Finance Committee

Finance Committee Meeting Agenda & Meeting Packet Wednesday, September 13, 2023 7:00 PM Meeting will be held at the Municipal Building 2nd floor, Council Chambers 355 East Central Street A NOTE TO RESIDENTS: All citizens are welcome to attend public board and committee meetings in person. Meetings are also live-streamed (and archived) by Franklin TV on the Franklin Town Hall TV YouTube channel. Meetings are also shown live and on repeat on Comcast Channel 9 and Verizon Channel 29. In an effort to maximize citizen engagement opportunities, citizens can participate remotely via phone OR Zoom. Link to access meeting via Zoom for the September 13, 2023 Finance Committee meeting: ● Zoom Link HERE -- Then click “Open Zoom”. ● Or copy and paste this URL into your browser: https://us02web.zoom.us/j/86521484389 ● Call-In Phone Number: Call 1-929-205-6099 and enter Meeting ID # 865 2148 4389 --Then press # ● Please be sure to include your name in order to be identified and let into the meeting. ● You will automatically be muted upon “entering” the meeting. In order to speak, you will need to “raise your hand” on the Zoom platform and request to be unmuted. Agenda 1. Call to Order 2. Public Comment 3. Introduction of new members 4. The Bill Dowd “Deep Dive” Series a. Five Year Fiscal Forecast Budget Model b. MassBenchMarks September 2023 Economic Outlook 5. Appoint four (4) Joint Budget Subcommittee members 6. Future Agenda Items & schedule for the year 7. Recurring Business: a. Approval of Minutes i. May 8, 2023 ii. May 10, 2023 iii. May 11, 2023 b. Stabilization Account Balance 8. Adjourn  Memorandum July 26, 2023 To: Joint Budget Subcommittee From: Jamie Hellen, Town Administrator Amy Frigulietti, Deputy Town Administrator Re: Preliminary Five-Year Fiscal Forecast Budget Model _________________________________________________________________________________ Attached is the latest five-year fiscal forecast for Fiscal Year 2025 (FY25) through Fiscal Year 2029 (FY29). This is a preliminary model based on a series of assumptions outlined below. These assumptions are based on Proposition 2 ½, trends, market conditions and a couple strategic initiatives (mainly capital facility and infrastructure costs). This forecast is only intended to be a guideline for strategic budget development and discussion. It is important to emphasize that if the Town has further needs for bond rating evaluations, items will need to be cut out of the budget in order to demonstrate to the ratings agencies a solvent, balanced budget. The current FY24 Budget baseline is highlighted in light yellow. The five-year forecast is highlighted in light blue. The sections highlighted in light green will be the center of the discussion at the meeting and represent the most challenging areas in the next five years. Revenue assumptions The model makes the following revenue assumptions: ● New Growth - The model assumes $1,100,000 in annual New Growth revenue from year to year. Town policy is to use a ten-year aggregate average for annual new growth calculations. While this number will fluctuate, the town has seen a drop in private sector and residential homeowner property improvement investments in recent years. There is a lot of risk in the marketplace due to supply chain uncertainty, high interest rates, inflation, and increasing costs. The model assumes an increase in New Growth. In FY24, New Growth revenue is expected to decline. FY25 could see a similar decline. For those interested in reading analysis about the Massachusetts economy, please take a look at the UMass Donahue Institutes’ MassBenchmarks series here. This publication represents a coalition of economic experts, including our state's most preeminent financial and academic 1  institutions, who publish their independent analysis of the Massachusetts economy. ● Tax Levy - The anticipated tax levy growth increases by 2.5% per year. Staff anticipates a reduction in the tax levy of approximately $630,000 over the next five years, due to debt exclusions “sunsetting” off the tax rolls as projects are paid off. ● Local Receipts - The model assumes a 2% growth in local receipts per year. ● State Aid - The model assumes a 1% growth in state aid per year. Education aid from the state has been well documented by the town for a decade. The public should not expect a large infusion of state education aid in the foreseeable future. ● Other Revenues - The model assumes a 2.5% increase in indirects per year. The model assumes a 2% increase in state assessments per year. Expenses Assumptions The model makes the following expenditure assumptions: ● Assumes a 2.5% Cost of Living Adjustment (COLA) for all municipal personnel line items each year for five years. Please note most union contracts, including FEA, Police, Fire, DPW, Custodian, and Library expire Summer of 2025. A 2.5% increase is modeled to stay within the tax levy. ● The Franklin Public School district budget increases 2.5% per year, or approximately $1.8 to $2 million per year. ● All municipal expense budgets increase 2.5% per year. ● Norfolk County Retirement System budget assumes a rate of growth at 5% and health care costs are projected at 7%. ● A full year assessment of $1.5 million for regional dispatch in FY25 and a rate of growth of 2.5% each year thereafter. ● Tri-County Vocational School building project estimated assessment of $2.1 annually for 30 years at an interest rate of 4.25%. The Town will have to consider funding this project through a debt exclusion vote at the ballot. A debt exclusion will increase taxes for citizens over the next 30 years in order to pay for the new school building. Tri-County is entering the Massachusetts School Building Authority (MSBA) process now and a districtwide authorizing vote (on the project, not the financing) is scheduled for October 24, 2023. The financial forecast illustrates in the light green section an increase of almost $2.1 million in FY27 for this building and a 2.5% increase in the following years. Given the construction and planning processes, this will likely not be the funding schedule. However,it is important to put this project in the model as a placeholder to illustrate costs as well as competing demands. It is important to note that if a debt exclusion is not passed or another financing mechanism is not found, the town will see structural cuts of about $2.1 million in FY27 and beyond. ● Includes anticipated borrowing for projects that were authorized by the Town Council in 2020, 2  which includes the Washington Street sidewalk ($3 million), High School improvements ($2.5 million, including visitor bleachers), Remington-Jefferson remodel ($4 million), and recycling center ($4 million). These project estimates will need reauthorization to accommodate for a 25% increase in costs from the original 2020 authorization. Of note,these numbers are preliminary and could be greater, once finalized. Staff anticipated a 4+% interest rate for these projects, even with our AAA Bond Rating. There is also $1 million authorized to borrow for the Parmenter School’s mechanical upgrades. This is NOT included in the model. A review of the costs to rehabilitate Parmenter needs to be explored at a deeper level, as Parmenter will need a new roof, mechanicals, and other improvements. If Parmenter is to maintain its use as a school for the foreseeable future (meaning 20-30 years), then the community should expect a complete upgrade of approximately $5 million. The Town will need to borrow for this project as well. It is also important to reference that our staff capacity may not be able to coordinate this number of capital projects in such a short time. Also, the debt and interest line items have quickly decreased the last two fiscal years due to sunsetting debt exclusions and other borrowing coming off the books. The community is going to have to make some judicious decisons and prioritize projects in the coming years. ● Includes the borrowing for the Fire Department ladder truck, authorized earlier in the year. What does this model NOT include? A short list of items that have been discussed publicly in some variation (not in this order): ● Costs associated with the Police Station and Davis-Thayer Building. These projects will each cost tens of millions of dollars and will certainly require debt exclusion votes of the public to raise taxes (and then sunset). ● Additional strategic investments toward Franklin Public Schools. ● Additional public infrastructure costs for roads, sidewalks, parking lots, trails, and green energy commitments. ● $500,000-$1,000,000 in additional annual capital needs that have been requested to be put into the operating budget as annual operating costs, such as public safety protection gear, equipment, fleet, vehicles, and school curriculum. ● Funding relative to an increasing demand and reliance on technology. Whether it's cyber security, computers for students and/or employees, the proper recruitment and retention of exceptional technology staff, or required fiber and equipment upgrades, technology is a necessary cost driver. This is an area of significant underfunding, and the Town has not invested nearly enough in what is needed to build a sustainable technology environment. ● New investments in social services, regional transportation investments, personnel, clean energy, or any of the other requests the community may have. ● Off-budget accounts, such as utilities and community preservation. 3 Where do we go from here? The community has several choices to address public school finance: 1. The municipal and school departments must live within the means of 2.5% revenue and expenditure growth. Ultimately, this presents challenging choices, but is the most sustainable option at the current time. 2. Work toward an override ballot question to permanently raise property taxes to pay for a defined set of service investments. 3. Shift resources from the municipal departments to the Franklin Public School Department. 4. Redesign the service delivery of the School Department. In other words, the District will reevaluate what services it offers, what is required, and what are the projections moving forward with cost drivers. One exercise that would prove valuable for the Franklin Public School District is to create a five to ten year strategic financial plan that addresses the balancing and shifting needs in public education with considerations given to the district's declining enrollment. The model, as shown, illustrates a significant structural deficit in FY26 and beyond. FY25 also shows a deficit, but appears manageable, due to healthy local receipts and stable new growth. Barring any unforeseen global circumstance, FY25 will likely be manageable. The community has a flood of expensive projects and competing demands coming up in a very challenging market to borrow money. The Town does not have any unused tax levy capacity, and has rebuilt its reserves to a baseline level in order to obtain a AAA Bond rating. Town and School reserves should not be withdrawn. While it may feel like a rainy day, it is not. The future likely holds more turbulent waters given the geopolitical state of our world. The Town of Franklin (and the Commonwealth of Massachusetts) currently enjoys some of the best overall quality of life in the United States. As demonstrated again this month, it is rated as one of the safest communities in the country against violent crime. The community has an elite school district with exceptional teachers and educators, incredible special education services, championship athletics, and diverse extracurricular and recreational opportunities, a vibrant and jam-packed senior center, and a public library that is second to none. The community has worked hard to rebuild its most critical infrastructure over the past 2 decades to ensure quality and clean drinking water, great roads and sidewalks, exceptional parks and grounds, and to ensure the community has plenty of sewer capacity for the next several generations; hopefully another 100 years! The Town has preserved over 200 acres of open space in the last two years and has been awarded the highest bond rating at AAA for incredible financial management for the first time in the Town’s history. The community enjoys a healthy, strong and supportive social fabric with events for all ages, economic classes and tastes. The Town has a robust diversity of retail shopping, restaurants, basic needs, social services support, and ammenities. Franklin also enjoys a government that shows its citizens that it can act in compromise, humility and a dedicated focus on decisions that enhance the quality of life in the community. While many very difficult decisions will be here for the rest of the decade, we also think it is important that the community recognizes, and does not take for granted, the current state of the town. 4  TOWN OF FRANKLIN FIVE YEAR FISCAL FORCAST FY24 THROUGH FY29 Date: August 2, 2023 BUDGET FORCAST FY24 FY25 FY26 FY27 FY28 FY29 TAX LEVY Prior Year Levy Limit plus 2 1/2% $ 89,436,897 $ 92,974,882 $ 96,426,754 $ 99,964,923 $ 103,591,546 $ 107,308,835 New Growth 1,270,305 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000 90,707,202 94,074,882 97,526,754 101,064,923 104,691,546 108,408,835 DEBT EXCLUSIONS Keller-Sullivan 376,050 360,325 - - - - Horace Mann Issue #2 280,000 270,000 260,000 - - - High School Issue #1 2,878,163 2,879,488 2,880,588 2,879,088 2,879,888 2,877,888 High School Issue #2 151,563 153,063 149,313 150,563 151,563 152,313 3,685,776 3,662,876 3,289,901 3,029,651 3,031,451 3,030,201 TOTAL POTENTIAL TAX LEVY 94,392,978 97,737,758 100,816,655 104,094,574 107,722,997 111,439,036 STATE REVENUE Chapter 70 School Aid 29,191,961 29,483,881 29,778,720 30,076,507 30,377,272 30,681,045 Charter School Reimbursements 1,019,377 1,029,571 1,039,867 1,050,266 1,060,769 1,071,377 Unrestricted Aid 2,953,914 2,983,453 3,013,288 3,043,421 3,073,855 3,104,594 All Other Net of Offsets 426,733 431,000 435,310 439,663 444,060 448,501 33,591,985 33,927,905 34,267,185 34,609,857 34,955,956 35,305,517 OTHER REVENUES Local Receipts - General Fund 12,606,309 12,858,435 13,115,604 13,377,916 13,645,474 13,918,383 12,606,309 12,858,435 13,115,604 13,377,916 13,645,474 13,918,383 OTHER AVAILABLE FUNDS Stabilization Transfers 250,000 - - - - - Enterpirse Fund (Indirects) 1,593,000 1,632,825 1,673,646 1,715,487 1,758,374 1,802,333 1,843,000 1,632,825 1,673,646 1,715,487 1,758,374 1,802,333 TOTAL REVENUES & OTHER FUNDS 142,434,272 146,156,923 149,873,090 153,797,834 158,082,801 162,465,269 ASSESSMENTS & OTHER VOTES School Choice 428,014 436,574 445,305 454,211 463,295 472,561 State Assessments 528,947 539,526 550,317 561,323 572,549 584,000 County Assessment 255,963 261,082 266,304 271,630 277,063 282,604 Charter School Assessment 5,857,406 5,974,554 6,094,045 6,215,926 6,340,245 6,467,050 Provision for Abatements & Exemptions 650,000 650,000 650,000 650,000 650,000 650,000 7,720,330 7,861,736 8,005,971 8,153,090 8,303,152 8,456,215 TOTAL NET REVENUE 134,713,942 138,295,187 141,867,119 145,644,744 149,779,649 154,009,054 LESS: TOTAL GENERAL FUND BUDGET (134,694,275) (138,518,637) (143,533,995) (149,059,548) (152,296,945) (156,432,601) UNUSED LEVY $ 19,667 $ (223,450) $ (1,666,876) $ (3,414,804) $ (2,517,296) $ (2,423,547)  TOWN OF FRANKLIN FIVE YEAR FISCAL FORCAST FY24 THROUGH FY29 BUDGET FORCAST OPERATING BUDGET FY24 FY25 FY26 FY27 FY28 FY29 111 Town Council expenses 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 123 Town Administration salaries 633,816 649,661 665,903 682,551 699,615 717,105 expenses 53,782 55,127 56,505 57,918 59,366 60,850 687,598 704,788 722,408 740,469 758,981 777,955 131 Finance Committee expenses 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 135 Comptroller salaries 702,487 720,049 738,050 756,501 775,414 794,799 expenses 85,800 87,945 90,144 92,398 94,708 97,076 788,287 807,994 828,194 848,899 870,122 891,875 141 Assessors salaries 368,198 377,403 386,838 396,509 406,422 416,583 expenses 104,900 107,523 110,211 112,966 115,790 118,685 473,098 484,926 497,049 509,475 522,212 535,268 147 Treasurer-Collector salaries 442,959 454,033 465,384 477,019 488,944 501,168 expenses 91,105 93,383 95,718 98,111 100,564 103,078 534,064 547,416 561,102 575,130 589,508 604,246 151 Legal salaries 125,105 128,233 131,439 134,725 138,093 141,545 expenses 60,000 61,500 63,038 64,614 66,229 67,885 185,105 189,733 194,477 199,339 204,322 209,430 152 Human Resources salaries 260,903 267,426 274,112 280,965 287,989 295,189 expenses 38,650 39,616 40,606 41,621 42,662 43,729  299,553 307,042 314,718 322,586 330,651 338,918 155 Information Technology salaries 36,952 37,876 38,823 39,794 40,789 41,809 expenses 457,215 468,645 480,361 492,370 504,679 517,296 494,167 506,521 519,184 532,164 545,468 559,105 161 Town Clerk salaries 235,340 241,224 247,255 253,436 259,772 266,266 expenses 20,850 21,371 21,905 22,453 23,014 23,589 256,190 262,595 269,160 275,889 282,786 289,855 164 Elections & Registration salaries 19,480 19,967 20,466 20,978 21,502 22,040 expenses 55,700 57,093 58,520 59,983 61,483 63,020 75,180 77,060 78,986 80,961 82,985 85,060 176 Appeals Board expenses 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 177 Planning & Growth Management salaries 445,416 456,551 467,965 479,664 491,656 503,947 expenses 32,300 33,108 33,936 34,784 35,654 36,545 477,716 489,659 501,901 514,448 527,310 540,492 184 Agricultural Commission expenses 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 192 Public Property & Buildings salaries 3,312,437 3,395,248 3,480,129 3,567,132 3,656,310 3,747,718 expenses 5,172,200 5,301,505 5,434,043 5,569,894 5,709,141 5,851,870 8,484,637 8,696,753 8,914,172 9,137,026 9,365,451 9,599,588 196 Central Services expenses 161,000 165,025 169,151 173,380 177,715 182,158 161,000 165,025 169,151 173,380 177,715 182,158 Subtotal, General Government 12,934,095 13,257,012 13,588,002 13,927,266 14,275,011 14,631,450 210 Police salaries 6,652,746 6,819,065 6,989,542 7,164,281 7,343,388 7,526,973 expenses 332,331 340,639 349,155 357,884 366,831 376,002  6,985,077 7,159,704 7,338,697 7,522,165 7,710,219 7,902,975 220 Fire salaries 6,529,173 6,692,402 6,859,712 7,031,205 7,206,985 7,387,160 expenses 654,000 670,350 687,109 704,287 721,894 739,941 7,183,173 7,362,752 7,546,821 7,735,492 7,928,879 8,127,101 225 Regional Dispatch expenses 958,670 1,500,000 1,537,500 1,575,938 1,615,336 1,655,719 958,670 1,500,000 1,537,500 1,575,938 1,615,336 1,655,719 240 Inspection salaries 432,336 443,144 454,223 465,579 477,218 489,148 expenses 14,512 14,875 15,247 15,628 16,019 16,419 446,848 458,019 469,470 481,207 493,237 505,567 292 Animal Control expenses 92,700 95,018 97,393 99,828 102,324 104,882 92,700 95,018 97,393 99,828 102,324 104,882 Subtotal, Public Safety 15,666,468 16,575,493 16,989,881 17,414,630 17,849,995 18,296,244 300 Town Schools 71,989,431 73,789,167 75,633,896 77,524,743 79,462,862 81,449,434 390 Tri-County Regional School 2,775,000 2,844,375 2,915,484 5,000,000 5,125,000 5,253,125 395 Norfolk Aggie 66,660 68,327 70,035 71,786 73,581 75,421 Subtotal, Education 74,831,091 76,701,869 78,619,415 82,596,529 84,661,443 86,777,980 422 DPW-Highway Dept salaries 2,053,118 2,104,446 2,157,057 2,210,983 2,266,258 2,322,914 expenses 3,956,650 4,055,566 4,156,955 4,260,879 4,367,401 4,476,586 6,009,768 6,160,012 6,314,012 6,471,862 6,633,659 6,799,500 TOTAL DPW - Hwy 6,009,768 6,160,012 6,314,012 6,471,862 6,633,659 6,799,500 510 Health salaries 294,711 302,079 309,631 317,372 325,306 333,439 expenses 48,400 49,610 50,850 52,121 53,424 54,760 343,111 351,689 360,481 369,493 378,730 388,199 541 Council on Aging salaries 607,649 622,840 638,411 654,371 670,730 687,498  expenses 33,100 33,928 34,776 35,645 36,536 37,449 640,749 656,768 673,187 690,016 707,266 724,947 543 Veterans Services salaries 106,393 109,053 111,779 114,573 117,437 120,373 expenses 11,115 11,393 11,678 11,970 12,269 12,576 veterans asssistance 165,000 165,000 165,000 165,000 165,000 165,000 282,508 285,446 288,457 291,543 294,706 297,949 Subtotal, Human Services 1,266,368 1,293,903 1,322,125 1,351,052 1,380,702 1,411,095 610 Library salaries 810,468 830,730 851,498 872,785 894,605 916,970 expenses 282,000 289,050 296,276 303,683 311,275 319,057 1,092,468 1,119,780 1,147,774 1,176,468 1,205,880 1,236,027 630 Recreation salaries 463,765 475,359 487,243 499,424 511,910 524,708 expenses 277,000 283,925 291,023 298,299 305,756 313,400 740,765 759,284 778,266 797,723 817,666 838,108 690 Historical Museum salaries 73,928 75,776 77,670 79,612 81,602 83,642 expenses 3,000 3,075 3,152 3,231 3,312 3,395 76,928 78,851 80,822 82,843 84,914 87,037 691 Historical Commission expenses 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 695 Cultural Council expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 696 Cultural District Committee expenses 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Subtotal, Culture & Recreation 1,940,161 1,987,915 2,036,862 2,087,034 2,138,460 2,191,172 710 Retirement of Debt non-excluded 1,897,000 1,745,000 2,698,329 2,661,521 1,905,875 1,886,430  excluded 2,175,000 2,245,000 1,955,000 1,775,000 1,850,000 1,925,000 4,072,000 3,990,000 4,653,329 4,436,521 3,755,875 3,811,430 750 Interest non-excluded 587,478 506,773 1,142,873 1,031,531 921,777 842,272 excluded 1,510,775 1,417,875 1,334,900 1,254,650 1,181,450 1,105,200 2,098,253 1,924,648 2,477,773 2,286,181 2,103,227 1,947,472 Subtotal, Debt Service 6,170,253 5,914,648 7,131,102 6,722,702 5,859,102 5,758,902 Benefits: 910 Retirement & Pension 7,501,821 7,876,912 8,270,758 8,684,296 9,118,511 9,574,437 Health/Life Insurance Benefits 3,853,000 4,122,710 4,411,300 4,720,091 5,050,497 5,404,032 Retired Teacher Health Insurance 570,000 570,000 570,000 570,000 570,000 570,000 Non-GIC School Retirees 1,145,000 1,225,150 1,310,911 1,402,675 1,500,862 1,605,922 Workers Compensation 550,000 588,500 629,695 673,774 720,938 771,404 Unemployment Compensation 110,000 110,000 110,000 110,000 110,000 110,000 Medicare 341,250 365,138 390,698 418,047 447,310 478,622 OPEB 800,000 850,000 900,000 950,000 1,000,000 1,050,000 Compensation Reserve 230,000 125,000 125,000 125,000 125,000 125,000 15,101,071 15,833,410 16,718,362 17,653,883 18,643,118 19,689,417 945 Liabilty Insurance 775,000 794,375 814,234 834,590 855,455 876,841 775,000 794,375 814,234 834,590 855,455 876,841 Subtotal, Benefits & Insurance 15,876,071 16,627,785 17,532,596 18,488,473 19,498,573 20,566,258 TOTAL ALL BUDGETS 134,694,275 138,518,637 143,533,995 149,059,548 152,296,945 156,432,601 Surplus/(Deficit) 19,667 (223,450) (1,666,876) (3,414,804) (2,517,296) (2,423,547)  Town of Franklin Override Slides Joint Budget Subcommittee August 2, 2023 Jamie Hellen, Town Administrator https://www.franklinma.gov/town-budget  Override 101 ● Step 1 - The School Committee begins the process of an override (unless Schools are not asking for any additional levy capacity, such as 2014). ● Step 2 - The Town Council reviews the School request. Discussion of non-education override items such as roads, sidewalks, capital, municipal needs, etc. ● Step 3 (optional) - Joint Budget Subcommittee (should, but not required) to review total proposal. Submits recommendation to the full Town Council for potential ballot prep. ● Step 4 - Town Council coordinates with the Town Clerk on an election schedule. ○ Elections schedules vary based on factors, such as, the election date and type (federal, state, local), before a budget approval or after a budget approval, etc. ○ Typically 35-90 days to accommodate election different requirements. Minimum 35 days. ○ See DOR’s Prop 2 ½ ballot questions manual. ○ Depending on the date, additional requirements are triggered. ● The Town Administrator, Superintendent of Schools and paid staff CANNOT advocate for or against an override with town resources. We are significantly limited in our ability to assist. ● A Grassroots organization is required, ballot question committee, legal structure.  Franklin Override History Summary ● Since 1990, Franklin has attempted 11 operational Proposition 2 ½ overrides. ○ All but one, in 2008, have failed. ● 2014 was the last proposed override for $1.5 million dedicated toward roads was defeated nearly 2-1 against. The last omnibus operational override was 2010, which was also defeated nearly 2-1. ● Since 1990, debt exclusions have passed 8 times in 11 attempts, all for major school or municipal building projects. The most recent was 2010 for the new High School. ● The most recent example of a discretionary tax increase was the Community Preservation in 2020, which passed 60% in favor, 40% against. ● Potential future debt exclusions: Tri-County School, Franklin Police Station, Davis-Thayer reno, a new School. 9/6/23, 2:18 PM Town of Franklin Mail - Notes from the Board Jamie Hellen <jhellen@franklinma.gov> Notes from the Board 1 message MassBenchmarks <chrbell@donahue.umass.edu> Wed, Sep 6, 2023 at 1:45 PM Reply-To: chrbell@donahue.umass.edu To: jhellen@franklinma.gov View this email as webpage. September 6, 2023 Contrary to expectations of a slowdown, the Massachusetts’ economy sped up during the first half of 2023 and a soft landing looks more probable, observes the MassBenchmarks Editorial Board Today’s economy is solid, but Massachusetts needs policies to grow its labor force for greater economic opportunity and competitiveness in coming years https://mail.google.com/mail/u/0/?ik=03d60c7a69&view=pt&search=all&permthid=thread-f:1776311157722970352&simpl=msg-f:1776311157722970352 1/6 9/6/23, 2:18 PM Town of Franklin Mail - Notes from the Board The most recent MassBenchmarks Board meeting began with a review of economic data demonstrating better than expected performance in the economy, notably in terms of payroll jobs and gross domestic product. The growth comes in the face of what are now historically high interest rates designed to dampen inflation. The better-than-expected economy is also pushing the Massachusetts unemployment rate down to record low levels. Growth in real gross domestic product (GDP) in Massachusetts is now outpacing the nation and Massachusetts has become a leading state for net jobs growth. Most major industry sectors are experiencing payroll jobs growth through the first half of 2023, showing that the economic improvements in the state are broadly based. Somewhat of a surprise is that Massachusetts tax revenues have been coming in below Department of Revenue projections in early 2023. However, this may be due to bonuses and capital gains being negatively affected by relatively poor equity and stock market performance in 2022. The still-elevated U.S. inflation rate is another concern, as progress in lowering inflation has been steady but slow. All told, it is now looking possible that a long-expected recession may be further delayed. GDP After declining in the first two quarters of 2022, Massachusetts’ real GDP has swung back and has grown faster than U.S. averages in both the fourth quarter of 2022 and the first two quarters of 2023. The unexpectedly strong rebound in state and U.S. economic growth has come despite inflation, slowing economic growth in China, the war in Ukraine, and the lingering effects of the pandemic on production and supply chains. Heading into the latter half of 2023, GDP growth is expected to slow, and may be on course towards a soft landing, rather than an economic downturn. The anticipated slowdown in GDP growth is due, at least in part, from a downward trend in consumer spending as government supports gradually come to an end and pandemic-related savings are drawn down. Indeed, lower motor vehicle sales in Massachusetts in June may be a leading indicator showing a further decline in consumer spending. Current MassBenchmarks estimates see GDP growth hitting a high of 4.0 percent in the second quarter of 2023 and projections show growth moderating to 0.7 percent and 2.0 percent, respectively, in the third and fourth quarters of the year. The U.S. GDP growth is also projected to slow in the second half of 2023 and may even go slightly negative by the fourth quarter. Employment https://mail.google.com/mail/u/0/?ik=03d60c7a69&view=pt&search=all&permthid=thread-f:1776311157722970352&simpl=msg-f:1776311157722970352 2/6 9/6/23, 2:18 PM Town of Franklin Mail - Notes from the Board Payroll jobs growth continues to be a strong point for the Massachusetts economy. Massachusetts outpaced the U.S. in jobs growth during the second quarter of 2023 with the state growing at an annualized rate of 2.2 percent compared to the U.S. rate of 1.9 percent. Looking at the year-over-year data, Massachusetts and the nation posted payroll employment increases of 2.8 and 2.6 percent, respectively. With the steady growth in employment, Massachusetts finally surpassed its February 2020 pre-pandemic record in March 2023, and as of June the state had 3.77 million jobs, 25,000 more than the previous pre-pandemic peak. Preliminary figures for July from the U.S. Bureau of Labor Statistics show payroll employment growth continuing to be quite robust in the state. Labor market Since cresting during the early stages of the pandemic in 2020, the Massachusetts unemployment rate is continuing a downward trend. The June unemployment rate stood at 2.6 percent, down from 3.7 percent in June 2022 and is now significantly below the U.S. rate of 3.6 percent. The declining unemployment rate, while a positive indicator, is due in part to declining labor force size. A modest uptick in the labor force at the start of the year proved to be short-lived. The seasonally adjusted Massachusetts labor force declined by 30,000 between June 2022 to June 2023. More significantly, this represents part of a longer trend that began prior to the pandemic. Since reaching a peak of about 3.846 million in June 2019, the state’s labor force has fallen to 3.721 million in June 2023, a net decline of 125,000. The combination of employment growth and labor force decline is contributing to the state’s record low unemployment rate and overall tight labor market conditions. Further complicating workforce decline is the aging of the resident population, as more and more baby boomers start reaching retirement ages in the coming years. Risks The potential downsides of the Massachusetts economy remain in place, some structural and others more temporal. Housing costs are stubbornly high and likely contributing to out-migration to other states. Although the economy has steadied and grown after the pandemic, there are still some things that have not worked their way through the tumult, such as commercial real estate. There is uncertainty about what a series of defaults would do to the banking sector and financial markets and how this would work its way through the economy. Other risk factors that could have potentially adverse effects on Massachusetts are China’s slowdown, Russia’s war with Ukraine, and the possibility of a looming federal shutdown in October if a budget is not passed. https://mail.google.com/mail/u/0/?ik=03d60c7a69&view=pt&search=all&permthid=thread-f:1776311157722970352&simpl=msg-f:1776311157722970352 3/6 9/6/23, 2:18 PM Town of Franklin Mail - Notes from the Board Policy considerations Given the largely positive data for Massachusetts and the diminished likelihood of a full-blown recession, the Board focused on policies that can make the Massachusetts economy more resilient, better able to respond to new growth opportunities, and help to address its chronic pockets of inequality. A unifying theme among Board members is investing in growing the labor force, a rallying point that could guide state policy. For example, providing more affordable housing and childcare, free community colleges, and improving our antiquated transportation infrastructure would help make Massachusetts a more attractive place to live and work. Because immigrants are a primary source of the state’s population growth, the Board also favor policies for helping them get plugged into the labor force by providing in-state tuition regardless of their present documentation status, making sure that underrepresented workers have access to apprenticeships and other work- based training needed to work in emerging sectors like clean energy, and by reviewing occupational licensure requirements to ensure that immigrants (as well as professionals in other states) are not facing unnecessary obstacles to employment. In conclusion, the condition of the Massachusetts economy looks good heading into the latter part of 2023. Current indicators are solid and have defied expectations on the upside for several quarters running. On the downside, the effects of higher interest rates are still playing out while uncertainties in the international economy as well as political polarization in the U.S. continue to be concerns. Even with slower economic growth expected on the horizon, Massachusetts has the assets to better position itself for the future and should not delay in acting now on measures to grow its labor force. This summary reflects the discussion of the members of the Editorial Board of MassBenchmarks at its meeting on July 31, 2023 and it reflects the economic data available up to that date. It was prepared by Branner Stewart, Senior Research Manager at the UMass Donahue Institute, and was reviewed and edited by the members of the Editorial Board. While discussion among the Board members was spirited and individual Board members hold a wide variety of views on current economic conditions, this summary reflects the broad consensus of the Board regarding the current state of the Massachusetts economy. MassBenchmarks is published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston. The views expressed are not necessarily those of the University of Massachusetts or the Federal Reserve Bank of Boston. https://mail.google.com/mail/u/0/?ik=03d60c7a69&view=pt&search=all&permthid=thread-f:1776311157722970352&simpl=msg-f:1776311157722970352 4/6 9/6/23, 2:18 PM Town of Franklin Mail - Notes from the Board For more information please contact: Dr. Michael Goodman Dr. Alan Clayton-Matthews Co-Editor, MassBenchmarks Senior Contributing Editor, MassBenchmarks Senior Advisor to the Chancellor Associate Professor Emeritus for Economic Development & School of Public Policy and Urban Affairs Strategic Initiatives and the Department of Economics Professor of Public Policy Northeastern University University of Massachusetts Dartmouth (617) 512-6224 (617) 823-2770 a.clayton-matthews@northeastern.edu mgoodman@umassd.edu Dr. Mark Melnik Dr. Mary Burke Senior Managing Editor, MassBenchmarks Co-Editor, MassBenchmarks Director, Economic & Public Policy Research Senior Economist and Advisor University of Massachusetts Amherst Federal Reserve Bank of Boston Donahue Institute (617) 973-3066 (617) 407-8188 Mary.Burke@bos.frb.org mmelnik@donahue.umass.edu MassBenchmarks Editorial Board Katharine Bradbury, Federal Reserve Bank of Boston, retired Frederick Breimyer, Federal Deposit Insurance Corporation Lynn Browne, Founding Editor; Brandeis University; Federal Reserve Bank of Boston, retired Peter Doeringer, Boston University, Professor Emeritus Robert Forrant, University of Massachusetts Lowell Keren Horn, University of Massachusetts Boston Michael Klein, Tufts University Yolanda Kodrzycki, Federal Reserve Bank of Boston, retired Frank Levy, Massachusetts Institute of Technology, Professor Emeritus Robert Nakosteen, University of Massachusetts Amherst, Executive Editor Emeritus Alicia Sasser Modestino, Northeastern University Christopher Probyn, State Street Bank James Stock, Harvard University Jeffrey Thompson, Federal Reserve Bank of Boston About the MassBenchmarks Journal https://mail.google.com/mail/u/0/?ik=03d60c7a69&view=pt&search=all&permthid=thread-f:1776311157722970352&simpl=msg-f:1776311157722970352 5/6 9/6/23, 2:18 PM Town of Franklin Mail - Notes from the Board MassBenchmarks is published by the University of Massachusetts Amherst Donahue Institute in cooperation with the Federal Reserve Bank of Boston. The Donahue Institute is the public service, outreach, and economic development unit of the University of Massachusetts. A comprehensive analysis of the state of the Massachusetts economy can be found in the most recent issue of MassBenchmarks. VIEW THIS ISSUE MassBenchmarks | 100 Venture Way, Suite 9, Hadley, MA 01035-9462 Unsubscribe jhellen@franklinma.gov Update Profile | Constant Contact Data Notice Sent by chrbell@donahue.umass.edu https://mail.google.com/mail/u/0/?ik=03d60c7a69&view=pt&search=all&permthid=thread-f:1776311157722970352&simpl=msg-f:1776311157722970352 6/6  Finance Committee Meeting Date: May 08, 2023 Present: Chairman Conley, Vice Chairman Riley, Clerk Corbosiero, Koke (remote), Grace, Keophannga (remote), Wiech, Hamilton 1. Call to Order: 7:03 PM 2. Public Comments – None 3. Approval of minutes – passed 8-0 a. December 7, 2022 b. December 7, 2022 – executive session c. January 11, 2023 d. February 8, 2023 4. FY24 Town Administrator Operating Budget Hearing: a. Overview – New growth has declined slightly due to the use of a 10-year average to calculate the estimated income for the year. High level with tax levy, new growth, and debt exclusions, there is approximately $3.3M of potential tax levy. Are hopeful local receipts will increase back to pre-pandemic levels. Inflation is having a significant impact on the FY24 budget as it relates to fixed costs. There are cost increases that the public needs to be aware of (i.e. stormwater fee, sewer rate increase, current low electricity rate increase, etc.). b. General Government - $13,067,095 c. Human Services – $1,266,368 d. Culture and Recreation - $1,940,161 e. Debt and Interest - $6,180,253 f. Employee Benefits - $15,101,071 g. Department of Public Works (DPW) i. Public Works – $6,069,768 ii. Enterprise Funds 1. Water – $6,806,382 2. Sewer – $6,014,827 3. Solid Waste – $2,185,639 4. Stormwater – $1,034,117 5. Future Agenda Items 6. Adjourn 9:06 p.m.  Finance Committee Meeting Date: May 10, 2023 Present: Chairman Conley, Vice Chairman Riley, Clerk Corbosiero, Hansen, Wiech, Keophannga (remote), Hamilton, Grace, Koke (remote) 1. Call to Order: 7:00 PM 2. Public Comments – None 3. FY23 Town Administrator Operating Budget Hearing Continued a. Opening Remarks b. Education i. Norfolk County Agricultural School - $66,660 1. Overview – Enrollment is approximately 560 students (16 students currently from Franklin). Current year had approximately 450 applications with approximately 155 accepted. Franklin is billed an in-county tuition based on enrollment (approximately $4,000 per student). ii. Tri-County Regional Vocational School District - $2,775,000 1. Will know next June what the project size and budget is for a new school (expecting roughly $280M). iii. Franklin Public School District - $71,252,779 1. School Committee approved budget was $73,591,000 which is higher than what is being presented. Outlined areas of possible reductions that would need to happen for FY24 to close the gap. 4. Future Agenda Items 5. Adjourn 9:15 p.m.  Finance Committee Meeting Date: May 11, 2023 Present: Chairman Conley, Vice Chairman Riley, Clerk Corbosiero, Grace, Hansen, Wiech, Hamilton, Keophannga (remote) 1. Call to Order: 7:03 PM 2. Public Comments a. Jessica Gera – Department requests vs. TA recommends – does not match up – where does the number come from if not from the department’s request? “Non column” – helps to streamline the process. 3. FY23 Town Administrator Operating Budget Hearing Continued a. 210 Police Department - $7,026,677 i. Expense side increases driven by historic items they would normally get via the capital process however related to normal expenses. Body armor, tasers, and IT program are now part of the operating budget. Other increase is driven by 4 additional patrol officers. Increase in service demand and inadequate staffing driving the need for the increase in staffing. Should see a decrease in overtime with new full-time staff. New police station will become more of a necessity to meet the growing needs of the department (office and locker space). b. 220 Fire Department - $7,258,173 i. Increase mostly driven by collective bargaining items (55%). Other half of the increase is due to additional turnout gear that typically would be in the capital budget but is now in the operating budget. Two additional positions are also driving the increase. Would allow for usage of truck that is fully stocked but has no personal. Expected to bring down the mutual aid calls that are needed today. c. 225 Regional Dispatch - $958,670 d. 240 Inspection Department - $446,848 e. 292 Animal Control - $92,700 f. Overall Wrap Up – presented areas where we can get the school budget back up to slightly over the annual average increase. Reviewed steps for an override. 4. FY24 Town Administrator Operating & Enterprise Budget Final Recommendation - $150,948,188 – passed 8-0 5. Future Agenda Items 6. Adjourn 8:42 p.m. Date: September 6, 2023 To: Jamie Hellen & Chris Sandini From: Kerri Bertone Subject: Stabilization Fund Balance and Three (3) year Comparison Through June 30, 2023 2021 2022 2023 General Stabilization 6,304,686.92 6,559,389.36 6,416,852.01 Recreation Fields 465,533.88 783,505.97 919,773.82 Open Space Acquisition 2,463,056.67 2,525,074.24 2,494,299.49 Budget Stabilization 869,298.71 2,040,284.17 3,004,525.00 Property Acquisition 280,805.53 288,513.63 283,456.96 Fire Trust Stabilization 16,304.48 16,752.05 116,458.46 MECC Stabilization 452,738.46 903,360.20 887,527.41 OBEB 8,925,964.01 11,491,897.45 11,885,540.66 Statewide Opioid Settlement - - 129,313.41