001All right, thanks everyone. We'll call the meeting to order here at 8:03 a.m. Um, appreciate our guest today. Uh, so we'll start with that. The town administrator report on the FY27 revenue and expense forecasts. And you're going to screen share present. Uh, if you could I'm sorry. >> Great. Well, good morning. Thank you for having us. Um, I have a few slides here, not a ton. Um, but we'll just kind of talk through where things stand in our process. Um, some preliminary looks at the numbers, what we're thinking about for fiscal 27. Obviously, just just feel free to drop a question if you make this too formal. Um, but first, um, so we'll run through where we're at with fiscal 25 and then we'll talk about 27 a little bit. Um so fiscal 25 ended
002June 30th um on the revenue side and this talked about with a few different groups and select as well but we're about 3.6 um in excess of our budget on revenue forecast. I've identified some of the larger um items within our revenues that were kind of outliers. Um, and I flag these because most of them we consider to be kind of one-time um, collections for various reasons. Tax and leans and penalties and interest, for example. Um, we've seen a lot of progress from the Treasury and Collector's Office and and closing out some longer term outlying outstanding um, accounts that have not been up to date um, by keeping pressure up on taxpayers who are delinquent um, for multiple years. Um, so as those come in, obviously that's a one-time collection and going forward, we expect
003to collect their taxes on a regular basis. Uh, motor vehicle excise tax, we've been conservative on that. Um, year-over-year, we're seeing increasing valuations as anybody who had tried to buy a car in the last few years. Um, so that might be something where there is more of a new baseline. Um, but that was about $900,000 over our budget expectation. trash fees. We had a dollar increase on the trash fees in effect for fiscal 25. Um, so we were conservative in terms of forecasting what that might look like. Uh, just because we weren't sure what that impact would be in terms of our people maybe choose a different option, maybe change how they use the carts. Um, but uh, kind of normal service continued despite the dollar fee increase. And that that fee increase is now
004in place. Again, obviously festival 26 building permits. Um that department has stayed extremely busy which is good. Um the addition renovation experiences that we've been having have stayed high. Um what is a little unique about fiscal 25 is we had a number of projects start between um several all got building permits that year. So they had large payments in fiscal 25. So far this year, um, we've permitted or are about to issue a permit for 582 little 40B, which is 82 84 unit building. Um, but otherwise, we're not seeing necessarily the large projects. Um, there are a couple of larger projects still to come. Um, but they might not necessarily get their building permit in fiscal 26. Um, maybe in fiscal 27 depending on the timeline. Lastly, investment income. Um I we should just start
005renaming this but it is more interest income than investment um just the earnings on our dollars in um in in banks and elsewhere. So again high interest rate environment um large amount of savings on the books which helps um drive that number high. Uh this number has been as low as $50,000 even you go back four or five years. So, it's one of those that really does fluctuate and we've adjusted our expectations for that a little bit, but we do want to be cautious because that, you know, an interest rate environment could change starting to shift downwards. Um, so it's hard to do that in terms of a year-to-year basis, but um we take those revenues, we add our expenditures, and we had about a million dollars in unspent funds across various town departments. Um,
006you call them together. mostly with vacancies with turnover and um you know under spending in terms of needs of some of our counterparts which we appreciate from not spending a dollar just to spend them lastly um free cash was certified as shared um earlier this week last week >> um I don't if there's anything I should add in terms I don't think so just the audits pretty much wrapped up. They're just waiting for some information on the retirement system. But other than that, um that went well. Moving on to 26 and figuring out 27. So just uh keeping with the theme on the revenue side of the aisle uh for fiscal 27 um our preliminary forecast makes um some baseline assumptions. As you can see on the screen we assume we're increasing property taxes to
007the maximum of our ability under proposition two and a half. For new growth we our forecast assumes a million dollars a year. Uh that's in our fiveyear forecast as well. Um, our new growth value for fiscal 26 has been preliminary approved by the department of revenue. It's well above a million dollars as we've been the last several years, but we're in accordance to some of the conversations we've had with the state an outlier on that. Um, and that is driven by a few different pieces. Um, obviously new construction helps, additions and renovations, those have been high and remain high. We have a couple large projects which is good and those contribute. Um the fiscal 26 growth number includes for example the ice house 4B project fully coming online starting to subunit. So we capture a
008ton of growth related to this just that project alone. Um the other key element here is about a third of our new growth quarter is utilities. Um national grid been doing a ton of built and um ever source continues to replace line. So if that work were to slow down, we see our new growth number slow down too. So while we feel comfortable here today with new growth at a million dollars for fiscal 27, it's a place where we might have to revise our projection downwards just as there are broader potentially impact economic issues that might affect that if um some of our larger projects process through and capture that growth. There is an additional project like that. we might not have that um kind of baseline target, but for now we're at a million
009dollars for this 27. >> State aid, we've tried to stay conservative on state aid. So this is we've just plugged $132,000 increase on chapter 70. It it comes out to about $30 a pupil at 4,400 students, which it's it's a placeholder. It's a modest increase. I think it's about 1% if I remember, right? So we're not trying to get out ahead of our skis on that. Um and then unrestricted general government aid institution. So um hopefully our state aid numbers and the governor's budget which comes out January will be above that. Um but that's where we left it. Um for now local receipts, we just talked about local receipts a lot. Like we've we're under we are very conservative on those forecasts. We we maintain that. So we're expecting about a 1% decrease in in
010fiscal 20 forecast at this time. That's about $120,00 and right now we don't assume any use cash into the budget. The bottom line is you put that together that's about $4.2 million or 2.9% increase from our fiscal 26 expected revenues. Um, and that doesn't include any use of the operating budget stabilization fund that was included in the override, $700,000. And then Tabby also approved $2 million that fund. So there's no withdrawal right now contemplated in these numbers here. How do utilities relate to growth? So like or something. So it's personal property. Um and a lot of our commercial value here in town is actually utilities rather than buildings and infrastructure. So it's pipelines, it's poles, it's conduit, it's wires. So it's a taxable asset. The valuation is set by the state. So it's really just
011how many miles of X, Y, and Z do you have? And it's a calculation that the Department of Revenue says that you tax. Um so it depreciates very quickly. Um however it's it's helpful in caption it's the amount of pipeline work they've been doing sh like if you have a lot of gas man replacement gas replacement going off the last year. So that's just all the lines that we tax what% increase on local receipts that you're seeing. Like is there a simple way to explain what that would look like relative to the previous slide? Like sort of how you how much additional revenue came in. You're not in other words like you're not really adjusting your assumptions even with the additional >> no I think that's where we're spending some time to try to feel
012more certain about what we use um is that motivational exercise an outlier or should we assume that that is more like um some of the other items we can attribute to one time occurrences so it's just making sure we're not too dependent on actually show up um in future years. >> Nick, given um Thank you. And given what 25 yielded as a positive uh free cash outlook as well as revenue being 3 million higher etc. What is your expectation for FY26? We How do we build? How do how do we get Do you think we'll end in the same spot at the end of 26 as we did in 25 as a potential assumption or that's a big question? >> No, it's a good question. I think it's a little early. Um the large motor
013vehicle excise excise tax commitment is in January >> January. So like that's there's different times through the year where we'll have better information about where we expect to land. Um >> I think the treasur is continuing the efforts to collect on some of the older stuff. So you might see some of the tax lans redeemed and penalties interest still be higher than we've historically had. Um but at some time that's going to peak because you're cleaning up old stuff, right? So, um, it's really hard to say because we're only a few months into the year and it's not like these income streams are all like flat, right? Like there's peaks and valleys different times of the year that they come in. Like the trash feed are build out in July time frame. So, we should
014have a good read on the barrel feeds anyways. And then there's like the individual stickers that are sold. So it's I think it's a little early to tell. Um and I think the investment income still we haven't seen an impact from the any decrease in rates yet. It's all how she's managing the money too. >> Thank you. I don't I think where where we sit today, we feel good about hitting our budget. It's a question of how far above the budget and as the months go by we'll have a better sense of that. Trash fees in particular are on track and based on the first three months of collections we're at or above last year. So um some of the other items are more about espec especially on the building permits front you know the
015trend is still where it was. more about how many large building permit fees are we can get you know one um you know winter valley has a project coming up that might have a large fee that they they get a building permit for so it's that's more busy depending on the types of time but um we'll continue to moderate and continue to buy >> guess so the interesting isn't that a out. I mean, because it's pretty significantly over that something that you can >> I think if you go back three or four years, we were in we were below $100,000. So, it's like that's how variable it can be. Now, look, the treasur is taking trying to do everything she can to take advantage to manage the money. I think um I don't want to
016say aggressively but I think >> smartly yes because it's again it's not investments it's not like we're playing in the market um but it's just managing cash flow keeping an eye on cash flow take advantage of the savings on the books to acrue monies so I would be reticent to to make significant adjustments we have upward we've revised that projection upwards over the past several years um I would be reluctance to move more. Like we can feel comfortable about fiscal 26 that are going to be our target, but what is the market? Like that's really the question that we're trying to forecast. That's gets a little bit more challenging. >> And just keep in mind like the the revenue in excess of budget of 3.7. It's a lot of money, but as a percentage of
017our total budget, it it really isn't. So that could easily swing >> the opposite way if we're too aggressive on our revenue forecast. So we just have to remain to be conservative, you know, keep an eye on it, but it's really not that large of a percentage. So >> what is total revenue? >> Pardon? >> What is total revenue? >> It's over 100 million. Um >> private tax levy is about 110 million total. the general fund operating which is 145 million% less. >> Yeah, >> obviously there's some advantages having three cash in terms of like using them for capital improvements. Is there is there a target y like try and get to with like cash amount? We've obviously had much higher like y'all said than we we've been doing in the past few years of
018like over four million I think since last year was the last first time we were ever over four million from prior like graphs y'all shared with us previously. Um and so like that that's great in terms of what we can fund in but do you have a general target of what you >> my answer might be different than mixed answer but just the way we budget >> we budget to a zero surplus. So the way we budget overall, we're not budgeting to to generate free cash, right? We're appropriating whatever our revenue, but we are working on policies. >> So one of the discussion items we've been having internally and then talked about with the finance committee yesterday was um a lot of cities and towns have policies that set the goal for free cash generation
019each year. And so that it it's helpful because of that it requires that you keep conservative revenue forecasting budget um as kind of a foundational requirement of that. Um, so we're talking about internally whether it makes sense to kind of start having a target about that so that we feel comfortable holding the line on revenue forecast because now we have a policy that says our expectation is that we're going to generate at least 2 to 4% of the budget or 1 to 3% of the budget, whatever that kind of goal is. Um, but right now we don't really have metric for it. Um, other than just trying to stay conservative on the revenue forecasting, you know, a million dollars of this is unspent funds. Um, we appreciate every unspent dollar that don't spend, but we
020can't expect that. If we're fully staffed across all all the departments, then that probably could be drastically lower. Um, so we don't want to be in a world where we're having departments not spend appropriations in order to hit policy targets. Like that's the other side of it which >> is weak. So we're wrestling with that. >> And and the other half of that is in what is the target of free cash you guys like to have in whatever revolving account you would put it in? And when that's enough, would you scale that expectation back? >> When we're not a money-m organization as a town, right? We're supposed to expend the funds on services of community. But I'll I I just say I I appreciate the conservative revenue estimates >> and I would much rather be
021sitting here looking at a sheet like this >> that says we had to look at this. This is a one time thing because all those numbers will change for 26 up or down community. They'll change again in 27. So being conservative I think is always the best thing. Uh for sure. And so for those communities that have a policy around how much free cash they're looking to have, do they also have policies saying what they're going to do with the free cash? Because I mean I think like you're not just building up free cash just to have a bunch of money at the end of the year, right? So So I'm just curious like are they using it because they're saying, "Okay, we're going to do this with like our capital improvement budgets." >> Yeah.
022So generally it ties to appropriate uses of it as well, >> right? >> Um and then the other element is a lot of some communities don't appropriate all of it. So they might leave a million dollars on appropriate free cash after their town meeting. >> So they're already starting next year knowing you know regardless of what happens with the budget there's already we expect to hopefully have at least a million dollars in that scenario that do is going to certify as a baseline. So, it's it speaks to a more kind of holistic approach on it. Um, our draft policy right now doesn't get into like how explicitly free cash will be used. Rather, it says it won't be used for current operating budgets like sets that as a new requirement. But we use kind of
023the annual appropriations a little bit flexible rather than saying 10% will go to general stabilization, 10% will go to capital stabilization, 10% will go here. But it doesn't get into that kind of details in terms of the draft. >> So I understand Nick you said that there is currently on the books of guidance to not use free cash for operating. >> That's our draft policy that we've been working on explicitly says it shall not be used for. >> How do you feel left out as a person budget? >> Is that is would that be a challenge for your team? was that I'm sorry for the team when you're when you know that that that's a lever that people always like to take out if they need to take it out I guess is what I'm
024saying is that I yeah you know best practices are you don't use free cashations over the last several years with um COVID and different kinds of things you know we we went off hooks with that but to stick to best practices yeah it it'll always be a challenge in Melton because our revenues were revenue restricted, right? So, >> um if we have some large increases and uncontrollable expenses, >> it it'll definitely be challenging, but it's a good best business practice to try to stick to >> so that we don't end up in a situation with like another extremely high overriding. >> Okay. in the in the additional kind of context wrinkle I'll add to that is with the new operating budget stabilization fund that was set up deliberately to support the budget in the next
025few years that would be the source we would return turn to to support budgets rather than turn to free >> yeah so it's it is as well to an extent partially one-time money going into the budget but I we've set it up explicitly to do that to draw from it over the next 25 years to support our budgets ahead of any next year. So um rather than go to free cash to do that, I think our approach will be in years where we have high free cash is there an opportunity to appropriate additional money into that operating budget stabilization fund for use in fiscal third rather than directly into fiscal if that makes sense. >> That makes sense. Thank you. And that's kind of I think that's kind of where it's more intentional in the
026mechanism, right, of saying like instead of just taking from free cash, the free cash is going to be put in those specific buckets. And those are buckets that were that would be used to fund operations. On the expense side, these numbers here are I'll just add in terms of how we've approached the forecast. We didn't approach it from a perspective of what do we expect costs to be and let's plug those in. approach it from the inverse of saying what revenue can we count on and with that revenue count you know calculated what can our budgets support or what can our revenue support from budgets so that is where these numbers come from so I just want to be clear that um it's not it's not that we expect salaries only to grow by 2%
027it's more that if salaries go by two and a half% and all these other conditions the way we've mapped out the forecast the budget should be able to balance with the utilization of the civilization fund. So that's kind of the overall framework of these numbers. Um what can our revenue support necessarily what are our expenses? Um so for 27 as an example these are kind of the baseline numbers that we have but there's two and a half% of salaries 3% of general expenses across all departments. health insurance. I'll come back to um general insurance decrease or assessments on the cherry sheets at 2%. Um our debt service which is in our debt schedule I didn't get too much into detail on that but that contemplates significant increase in debt service over 27 and 28 are
028already pulled in to support um the capital projects previously approved. Um so it's it's going up like half a million in 27 half 28 in our forecast there. Um and that's already built into the forecast uh OPED. So we have an OPED policy for contributions to the other post-employment benefits trust primarily retirey health insurance. Um that's increasing at approximately two and a half% a year. Um bills of retirement we're fully funded. actually were in excess of full funding for about 2% 102% funded in the retirement system. One of the only communities fully funded in Massachusetts. So what we're doing with retirement right now is we're paying what's called the normal cost which is expectation of future benefit for current employees are going in to maintain full funding. In addition to that, contributing an additional million
029dollars to retirement to continue to build up those reserves so we don't experience any kind of all of a sudden come out of full funding if the market were to drop. OPED and retirement together under our policy $2.5 million will go to those two and grow two and a half% a year. So Milton retirement had zero additional dollars going. the entire balance of what we set aside for open retirement. But if built-in retirement crashes out of full funding and needs to million dollars a year, it has that available within the budget already. So it's um it's $2.5 million set aside for these long-term liabilities growing 2 and a half% a year and the split between those two may vary year to year, but that overall um commitment is expected to remain um going forward. If
030I can just add Milton Retirement, the funding schedule is set by the Milton Retirement Board. So that is outside of management's control. >> Congratulations. That's a big deal. >> Yeah, it was, you know, a deliberate choice of prior boards and prior retirement boards and prior warrant committees to to stay on track to keep to that. Um, so it's it's a nice accomplishment. And I'll just note our payments to retirement system a couple years ago to get to full funding were in excess of four, you know, $4 to5 million. So when we hit full funding, we held on to $2.5 million of that, but the balance flowed to the rest of the budget as savings to be used by operating budgets. Those were consumed by operating over here. So, we have savings on those long-term liabilities
031that have already been absorbed elsewhere in the budget and we're safeguarding that $2.5 million to keep making progress. Um, I don't mean to get too detailed on it. But the other thing is the at our ratings call with S&P this year, they were very focused more so they've been in the past couple years on OPED. So to have a a policy and to be adhering to it is going a long way um in their eyes and they it's there was a focus on on the call as well as in their report that they by the public >> which we maintained our AAA but >> I still um lastly uh utilities. So utilities are captured within the general expense. I just call it out specifically because there's been a lot of public attention to electricity costs
032um nationally, locally. Um the good news is that our electricity supply contract which is up in December 26. Um we're able to renew that for a further three years and our our supply cost is going down. So right now we're paying 13.7 cents a kilowatt hour. After summer of 2026, we'll be paying 13 cents a kilowatt hour for a free year. So, that's a locked in rate, which is solid. We are expecting much more um pessimistic news just if you read everything that's going on, electricity costs, and you're looking at your own utility bill. >> That said, that's only half of what we pay supply and distribution on the electricity side, >> you know. So, we're going to see savings about $50,000 across all of our electricity accounts on utilities. However, um our broker fully
033expects that those savings are going to be not by increase in charges on the distribution size of the bill. So for utilities, we should not be budgeting uh any reductions in 27 unfortunately um at least keep them um flat if not a slight increase to to acknowledge and that potential increase uh on the bill. So, some good news, some not good news on gas. Um, so again, gas is also up November of 26th. Uh, right now, the recommendation from on the energy markets is to actually not enter into the long-term contracts, but to go back to the utilities >> for this winter and let not this winter, next winter, and let's see where the market goes. A lot could change between now and then. Um, but right now, we're not in a position to extend
034that contract. They think that for fiscal 27 gas supply cost should be flat but again um the utility national grid in this case has been increasing its delivery charges. So those are expected to grow 5 to 7%. Um and roughly that's half the bill half the supply half it delivery um not necessarily exactly but that's just where um utilities are. I just wanted to kind of draw that out a little bit because of the kind of public attention electricity costs are getting. So stable is good or not quite stable but we're not also experiencing passive increases. So that >> yes health insurance um I that's the the hard one. Um so I'm just gonna go into the health insurance in a little bit more detail here and I'll come back. Um so this is at
035we had a 14% premium increase for fiscal 26 in addition to our challenges on health insurance as we were building 26 budget was the high premium increase but also much higher enrollment numbers than we had seen. Um so the fiscal 26 budget resets our enrollment forecast to where we are. So I think the number is we expect 712 um subscribers. We're at that now. Um so we're remaining kind of on target in terms of overall enrollment. Um this year I just one kind of trend we're noticing is a lot more um employees moving over with open enrollment to family plans rather than individual plans. So in July when the new after open enrollment we saw a significant increase in family plans um which are much more expensive than individual plans. So, our overall enrollment remains
036on target. Um, we're monitoring that on a monthly basis, but um we'll have to keep that an eye on that throughout fiscal 26 as we approach 27. The premium front um we've had good experience on premiums the last four or five years that changed with fiscal 26, a 14% increase. And the news on this is that we should expect similar for fiscal 27. Um the Mass Municipal Association has been extremely focused on this over the last couple months. I've linked a couple of things here. The executive director wrote a report um in an article about it that he shared widely. Uh two weeks ago they had a forum at Renttham that I attended on healthcare costs. The um director of the GIC was there, a representative from Blue Cross um and the director of the
037Maya Health Trust as well. And they're all expecting premium increases and and cost to continue. I pulled a couple of takeaways from this which is that one of the interesting components of the presentation was that utilization had been pretty flat but it's just the costs that have gone up and then in 24 and 25 utilization also started to increase. So utilization and cost are increasing which is a double-headed storm for us. Um GIC had a 12% um premium increase last year. uh building again 14 um and that they're just seeing that you know through co and in the first couple years out of it trends were at a four to 6% premium increases and that shot up um across the board. Um something we're going to have to continue to monitor. Our forecast assumed 7%
038year on health insurance per year which is well above what our recent trends have been. So we felt pretty comfortable with that as somewhat conservative. Um but we may be wrong for fiscal 207 unfortunately. We'll have to keep an eye on it. Um further so just for more context with selfinsured um so we contract with Boston Pilgrim. >> We pay rene claims out of that trust. Um so as claims increase and costs increase it puts pressure on the trust which turns to us raising our premiums. The worst case scenario would be that cost so fast outpace our premiums and collections that the trust is imperiled and maybe not solid. So like that's the worst case scenario. By doing the 14% premium increase we expect to get through 26 without those challenges. But because we're self-insured,
039um the risk in terms of who's having the trusty and solvents with the town um and we have stop-loss insurance. So like for individual high claims costs, we pay the first $175,000 for a claim. After that, the stop loss will kick in. So we'll continue to pay that claim, but we'll get reimbursed at the end. Um so that's just broadly how it works. Uh >> how much is in the trust? I think it's don't quote me I think it's somewhere around four million they recommend what like three times >> your monthly claims. Yeah. >> Yeah. >> Thank you. >> In this environment is the stop-loss insurance like foster >> we experienced like a 10% increase on our stop-loss insurance. um that's about a million dollars on student. So that has so we've seen that increase
040and in addition what they will sometimes do is identify claims and say these claims we expect to be very expensive. So built in for these particular claims the stop loss number will be higher. So there are a couple of claims where it's not $175,000 but it's like 330,000. So but now we own for for those particular points we own first several hundred,000 on them and then the stop loss will step in. So that's a way they shift their costs back >> case by case >> through the annual procurement that was one of the um discussion. Um so just as an example I shared what our plan costs are. So the most popular plan is the Blue Cross family plan. Total cost is $35,000 a year. We pay 76% at 266 and then the employee shares
0418,400. Um and you can see where the trend is more family plans obviously stress expensive. Um and just to put it in overall context for fiscal 27 every 1% on the premium is about $125,000 increase to our health insurance budget. So, um, we 27's preliminary forecast include a 70% premium increase against the entire health insurance budget. So, it's a little bit more than a 7% premium increase, but that's kind of the ballpark. Anything above that, we didn't really contemplate and would have an impact on the total budget. Um there are things the town can do to sh costs through plan design changes um that there's um state law that allows the town to implement plan design changes um through if you follow a certain process and the unions to discuss it. So that's one potential
042pathway but it it doesn't mean our cost will be less. It just means that I mean the town's cost might be less but it's a shifting of the cost rather than cost. So I just be clear about how that works. So it' be likely if that were to happen, it would be looking at co-pays and deductibles and finding ways to to increase those. The town is able to enact plan design changes to match the most popular GIC plan. So it's not like we can go to some high deductible plan only. Um but we would have to match whatever the most popular GIC plans, which is a little bit higher co-pays and a little bit higher deductible than our plan. Can you go to a high deductible plan with a reimbursement account attached to it? So
043we always see the same net. >> The town in theory could offer such a plan. We couldn't replace our plans with that. So the most the highest deductible right now it's $400 individual 800 family. The most popular GIC plan is 500 individual,000 family. So that's the extent that you can go to. The GIC has more options. We have only two plans and they're pretty much same. Harvard Pilgrim and Blue Cross, they're they're almost mirrors of each other. Um the GSC has more options. So it has high deductible plans if the employees choose that that option. They're not required to of course, but they can. >> Don't we have to offer um a high deductible plan for the I don't know the fact that you're at 76% like there's a state requirement around affordability, right? Being
044able to offer a plan that's certain cost max out for employers that can >> we're required to offer a PO plan which we do which is not on here but that is a more expensive beyond that we're not required one other thing on health because I know this is a GLP1 is that something that like those >> Yeah. No, it's it was a key it was a huge discussion item that that forum. Yeah, >> I'm going to North County has a town managers group and we're meeting today and somebody put that on the agenda to talk about. Um right now they're covered under our plans. >> Blue Cross is phasing out coverage entirely. >> Harvard Pilgrim, I believe their plan is take the option. The only one they'll cover is they're going to limit it
045to one. I forget which. Um they're talking like that was like 2 to 3% of our premium increase was just the coverage of the GLP ones. Um so we're following kind of what how other insurers and other cities and towns are going to it. Um what are GLP? Oh, sorry. It's like the >> expun challenge. >> That 30% of your insurance. >> I think Blue Cross is not fully eliminated just for weight loss. Yeah. >> Yeah. Sorry. >> Yeah. Yeah. For weight loss coverage. Um they will offer it if we have a rider to our plan which sets out what the coverage requirements are. Um it's a it's been a huge cost item. Hopefully with you know the insurers setting more limits in terms of what they'll cover then the providers and the pharmaceuticals will
046find ways to reduce their cost to try to keep it covered. I think that's kind of the bigger picture market um battle that we're seeing play out on a kind of ins town by town level. I I don't know what our approach will be but it's been a significant cost driver. I I I don't want to talk about these as the cost because >> we don't talk about cancer drugs that way. Um so it's hard to talk about one particular treatment and I thought um the director of the GIC at that at that forum put it well. He said this is a very successful proven treatment for a chronic health issue. So we have to be these very carefully how we're going to approach them and cover them. So, we're monitoring what the GIC does
047and what the Maya benefits trust, which has a number of cities and towns in it, will do um throughout the year, but it has been a huge cost factor. Nobody's really talking about what the savings events like they must be avoiding costs as well if folks are avoiding becoming diabetic if they're improving cardiovascular health. So, it's like it's kind of never. >> Yeah. The challenge is you're avoiding costs that haven't happened yet. >> Exactly. They're coming in 10 years, right? Yeah. >> So, it's it's a very it's a tough one. It's a it it is expensive. It's very expensive. There's no doubt about that. But the other elements of it are kind of too right now. Um uh so yeah, just I just I wanted to focus on health insurance because it's a huge part
048of our budget is a the biggest concern we have right now about 27 will be how health insurance shakes out. Um but anyway so for just the overall takeaways the kind of broader macro forecast stuff obviously hard to impact right now everything appears stable hopefully that continues. Um we talked a lot about proceeds that they're trying to budget but it doesn't necessarily mean all those operating budget operating revenues that we can depend on. Um we talked a little bit about the operation fund and how we're going to have to draw that down carefully over the next several years, some policy parameters and guidelines behind that. Um that work is started. Now I didn't talk at all about federal funding cuts and obviously it's an area concern for both um our budget as well as your
049budget. We have less that we we don't have a lot that we rely upon operating expenses. I know it's a little bit different to the school budgets, but where we expect to see that impact is more likely on state aid. Um how the state budget responds um and what they're able to fund a nonprofit as well as likely defining grant opportunities. One of them is a small grant, the community compact grant program, which is a great program. You generally got like $50,000. So it wasn't big dollars, but it was a very easy accessible grant for cities and towns to take advantage of. I think it was on the budget at $2 million a year in the state budget. It didn't get any further with fiscal 26. So, it's a very small example, but it just
050goes to show as the state tightens its budget. It has these downstream effects on grant programs that healthcare we talked about. Um, and then debt service I I spoke about broadly. We're we're trying to work on our debt service schedule. Like I said, it contemplates a significant increase in 27 and 28 already worked into the forecast. Um, and it's driven because a number of our larger, more expensive projects are all going to end up happening at the same time and they didn't get phased like we normally would expect them to be. Um, the lower galler project talked about endlessly. Um, that has a hearing today at the office of appeals and dispute resolution with mass DP for the butter appeal. So, the hearing will be finished today. posting briefs and then a decision is expected
051sometime. No real timeline on that. So in theory that may not even in we're optimistic it should take place next year and that's a $2.4 million project now that we're spending in summer 26 um fall 26 potentially that if that order doesn't come out to the town's benefit in a timely manner we may lose another construction season that we're pushing that back again. um a lot of truck for $1.6 million that was approved in June of 22. It's expected to arrive in the spring of 26. So again, that's a four-year lag from when it was ordered to arrival. A new engine which was approved at the 2023 town meeting about $850,000. Again, expected to arrive in the spring, three years after being ordered. Um the Cunningham Collie car project was just a larger, more expensive
052capital project than we typically funded through the operating budget. Um you know, we've budgeted $5.5 million. We should be well under that. Um under four million, we think. So that's all good news, but it just is a larger, more expensive project. Typical. And again, they're all kind of coming at the same time. Um so anyway, for the 27 budget, I wouldn't expect a lot of additional debt supported projects. um more likely will lean on that free cash to support that uh capital budget. Um but I just wanted to flag service because it's we're going to see a spike in in debt service. We typically like to see a more gradual increase. Um but the spike is because those budgets have been pretty flat the last couple years. So, you know, we've avoided cost the last
053couple of years, but it'll catch up to us at 27 28. >> Nick, are you saying like on the the trucks and the engines, we're not paying the debt service until those vehicles arrive? Yeah. So, we appropriate the money, we sign a contract, and then we pay on delivery >> in the Cuttingham Collico project. Um, is that the both phases because we'll be doing phase two in >> 26. So, we expect to borrow that fully next fall after completion. We typically borrow August, September. So you should be not necessarily completely closed out but knowing exactly budget and um so again we will have we will be under budget based on the $5.5 million appropriation which is great well under but um that's just kind of the overall take questions. Can >> you just quantify? So
054you're you plan for a 7% increase in health insurance. I don't know what that is just in dollars, but let's let's assume it's double. What what is that actually? >> So I think so it's 125 grandish per 1%. So that would be maybe 800 grand and then another 800,000 What is your your renewal timeline? You're not on a calendar. Your renewal or your fiscal year? So, every July one is coming. >> Okay. So, you'll start you won't really have this information till February, March. >> Yeah. Typically, we land on a premium increase by by the beginning of March generally. >> Yeah. It's always one of the >> last things things that come in >> for the budget because we're always trying to look at the act the most recent actuals >> yes I'd say March
055March expect that if the town is going to consider and talk about plan design changes that process have to start sooner and there would be some savings in the first year um under the plan design change rule a quarter of your savings in year one have to returned to the employees. So, it's not, you know, you're not if it's if you can save 3%, it's not necessarily 3%. >> That has to be shared. >> Nick, you're negotiating with your unions right now just like we are with right now. >> All our contracts are up and expiring. >> So, would it be so would it with the larger strategic value of not taking that issue up during a negotiation be something that >> I think so. And what we're I I think where we're at right
056now is really just wanted to share information about health insurance before we even contemplate anything like that. So, I think we're just trying to get it out there that we came off a tough year. >> We're not seeing anything that's going to say it's going to be an easier year >> and just being upfront about that. >> Yeah. >> And the other piece is plan design. We because there are limitations on how much of a design change the town can make. what what are those savings actually going to make? You know, like I said, it's a we're at 400 800 deductible. The GIC is 500,000. So, that's it's a little bit higher, but it's not significant. So, working with our consultant to get a sense of what those savings might be is is a conversation
057we haven't had yet, but something we we may have to. So uh big picture takeaway is is uh first of all thank you for all this really detailed information that's really really helpful and uh when you're when you showed that slide if you know looking at the expenses from a percentage increase versus what they actually are is is that is that is that slide basically saying absent health insurance if we all skate in our lane for next year budgeting wise that we all relatively have a a healthy budget to a number that we can enter into It's within the fiscal revenue projections. >> Yes. But it assumes usage of the operating budget stabilization fund of about a million dollars. So if we're going to avoid maybe $800,000. So the way we set up the budget
058again and when we talked about the override was contemplated drawing down that stabilization fund. So the first withdrawal would take place in 27. we hit these numbers, we would have to withdraw about $800 to $900,000 of it. In year one, there's 2.5 million. There's 2.7 currently and every year another 700,000. >> If we hit these numbers, these percentage increases, that's assuming that we're using 800,000. Yeah. >> And so the 2.9% revenue increase from last year to this year >> from this year to next year. Yeah. >> I'm sorry. Yes. From this year to next year, it would then be 800,000 on top of it to match these expense projections. >> Correct. >> Okay. >> And then that is operating under the assumption that we haven't done anything with the free cash that was just recently
059certified. Correct? >> Y. Okay. >> And it it doesn't contemplate any use of free cash. This these our expenses don't include any capital. So it's not like there's a million dollars in capital in here that's not funded. It's it's not >> So there is potential though that because there is free cash that some that free cash could potentially be put into the operating budget stabilization account. Yeah, >> question because we're adding you said 700,000 to the operating budget on basis take out 800,000. So the delta within this scenario is minus current school >> and the other so the only other component of the fiscal 26 revenue budget that's not set is our final duty. So like I said it's been preliminary approved by department revenue. It's our budget assumes a million dollars. We're going to
060be over that. Last year it was 1.29. We're going to be over that. So that that new growth number and I'm being reluctant to talk about it more explicitly because the board of assesses will talk about it on their meeting Monday. That's all additional new revenue to the budget 26. So that then carries forward into 27th. So if it's $300,000 now, and I'm not trying to muddy the waters anymore, but in theory, if it's $300,000 over budget, then that means there $300,000 additional fiscal 27 to use. >> That's not contemplated right now in this scenario. And then that operating budget stabilization fund, which are all is less. >> Obviously, that'll all be by health insurance on the worst case scenario, but that's just an example of how that would play out. And so realistically that
061health insurance so this is just the projection that was originally built in but realistically knowing what we know now about health insurance are we saying that that percentage >> last or this year it was 14 right y >> so >> that could go up by another $800,000 >> it could be and I we haven't put a number on it yet we haven't >> nailed down what we think conservative forecast for that should be I think we're starting to think it should be at 14% for now and hopefully it'll be less than that but in order to start high and ratch it back down that might be in this first kind of reiteration of forecast yeah 14% 20% so it's crazy it's crazy especially if you're not doing janies do So, Nick, are you approaching your
062budget season this year with a um with your department heads where you would generally say we're moving everybody, we're rolling everything over and then tightening it up from there to match this kind of forecasting for expenses? >> Yeah, we have not stipulated. We've asked departments to return what they think their 27 budget will cost them and then we'll put it together and try to hit our metrics from there rather than have individual departments try to fall in under these parameters saying give us your requests for 27 and then our job is to as a whole >> come in on on budget. But in general, we're telling man, roll over your personnel and don't add new people. No supplemental request, but we call it like a level service plus contractual increases. >> Yeah, that makes sense.
063>> That includes not being filled, >> but they move they move over, >> right? But if they were >> Oh, I'm sorry. if they're vacant today but funded all funded positions remain in terms of the initial budget request. >> So will will everybody over have FTE wise no adds to FTEES and just assume contractual obligations. >> Okay. Thank you. >> And maybe continue to talk about things that we feel we need that we can't just so that those things be mindful with time. Um, any other questions for our guests. >> Thanks for coming in. >> Yeah, really appreciate it. >> Of course. Anytime. Sorry, I wasn't coming optimism, but >> I'm content with that budgeting. I appreciate the conservative approach to revenue and >> the thoughtful uh stabilization, the operating support and um I think
064it's really great. >> Oh, yeah. You guys are doing Like if you take health insurance out of the equation like it's not a bad report and >> health care is in a crisis this country doesn't do most >> right yeah it's we can't solve it on our own that's so it's really about >> shifting costs rather than trying to buck anything obviously the federal stuff will have a cascading effect on the whole insurance market more so than just in this year >> they just laid up a whole bunch of Department of Education folks. It hasn't even hit front page yet because >> other things on the front page. >> It's my page. >> It's amazing. >> That should be a very we should be. >> Absolutely. >> Thank you. >> Uh great. Um know we're
065at time. I would like to jump down to just uh coordination. with the board committee. Um so question is when do we want to leave to come on a budget 101 presentation at a full committee and meet in the evenings 7 o'clock. We've talked about we were not able to do it the week of the 28th because the 27th because of town meeting this week y'all are going to select the word and so that was off the table. So the week conversation with committee was the week of the third school committee on the 5th preference was the fifth school committee. Um, so I guess the question is available the 3rd or for the 4th or is there a reason why you really want to push for the next week? I think the committee's preference with
066the chair is the third town election. >> Yeah. Oh, they didn't realize. So, we have um school committee on five schedule. >> That's right. >> Join family's birthday. >> Is that your birthday? >> 45. Making it all work at a young age here. >> Bring cake. >> Yeah. Okay. Uh I will move back to them and tell them the third November 3rd as well. Thank you for that. Uh great. Um again we are at time as I was worried we would I know you put in the folder the updated budget philosophy um priorities. Anything kind of briefly you want to hit on this? >> I did. >> Yeah sure. I uh took your feedback related to ensuring a long-term sustainability component. So we started with that in the narrative and the philosophy at the beginning
067of that section and then we added a priority number one for the sustainability piece. I want to thank Katie as someone good shifts for that. Uh we did again show this to the uh leadership team as an example of how we're approaching the budget. Uh this is something that can be uh continually provided that it's from this group. U certainly open to that. The goal again is just to with uh with the budget season coming let people know what we're trying to do and why and give examples just so we can provide directionality before we get to the numbers pieces of this. So I think it reinforces the uh we need to be good stewards of the financial uh work that we do uh and it priority and then it allows to teaching work as
068well. Would this then be shared in um that budget coordination commission? >> We could certainly do that. >> Just sort of I think it sort of it it feels like it comes out in a very positive way of some of the discussions that we had at the end of the school year last year with like coming down best practices um just might be something that kind of wraps the discussion. I don't know might be helpful. So we're with them this Friday. Uh this has not gone to the full committee. So I could to everybody today saying this is something just in terms of the document. >> Yeah. I don't it's not on the agenda for Friday on the budget coordination committee. But to the point like it's chair yeah next Wednesday the full school committee.
069>> Okay. figure it out and second >> and I think we were correct me if I'm wrong but I think with all the budget documentation and budget reporting we are trying to share that on the district website as well that's just kind of like a one place >> that has kind of like all the information one localized place with all the information so I think just having that as kind of like our our landing page page for everything that we're working on that we've shared internally here and then at the full school committee just as an access point that people can please feel free to go there and >> see what so you saying Katie and I I will agree with you if this is what you mean it it'd be nice to have a
070place where we could always put that committee to say it's right up there too so we're posting it there in advance of even giving it to them because as long as it goes through on our sub finance and our school committee >> and everybody has eyes on it then we can continue to post things. It's just a layer of transparency that I think helps. >> Yeah. And we did highlight I mean we shared the calendar which processes established. So that's great. >> Um I do want to be mindful. I think we'll have time next Wednesday to chat about this a little bit further if members want to review it. Uh and any final questions? Um feedback then we can talk about this on this committee agenda for 1022 and then next week we'll also do
071the quarter one. Anything else we need to cover for Okay. And then the 29th is the discussion for the following accounts. next week too about the future meeting dates in November. Um >> let's just Wednesday or the meeting prior to the warrant committee. >> So that be a good shared >> the presentation that we're going to present to this committee. >> Yeah. All right. Um, meeting minutes. Charlene is poking me on those, so I need to get those together. I was hoping I could just do it during town, but I might I might need to do those soon. Um, so I will work on those. Um, that's it for today. So unless there's anything else I will make a motion to adjurnn >> second. >> Uh all in favor. >> Thank you very much. >>
072Thank you. Thank you.