again this year um that might not be available to us in future years. and the penalties and interest are are
largely one-time costs that um that I see on the collector's side of kind of chewing up some old uncollected tax balances. So, I I just I I caution you on on raising um this percentage a bit as as aggressive as I'd like to be so
that things are funded as as best we can. this is this doesn't feel like the place that we want to make sure that we're hitting an x% each year because um there's just so much fluctuation to it. >> So I think um I think everyone agrees
our our guiding principle is we want to be as as conservative as we can particularly on the revenue side. Um that said, I I I think a valid point has been raised about whether um if we drill
down on on each source or let's take the top five um whether I think we just want to test the assumptions a little bit. So what I've what I'm asking Nick to do is is just that. So on motor ve and it's actually I think it's Johanna and Nick
on motor vehicle what are the assumptions there? Um why why do we think if we're looking out over a longer period um this 1% is still the right uh the right path? Same thing for trash.
Let's take the top five and and just drill down on what the assumptions are in each one of those and and we might end up with the same conclusion. But I think um a number of people have raised some valid points. So, let's just let's give ourselves a little more information so
that we can understand exactly how we got to where we are. >> I think the the two that in that category that are the biggest to me are the motor vehicle excise tax and I think
it was um investment income. Nick, are those both about a million different? Uh we spoke about the motor vehicle excise and what we wanted to look at was the largest numbers from new from new purchases. Um and so when Joanna gets
that list that she mentioned, we'll be able to see um where the cars are because there is a depreciation cycle um an amount for each that goes down. So we want to see if can we see how many are new and all the questions that were asked before. So I think that that's already on the table for investment
income. I think this would fall as well to Joanne about the vehicles and what we could expect in this market environment for the next year or two. Um, so I think those are the two that perhaps are the drivers. I think that those are about two one to three million in there. That would be the big difference between the
1% more. Joanna was already kind of uh on her way to drilling into those >> confirmed Winston. >> Okay. Enterprise fund indirect cost. Yeah, that's just um taking all the
costs that are born um in the general fund that we share with the enterprise fund, health insurance, employee employee benefits broadly um and then utilities and stuff. We we charge off to storm water, water and sewer um so that they share the burden of um operating
those entities. >> Yeah, that seems fine to me. If it's primarily benefits and benefits are going through the roof, is 5% the correct number?
Uh, I think so. I we feel okay with that. Um, because other items that are included in that calculation aren't necessarily increasing as quickly. Okay. >> Um, but again, it's something for each individual fiscal year. We'll we'll adjust in terms of a forecast that felt
appropriate. Okay, I just maybe this is too nitpicky, but if we are changing these dials, if we say health insurance isn't 7%, it's 15%. Then this will also go up >> for Yes. Exactly. In the given year
where that's the case. Correct. >> I mean, is we're tweaking our forecasts, not just reality. >> Oh, yeah. No, understood. >> Chapter 70. Yeah, this is this is below where we've been. It's we just plugged it at $132,000 a year. It's about 1%ish
a year on chapter 70. Um this we to our benefit we've been below that. Um a couple years ago we were significantly above that. Um we're back to being mostly minimum aid which is just you get an additional infusion of money each year on a per pupil basis. I think that
figure was closer to $105 a student last year. Um, but this is where um, as there's uncertainty about that state uh, budget, um, we didn't want to go too too beyond um, just a modest adjustment each
year. And that it ties out to the unrestricted government aid as well. >> That's my question for for uh, John and Katie. Are we comfortable that this is going to continue to go up at all? >> Yes. >> Yes. Wow. She that sound you sound
certain. But >> so it's we're the state is required to at least do the $30 per pupil more than we got from the previous year. And it's been significantly higher. the per pupil
more that we've gotten has been closer to the $100, $150 um number in previous years. But I think it's the legal like whatever is in um the actual law is $30 per pupil that we
would get. So that's in in spite of or inclusive of whatever they do with the state budget each year. >> It's in spite of. >> Okay.
>> Um only other thing I'd say is the enrollment number 4,400. That's a nice round one. That's a little bit higher than we are currently. So again, as we talk about conservatism, maybe we want to just put that enrollment number at the 4,300. Again, it might might not matter. It's not a
huge difference. Overall enrollment over the last 10 years is averaged at 4,288. If you do the last five years, it's 4,350 or 45, somewhere around that. So, I just think
>> that's good. Thanks. >> 4,300 number is slightly more conservative. >> Yeah, that's a good guess. Um, UGGA 2% a year. Yes, this is um adjusted by the state um
usually in line with where they expect their overall revenue forecast to come in. Um so we felt the 2% um was in line with things where things have been um over the last several years. It's not a huge amount of money. That's probably
$80,000 I think is the 2% figure of new new money. Um the Mass Municipal Association has been um having a very public conversation both in the media and elsewhere about Prop 2 and a half and the future of that um and
limitations on financial revenue for cities and towns more broadly. And they've um really targeted unrestricted general government aid as something to focus on outside of the much more challenging conversations about Prop 2 and a half. Um, so their their
legislative push this year it sounds like is to to have a big jump on that to to try to fill back in what had been taken away from the great recession. But um, all that aside, I think 2% feels about okay. Um, overall state aid has um
been um, just kind of that modest increase year-over-year. When you take out the assessments, we also get charged. >> Okay. Jay, are you comfortable with that? >> I don't have any comments right now. >> Okay.
>> Uh, state aid other categories no change that not too controversial. Overlay reserve. Again, just trying to be conservative. We we have an overlay where we pay a um money is put into every year by the
assessors when we set the tax rate. Um and then there's a modest amount that we expect to be released each year. Um the overlay is funded to cover uncollected tax, property taxes, um plus um exemptions, abatements, any cases currently tied up at the pallet tax
board. So that's what the overlay is generally. And we've we've been in the ballpark of releasing between$100 to $200,000 a year >> and discussed with the assessors or No, >> that's because it's been our trend. We
haven't visited that with them on a year-by-year basis. If we feel it's getting too high, we would approach to have a more direct conversation. But in terms of the nature of the forecast, tracking with what our history has been, uh, we felt okay with. >> Okay. Uh, free cash we talked about, but
I think this is the right assumption. No free cash. Uh, operating budget stabilization fund. So, do we do we think The mandate is full usage. Um, >> should we try to spend a little less?
>> I'll say it's hard to say because there wasn't, in my opinion, there wasn't sort of a big conversation about what this was in the override. I didn't know there was >> I think it sort of slipped through. >> Um, I would say if there is the prudent use of this is and This might not might
be too vague, but to maintain level services through the next override. Now, that doesn't mean spend all the money we have to spend in five years so we go to an override. If we do better than that, that's great. Uh I I think
that's the intent. Maintain level services because in previous decades, you know, when I was sort of new to this town, we had passed an override. Then the next year we'd be fine. And the year after that, now the library is closed on Sundays. The year after that, now the library is closed on Saturdays and
Sundays. The year after that, now we're laying off various people at schools. The year after that, we have an override. So I think the mandate is don't do that. That's that's my view. >> Okay. >> Nick,
>> I think I I agree with Jay's take on it. Um what when we originally put together this we anticipated using the forecast assumed full usage of it um over those fiscal years. Um that's what the
baseline was brought in and and our view was again to to the purpose was to draw it down over the course of the next several years prior to um feeling the need to to raise the override question. So I I would agree um more big picture
that that was the intention. Um the more we can avoid using it, the longer we can make things work. I think that is the preference. Um but the structure of how we set it up is kind of the first situation
>> and and we projected full usage because um we had identified I think the the conversation started with if we do this when do we anticipate needing another override. So we said
>> with that assumption this is how we would have to draw it down based on the operating budget expenses in the 2 and a half to 3% range. This is how far we think we can string out if we put 700 grand in at recurring plus a $2 million payment. So it's more like how far does
that get us with the other assumptions. Yeah, >> that was the framework we were having the conversation within. But the Jay's thesis that this is to maintain level
service across the town departments that's schools and everyone else. Um I I think it's correct. Do you agree with that? >> I agree with that. >> And I just just to to as a reminder there's 700 grand of this that is recurring each year. Um, so that's new
revenue every year of $700,000 plus two and a half% of the select board votes to increase it each year. Um, and then we had done a standalone appropriation into it of $2 million of free cash. So there is an element of this that is for recurring um, source of revenue which is the seven approximately $700,000.
>> Um, unless the select board needs to increase it or not to make a contribution, >> the it's up to the select board each year to vote to increase it. the max they can increase it in a year annual amount is 2 and a half%. >> Yeah. >> Alternatively, they can lower the amount
or pull it off entirely and then it goes away forever. >> Correct. Okay. >> Yeah. >> This may be getting outside the bounds of this conversation, but you know, just like we did a $2 million free cash contribution last year, I may be getting
my ears confused, but we did $2 million contribution this year. We have $4.5 million free cash. Let's say we spend a million on capital. Let's say we spend a million on half on other various incendry things. We might have another 2 million we put in there. Um and then
again, this may be getting beyond the balance of this conversation. Then well, if we put take $2 million of free cash, put it in there, and then immediately take it out, well that's not good because that's using free cash and ongoing expenses. If we put $2 million in there and spread the use over the
next five years, is that okay? it. I have more questions than answers, but I think this, you know, one good use of free cash might be to put a good chunk of free cash this year into that then does that mean we push an override
out another year? Does that mean we still have an override in 2030, but the free c this account isn't drawn down to zero? Again, I have more questions than answers. Well, my my dream with regard to this process and what we're trying to to uh
produce here is a financial forecast that's that looks out about five years that informs the public about where we are and what we're thinking about the town's finances and each year updates when we think we'll need the next
override and why. That's my dream. >> That's my dream, too. >> Okay, good. I think it's all our dream. >> Good. Good. Okay. Um, so, uh, I think
you're right that that I we talked earlier earlier in this discussion, the last time we had it, we talked about a principle that says we we all agree, I believe, that free cash should not be used for recurring expenses. That said,
I agree that it we could use free cash to fund or to uh add to this operating budget stabilization fund and in that sense it might in later years be used for recurring expenses to maintain level
of service. The other thing I'll just add to this is that um as that fund is built up and it is presently built up um it will incur interest revenue and investment revenue which will stay within the fund. So the
$700,000 plus the $2 million will earn some amount of money this year that will so there is you know a modest amount um but if again there's another contribution from free cash that'll increase kind of that baseline principle that will be used to potentially earn additional funds that will stay within
the fund to be appropriated. So just another just like all the other stabilization funds the any interest in investment income stays with those funds themselves and our our esteemed treasurers responsible for maximizing the returns in those for those funds.
>> Correct. Okay. Okay. Expenditures salaries um this is non-union. So the again the way this is built is um it applies a two and a half% increase to all salary lines across the entire >> I don't think I'm looking at the same
thing you're looking at or what are you looking at >> just the summary sheet I I'll share it sorry >> financial forecast summary >> I just >> so this is union and non-un What what I was confused by is so we
show a salaries um expenditure forecast and then a collective bargaining set aside which I assume is to fund salaries. So I was a little confused about and just to peel
that apart a bit. So on the way the broader workbook is set up is we have a set aside for collective bargaining contracts that is increasing by two and a half%. We also have the salary budgets for each individual department. Um those are increasing by two and a
half% to that accounts for like the steps that somebody might receive in a given year. So some departments will have steps for some of their employees. Some of their employees might all be at the top steps. So there's a little bit of wiggle room. Um so across the board um that's how that's set up. The 2 and a
half% is applied again in the forecast just um to the school department salaries line as a whole is applied the 2 and 1 half% in terms of how that workbook functions. >> That's that's this top line salaries. Okay. So >> the town's collective bargaining set
aside is is outside of each individual department. So that's why there's one line item for it's one entire for the all the town side u bargaining agreements. And for this salary cost projection,
this two and a half% increase includes and encompasses uh for the schools steps and lanes and um non-union increases that it that it that 2 and a half% accurately captures that increase per
year. So, I think if um that's the total number for the school, I think it's probably a little low just based off of a >> because um so many of our staff are um
part of the collective bargaining agreements and because it's steps and lens um so typically I think for this year and uh projecting out to fiscal year 27 7 when we looked at our increase
just the salary portion of the budget increase was about 4%. Um so and again it's very much tied to the collective bargaining agreements but I do feel that the I think just based off
of some historical information um and the difference between the steps that are currently built in the 2.5 maybe a little low for the schools. Yeah, I I had the same thought and so I
I think we might want to take a look at that. >> Yeah, I'll just >> totally agree. >> I was just going to reiterate that the way again we the first when we structured this the first time it was from a revenue side. If this is our revenue, what must our expenses increase
at to stay within that? Rather than flipping it around to saying, so the way we built to say is we have limited revenue. So every budget must stay within a certain range or else >> it's unsustainable and this is the range that everything must stay within to be
sustainable. So that's the way we structured it the first time to give everybody a sense of, you know, we have $4 million in new revenue. that means we have can have $4 million in new expenses on an annual basis. Um, and that was the way it was structured the first time
around. But I I don't I'm not saying that's the right way. It's just how we approached it to just explain it. >> I definitely like to revise that as we talk about these expenditures. I'd like to accurately reflect what we think those expenses are and then then figure
out um how we solve if if there's a gap that that's that's that's one of the benefits of a forecast. >> Yeah. >> So this is this is certainly one I think we need to look at for potential revision. >> I mean that's this is one you accurate
on at least year to year. Absolutely accurate. >> Absolutely. John has his hand up in case y'all can't see him. >> So I I agree that that expense needs to go up, but I I fully understand what Nick is saying. If we're if we were approaching the revenue forecast or
approaching the budgeting process through a revenue first lens and then then deciding what exactly we would need to do from the expense side to stay within that. So that that's what I think this shows. And then the next step, the 2.0 version of this is now we have to
match expenses to revenue. And then what does that difference look like and what does that mean to not only FY27 but the five-year forecast. So uh but I'm glad we started here because I think a revenue side budget projection is really helpful. Uh but I think this is we're
getting ready to go into the next step of now matching expenses that are more realistic to the revenue picture that we're providing. Yeah, I think this is the the difference as we talked about earlier between a one-year budget projection and planning versus a five-year forecast of like we
need this is the opposite of what we did on the expense side or revenue side where that was very conservative. This is like very hopeful. Um I just I don't think there's any evidence that the town or the schools have kind of met a 2 and a half% increase um over the last
several years. And so I think we need something that's more more reflective. I mean that that is the reason we ultimately need a two and a half override eventually is because revenues go up higher than our or expenses go up higher than our revenues. Uh and mostly that is salaries because that's 80% of
the overall town budget the salaries. So uh anyways agree with all this >> this salary number is not just for schools though right this two and a half >> apply it across all town departments as well. So like so if we want to do that
as a driver then perhaps salaries needs to could we have underlying categories for salaries because the schools may increase more than others and our net may be 2 and a.5%. Right? So if we want to change it and say that we're going to dig into collective bargaining and school
salaries versus police fire some of the other places over the five years um I don't know if it wants to get that granular. Um just listening to what everyone is saying like is if we if we're going to do a thing thinking about the schools and the override maybe some of that
needs to be broken out um a little differently when we're doing the forecasting. >> Yeah, Winston I I think it it may not be 4% if you take into account the rest of the town, but remember the the school's
school's budget is half the town's budget. So, um, it's it's going to be it's going to if you're doing the weighted average schools is going to have a significant impact on what that final figure is. But, >> no, I agree on that. I just think if we
we we are kind of talking around having a particular eye on the schools because of how big a driver it is. So maybe in the expenditure forecast what we're missing here is breaking out schools a little differently um and saying because of how large a part of budget it is or
because that's some of our concern way the way way the costs are being driven that we should be looking at where our school expenditures are differently according to our revenue because even in the operation stabilization fund we're talking about some of that was built to sort of
backfill schools right if anything they sort of need over the next 3 to 5 years. You know, correct me if I'm wrong in my my uh view on that. >> Well, it's the operating budget, so it's all town departments, including the
schools. But I I would I don't want to um I don't want to single out the schools. All all I want to do is create a weighted average that includes what's actually happening with the school's salary structure. >> Is is there a way to find out what the salaries increased without the the thing
that mixes it up is the additional employees that we fired, but just based on without the new employees like what the percentage was that it increased by. >> So we we have um we we don't plan on hiring any additional staff for next year. So,
is she thinking it from an FY27 perspective? But if you just I think Katie sent out um uh a level service overview document that shows that just steps steps and lanes itself is a little over 4%. Um and then putting money aside
for COLA is a is an added expenditure to that. Um, I would also suggest, and I don't know the answer to this question, but I I assume some of the unions do have some small steps and lane structures uh involved in them on the town side. And my question would be also
to Nick, does the 2 and a half% that you've set aside um include a set aside for schools or is that just a townside set aside for cola bargaining, etc.? No, that's the town departmental because we don't put it in our budget anywhere
else. We don't put it like there's not a set aside within the public works budget. It's all centrally budgeted for the town side department. So that's why it's a separate line and that's just how we show it on the budget. It's a separate article each year as well. >> Yeah. And we try to have a set aside as well within the school budget that we in
in a like this year in a negotiation year we would embed that in other parts of the budget in order to not make it as transparent uh related to negotiation strategy etc. But um yeah, I I think it's I think to everybody's point, it's
it's really helpful to get a real clear realistic percentage increase uh for all staffing and because it is 80% of the budget. And then on the school side, because we're so many FTEES, it is an outweighted average to Loyy's point. Um and just to be more realistic because I
I don't think the schools would ever be able to budget to a 2.5% salary increase without laying people off. That's not level service. That's that's kind of quasi level funding versus level service that I know there's a middle ground there, but because we have so many staff
in relation to the town. Um, >> right there just not a realistic number. Uh, but I understand the exercise and why it's up there, Nick. So, I appreciate that, but I think we're just on the we're beginning to talk about the the 2.0 version of that, which is realistic expenses that we might want to be thoughtful about.
>> Yeah. I might ask that if um you know if the town and the schools can can meet just to talk about again I think similar to revenue forecasts where you had all those numbers going back we should be able to have that for salary expenses going back the last 5 10 years of like
what just what what have we been doing I think to Brian's point like how we figure out how to cut out the FTE growth within that um would be important right because that's there probably years where that jumped much more because of FTE growth. Um, but I would think we'd
need to base this number off of you again what what have we been doing historically based upon those kind of contractual agreements. Um, and and I agree John with your point of the collective bargaining set aside. If we have that number here, I think that should be a percentage that's inclusive of both what the schools would need as a
set aside as well as what the town departments would need to set aside. And maybe two and a half% is still the right number to accomplish both of those things. But um you know we should we should make sure that's reflective of kind of set aids for all collective bargaining across the town.
>> I'm not sure you want to do that >> because you you've got a bottom line budget Mark. You don't want to I don't think you want to set aside uh a school's designated collective bargaining set aside. I didn't mean within a particular year
that it would be again a line item within the budget as much as again just how do we again maybe it's within the school's projected percent increase in salaries but just right collective bargaining agreements happen every 3 years right there needs to be a set aside uh as the towns are doing and so
where are we collecting that within the five-year forecast projection to know we need something here um and so again wherever I think this group that the town wants to to put that information whether it's the salaries category or
the collective bargaining set aside category. Um I I just want to make sure that that is that is captured and named that this this thing captures both standard you know step and lane changes and as well as collective bargaining set
aides for uh school um collective bargaining units. Yeah, we we've added that as a to-do um to de develop a revised forecast for that. Um time check. Does Does everyone have a hard stop in three
minutes? >> Can't go forever. >> Well, let's talk about the next half hour. Do we um Does any Does anyone have to leave at 9:30? >> I do.
Okay. All right. Um I think then being respectful of people's time, we're going to wrap up for now and pick this up um much sooner than we did the last time because I I think these discussions are
productive. So um pick up where we left off, which is uh we'll be at pick up with general expenses um next time. So, thanks everyone. >> Do we want to day and time or sorry,
>> that's the first thing. Day and time. Next day. I had two questions. Maybe I'll ask them first. >> Okay. >> Um uh I I mentioned once about doing a um budget summary like you know how we did it for the um civilization funds and
this and that like how you budget. I know we're kind of doing that now going through the forecast, but I wonder if we should >> I'd be happy to offer my um time to try to write something up on how we did the sales funds to how we would want to
approach the budget. That's one thing. And the second thing is we talked about well that's the first thing. Is there any thoughts on that? >> Can you say that again? You know how we did a write up for the budget stabilization funds and we did a write up for um free cash and stuff.
We do the same type of like policy I mentioned um for how we approach the budget which is kind of what we're doing here to some extent but like the theories behind you how you do it like where you want to be conservative where you want to be accurate those type of
things. I do think this affects it. Well, we're going through this now like we're talking about salaries, you know, like how do you approach that? >> I I think when we complete this discussion, we will have accomplished that. But let's let's wait and see.
Let's let's finish this discussion though. >> All right, that makes sense. >> Forecast. >> The other thought was we talked about a software possibly that would help. >> Yes. >> Forecasting projections. I just don't want >> Yeah, I think I think Winston has already committed the select board to
fund new software for Nick and for uh Treasury. >> Yes, we're we're going through >> we're going through the process of having conversations and having demos for a few different um solutions.
>> Great. Awesome. >> All right. Uh thanks everyone. We'll send out uh I'll check with Megan and see because we need a couple of things here. We need a regular meeting and continue this forecast assumptions discussion. So, we we'll
need to schedule both of those, but we'll back to you very shortly um with some proposed dates. Thanks everyone. Thanks. Thank you. >> Thanks, Nick.