TOWN OF SWAMPSCOTT FINANCIAL FORECAST FISCAL YEARS 2014 – 2018 Tom Younger Town Administrator November 28, 2012

Budget Pressures Any Economic Recovery Underway is Not Yet Providing Relief for the Town’s Budget; The Chronic State Budget Crisis Continues to Impact Chapter 70 Revenues ; The Town is Controlling Discretionary Spending, However some Non-Discretionary Spending, Like Health Insurance and Pension Costs, Continue to Rise Beyond Inflation Creating a Viable Long-Term Capital Plan with Funds Available; Plan for Funding OPEB (GASB 45) Prior to Being Mandated; We Must Continue the Commitment to Increase our Reserves to “Best Practice” Levels while Eliminating our Reliance on One-Time Revenues or We will Jeopardize the Town’s Bond Rating and Cost of Capital.

Five Year Financial Forecast Pro Forma Assumptions - General Fund Revenues State Aid is Projected to remain level in FY14 and FY15 With a 2% Increase in FY2016 Through FY2018; Tax Levy and Levy Limit will Grow Approximately by 3% Through FY2018; Charges, Licenses, Fees and Miscellaneous Revenue Projected to Increase Minimally in FY2014 Through FY2018 due to the current economy with a Tri-annual Review of Our Rates; Reduce the Use of Free Cash to $100,000 for FY2014 Through FY2018, Additional Amounts May Need to be Used to Fund the Town’s Rainy Day Fund; Nahant Tuition is Expected to be $1,135,600 for FY14; Other Sources of Revenue Include: Enterprise Fund Indirects ($802,000).

Five Year Financial Forecast Pro Forma Assumptions - General Fund Expenses Salaries and Operating Expenses (Including Schools) Projected to Increase 2.5% for FY14 and 2.5% Annually Thereafter; Health Insurance Costs Projected to Increase by 10% in FY2014 and Increase By 10% Annually through FY2018 Based on the Presumed Cost to Implement the Affordable Health Care Bill Adopted by Congress in 2010; Due to the Accelerated Funding Schedule Adopted by the Retirement Board, the Retirement Appropriation is Expected to Increase by 10% in FY2014 and 10% Each Year Thereafter; State and County Charges and Cherry Sheet Offsets are Expected to Increase 2.5% Each Fiscal Year; Debt Service Based Upon Current and Future Capital Improvement Programs; Includes Sewer Debt Exclusion through FY FY2014 Will be Last Full Payment Year;

Five Year Financial Forecast Revenue and Expenditure Summary General Fund

Net State Aid Comparison FY2004-FY2013

Changing Enrollment Analysis

Revenue Allocation by Percentage

Closing the FY2014 General Fund Budget Gap State Aid Increase above Forecasted Amount; Health Insurance Premium Increases are Less than Expected; Reduce Discretionary Spending Without Impacting Service Delivery.