FY 2018/19 Recommended Budget Town of Manchester, Connecticut March 7, 2018

State Aid- Current Year FY18 Town budgeted $36.2M in State Aid major formula grants Actual revenues $34.3M; loss of $1.9M Lifting of MV tax allowed for collection of additional $937,000 Net effect- revenue shortfall of $984,000 attributable to formula grants by end of fiscal year

State Aid- Upcoming Year Year two of current State biennial budget reflects a 1.1% reduction from current funding as amended by the State In light of continuing State deficits and holdbacks, FY19 projects a 2.5% loss in aid from major formula grants This reflects a $2.8M decrease compared to the FY18 Town Budget; therefore a net decrease of $2M because Board substituted MV tax

FY 2018/19 Recommended Budget Summary Total General Fund budget $188,837,928 Expense increase of 1.86% Results in mill rate increase of 3.50% Modest increase in sewer rates (2.5%) and no increase (0%) in water rates Fire Fund: 4.02% tax increase; propose additional three firefighters to address overtime costs in future years

FY 2018/19 Recommended Budget

FY 2018/19 Recommended Budget FY 2018/19 Financial Highlights Includes overall Town government increase of 1.1%, or $778,700 Town government operations (excluding non-operating expenses) increase by $851,051, or 1.7% Increases in salary $425,858 (1.5%) Increase in health insurance $271,017 (2.9%) One pay period health insurance premium credit saves $361,254 for Town government (plus another $750,000 for BOE and $138,746 for other budgeted funds) Defined benefit pension for police & employees hired before 2007 increase $444,613 (14.0%) due to re-assessment of plan funding needs $200,000 savings from redistributing some paving costs historically shown in operating budget to bond funds, as life is 20 yrs +

FY 2018/19 Recommended Budget FY 2018/19 Financial Highlights Non-operating budget decrease of $72K, or -0.3% Debt service increases by $34,396 (0.29%) General fund capital budget increases by only $1,000 Capital improvement plan for FY19 utilizes: $1,354,000 in General Fund $585,000 in one-time funding sources from completed and/or discontinued existing project balances $700,000 in LoCIP funding (grant program likely to be phased out of State budget after FY19)

FY 2018/19 Recommended Budget FY 2018/19 Financial Highlights Without one pay period health insurance premium credit (Town + BOE), use of capital project balances, and financing of paving costs, resulting tax increase would be 4.88% instead of 3.50% taking state aid cuts into consideration Fiscal challenge will continue into next biennium (FY20 & FY21)

FY 2018/19 Recommended Budget FY 2018/19 Financial Highlights Board of Education increases 2.3% or $2.5 million in Manager’s recommended budget More refined information became available after the BOE recommendation of 4.2% was submitted Reduction in health insurance premium $404,984 $750,000 one pay period health insurance premium credit DB pension reduction $383,175 MSIP increase $110,392 Manchester Regional Academy roof- $382,270, to be covered with school improvement bonds These adjustments that have no operational impact total $1,810,037, bringing the BOE’s request down to 2.6% ($114,624,070) Manager’s recommend reduces by an additional $349,963 for a total adjustment of $2,160,000, or a 2.3% increase over FY18

FY 2018/19 Recommended Budget FY 2018/19 Financial Highlights In addition to Recommended Education budget of $114 million, Alliance Grant funding of $4.8 million expected as direct payment to BOE Alliance Grant funding restricted to Alliance Grant programming – not for core Education program May receive additional Alliance capital funding

FY 2018/19 Recommended Budget

FY 2018/19 Recommended Budget General Fund Summary Proposed budget requires mill rate increase of 3.50% FY17: 0.50%; FY18: 0.00% Three year average: 1.33% mill rate increase Utilizes $2,000,000 use of fund balance- same as this year Grand List growth of about 0.4% Generates about $635K in new revenue at the current mill rate Revised fees recommended for health and cemetery operations could generate $90K

FY 2018/19 Recommended Budget FY 2018/19 Financial Highlights After factoring out State’s motor vehicle tax cap policy reversal, budget assumes $2.0M reduction in state aid; $1.14M attributed to current year reductions plus $860K in additional projected reductions Governor’s budget – reduces aid by $396K, Manager budget reduces $464K further from current year revised State aid levels

FY 2018/19 Recommended Budget Tax Impact Resulting mill rate of 36.07 (currently 34.85) Examples of tax increases on homeowners:

FY 2018/19 Recommended Budget Fire Fund Expenditure increase of 5.2% Proposed mill rate of 5.10 Increase of 4.02% compared to current mill rate Current year overtime projected at over $500K above budgeted levels Additional three firefighters recommended to reduce mandatory overtime triggered by contractual staffing minimum Overtime savings net of personnel costs estimated at over $300,000 per year after first year (no savings first year due to training of new personnel) Will be applying for SAFER Grant to cover 75% of first 2 years of cost and 35% of year 3

FY 2018/19 Recommended Budget Fire Fund Budget also includes 50% reimbursement for additional dispatcher position in Police Department Payment towards apparatus fund reorganized to increase number of years to pay off existing liabilities, reducing annual payment from $430,213 to $250,000 (FY19 minimum established by board via apparatus reserve funding policy) This stretches out the number of years to pay off the equipment in order to mitigate the tax increase Without this shift, mill rate increase would be 5.42% instead of 4.02%

FY 2018/19 Recommended Budget Water Fund Total expenditure increase of 1.3% Operations increase by 5.3%; significant increase to DB pension costs in Water Fund as a result of actuarial analysis & resulting changes to pension funding Capital budget increases by $303,000 (64.8%) Non-operating expenses decrease by -5.0% Decrease in debt service of -$486,901 due to short term note refinancing Proposed rate increase of 0%

FY 2018/19 Recommended Budget Sewer Fund Total expenditure decrease of 0.1% Operations increase by 1.7% Debt Service requirements decrease by $307,822 due to short term note refinancing Proposed rate increase of 2.5%

FY 2018/19 Recommended Budget Sanitation Fund Total expenditure decrease of -3.2% Operating expenses decrease by -$209,319 or -3.2%; new curbside collection contract resulted in savings Non operating increases by 1.8% Tip fee revenues expected to remain flat

FY 2018/19 Recommended Budget Summary Total General Fund budget $188,272,473 Expense increase of 1.86% Use of reserves $2,000,000 Results in mill rate increase of 3.50% Increases in Sewer Funds reflect continuing phase-in of debt service costs associated with plant rebuild; no increase recommended for water rates Fire Fund: 4.02% tax increase to address overtime issues

FY 2018/19 Recommended Budget Thank you.