Financial Reserves Strategy Sponsored by: The Board of Selectmen

Financial Reserve: Long-term Strategy and Use Free Cash: Town’s primary reserve account Discussion Group to address the Town’s free cash strategy: Members include: John Jeffries, Erika Alders, Bonnie Akins, Fred Hammerle, Kate Cannie, Jerry Lane and Karen MacTavish

Financial Reserves Have we always had a reserve? Fiscal reserve amounts since 2005 How much do we have today?  $9,785,433 Will we always have it? The Town will maintain a financial reserve using a strategic and disciplined approach What are we considering? Stabilize the tax rate Setting aside money to fund OPEB for the regional school district Use Free Cash for other long-term goals such as to smooth the future anticipated borrowing for capital needs and the preservation of open space

15-year History of Reserves as a % of Operating Budget Reserve Balance % of Operating Budget 2019 $9,785,433 24% (*) 2018 $7,913,093 21% 2017 $8,139,482 23% 2016 $5,877,594 17% 2015 $6,458,174 20% 2014 $5,680,471 18% 2013 $5,273,658 2012 $4,734,060 2011 $4,433,983 16% 2010 $3,803,191 14% 2009 $3,284,921 13% 2008 $3,405,170 2007 $3,265,104 2006 $2,958,012 2005 $2,124,443 10% 15-year History of Reserves as a % of Operating Budget (*) - estimate

Free Cash Reserves What is a free cash reserve? Free cash results from: Revenues in excess of estimates from the prior fiscal year Expenditures less than the budget from prior fiscal year Unused free cash from prior fiscal year Once the Town’s balance sheet is approved by the Massachusetts Department of Revenue, free cash may be appropriated by Town Meeting for any purpose including reducing property taxes for the coming fiscal year.

Dover’s Free Cash has been certified by the Department of Revenue at $9,785,433 or approximately 24% of the budget. The sources of this Free Cash amount are: 1 Unexpended Free Cash from prior fiscal year 7,913,093 2 FY18 revenues in excess of estimates + $445,843 3 FY18 expenditures less than budget 2,482,375 (*) 4 Other Adjustments 453,194 5 Free Cash used to balance FY19 budget - 1,509,072 Certified Free Cash $9,785,433 + $1,872,340 * - includes $1.1M of circuit breaker(special education) reimbursement

Financial Reserve Strategy To Begin the implementation of a long-term strategy and a formula-based financial reserve. Use reserves to fund unfunded liabilities, including retiree health insurance (OPEB). The current unfunded liability for the Dover-Sherborn Regional School teachers/staff is $28,900,000 ÷ 56.63%= Dover $16,366,000 In an effort to reduce the Town’s unfunded liabilities, the Board of Selectmen proposes that the Town set aside a portion of Free Cash to fund this other post-employment benefits (OPEB) liability for Dover’s portion of the Dover-Sherborn Regional School District.