1. Overview of Dover Town Operating Budget Fiscal Year 2018
Thank you for coming. On behalf of the Warrant Committee, I am going to give an overview of this year’s Operating Budget. The details are all to be in the Blue Book and there are handouts by the door. SMILE…
(Proposed Budgets, as of March 20, 2017)

2. Overview Operating Budget (Article 4) Free Cash
Operating Budget Trend FY08 to FY18

3. FY 2018 Budget Summary as proposed (as of March 20, 2017)
FY18 Total Expenditures $39,005,959 vs. $36,282,175 for FY17 Increase of $2,723,784 or 7.5% FY18 Article 4 (Operating Budget) $36,874,165 vs. $34,998,967 Increase of $1,875,198 or +5.4%

4. FY 2018 Budget Summary as proposed (as of March 20, 2017)
FY18 Total Revenues (excluding use of Free Cash) $37,377,247 vs. $36,099,919 for FY17 Increase of $1,277,328 or +3.5% FY18 use of Free Cash (* - minimum amount to balance budget) $1,628,712 vs. $813,413 for FY17 Increase of $815,299 or %

5. FY 2018 Budget Summary Large Changes from FY2017 Expenditures
FY18 Article 4
Increases
Schools $923k (+4.3%)
Dover’s Regional Schools Operating Assessment +$625k (+5.9%)
Dover School Operating $442k (+4.5%)
Insurance and Pensions
Group Health Insurance $288k (+12.6%)
Workers Compensation +$18k (+23.7%)
Protection of Persons/Property +$135k (+4.4%)
Police $35k (+1.8%)
Fire $45k (+9.2%)
Ambulance $28k (+15.8%)
Norfolk County Retirement +$81k (+7.2%)
Regional Schools Assessment Ratio FY % (FY % and was 53.37% FY16)

6. FY 2018 Budget Summary Large Changes from FY2017 Expenditures
FY18 Article 4 (contd.)
and
Decreases
Dover’s Regional Schools Debt Assessment $133k (-18.6%)
The above Increase and decreases accounts for $1.3m increase of the overall $1.875m increase of the Article 4 budget (or, 70%).
Regional Schools Assessment Ratio FY % (was 53.37% FY16)

7. FY 2018 Budget Summary Large Changes from FY2017 Expenditures
FY17 Capital Items + Special Articles
Increases
Article 5 & Special Articles & SA-Other
Article $56k (+15..8%)
Special Articles +$47k (+22.8%)
SA – Other +$691k (vs. $179 FY17)
The above for Article 5 and Special Articles accounts for approx. net $794k increase of the overall net $2.7m total expenditures increase (or, 29%).

8. FY2018 Budget Components Total $39.0 M
update
92% of the expenses fall under Article 4 of the Warrant
Operating Budget = day-to-day
Debt service at 6.0%
Special Articles and Capital Items change year to year (this year it’s 2.6%
Snow & Ice budgeting is [doubly difficult: weather, state law. Usually in deficit; the amount in Article 4 is minimum expected; the deficit is funded in arrears]. This year The Budget for the Snow and Ice Deficit is $300,000
Reserve Fund is our contingency for unexpected expenses of $250,000 that arise during the year.
Misc includes special articles-other, state chrgs- cherry sheet, additions to overlay and recap appropriations
10 Prop. Evaluation 40,000
13 Conservation Trust 25,000
15 D-S Reg/Cap Improv 171,455
20 Supplemental Approp to Art. 4 44,216
Subtotal 280,671
7 Police Accum Sick/Buyback Leave 10,000
TOTAL: 290,671
Total $39.0 M

9. Revenue Sources and Expenditures

10. Summary of Spending by Category
The big increases for FY18 are
Dover’s Regional Schools Operating Assessment +$625k
Chickering Local School Operating Budget +$445k (of which $50k is related to LED Lighting/ NRG saving upgrades to be partially offset to town with grants
Group Health Insurance +$288k
Maturing Debt Principal +$268k (mainly due to necessary amortization of 46 Springdale short term borrowing)
Norfolk County Retirement +$95k (or +10.2%)
Fire +$45k (or +9.2%: Salaries + $35k (or +8.3%), expenses +$10k (or 14.2%)
Ambulance +$28k (or +15.8%: Salaries +18k (+13.5%), expenses +$10k (or 22.8%)

11. FY18 Article 4 Spending by Category
“Debt Service” includes Dover’s share of the Regional Schools’ debt
The schools are the lion’s share: ~60% of art 4
General Government is mostly Town House functions and routine building maintenance.
Debt and Insurance & Pensions are non-discretionary
Protective Services are Police, Fire, Ambulance, and Emergency Management
Other is Parks an Rec, COA, Cemetery, Library
Total $36.9 M (+5.4%)

12. FY12-FY18 Article 4 Year-over-year changes
+5.9%
+4.5%
+5.3%
+3.4%
+4.4%
+6.7%
+2.5%
+0.4%
+10.4%
FY 17/16
+5.0%
+2.0%
-2.9%
+2.8%
+1.9%
+3.0%
+4.7%
+2.9%
+9.3%
FY 16/15
+5.2%
+2.2%
-4.2%
+1.8%
+3.9%
-2.4%
+3.2%
+5.5%
+9.8%
FY 15/14
+4.6%
-2.6%
+2.4%
+1.3%
+1.6%
+4.9%
-1.6%
FY 14/13
+1.7%
+*.9%
-2.1%
+1/5%
-0.3%
+3.7%
+4.8%
FY 13/12
-1.8%
+6.8%
+5.6%
+8.6%
+6.2%
Year-over-year changes
Everything has gone up except health and sanitation and debt service.
From a dollar perspective, schools largely dominate total dollar growth

13. FY18 Estimated Revenue Revenue is difficult to predict
Some of the tax levy is dedicated to debt service, by vote of Town Meeting. Allows us to exclude from Prop 2½.
Local Receipts are fees paid for town services not covered by revolving funds. Example: excises, fees large and small
State = aid (unpredictable) + SBA reimbursement (steady)
New Growth = assessors’ estimate >tax base.
Total $39.0 M (+5.7%)

14. FY12-FY18 Revenue Year-over-year changes FY18/17 +4.3% +15.4% -5.1%
+2.0%
-34.4%
+29.3%
FY 17/16
+4.5%
+1.3%
+8.4%
+2.2%
-5.0%
flat
FY 16/15
+4.1%
-9.6%
-4.6%
+1.0%
+30.0%
+41.4%
FY 15/14
-3.6%
+10.6%
+5.2%
+3.5%
FY 14/13
+3.8%
-2.8%
+2.8%
+1.2%
+24.2%
FY 13/12
+3.9%
-6.5%
+6.1%
-0.9%
+2.1%
Year-over-year changes

15. * - Minimum Amount Use of Free Cash to Balance
Budget Gap FY18
In recent history, the Warrant Committee has recommended at ATM this amount to close the gap between expected expenditures and expected revenues. As in previous years we consider the recent level of free cash we have, the towns finances and predicted financial needs, uses and expectations over the near, medium and and longer terms (to the extent we can), the town’s credit rating, tax rates and other factors in making a recommendation for the amount of free cash to use. This year the Warrant Committee is considering alternatives which would include the use of additional free cash to pay for approved expenses and/or to “lower the tax rate.” We will have a recommendation at ATM.
* - Minimum Amount Use of Free Cash to Balance

16. Budget Gap as a Percentage of Expenses
After a few years of drawing more heavily on Free Cash, we have been below our target of around 5% for the past few years
This year the gap is projected to be 4.2%
[Free Cash is replenished by Turnbacks at the end of year from unspent town funds and and unspent Special Education Circuit Breaker funds from the state]

17. Free Cash
The Warrant Committee is reviewing the level of Free Cash as we do every year.
At ATM on May 1, the Warrant Committee expects to present a recommendation regarding the use of Free Cash.

18. Free Cash What is Free Cash?
Free cash is a revenue source that results from the calculation, as of July 1, of a community's remaining, unrestricted funds from its operations of the previous fiscal year based on the balance sheet as of June 30.
It typically includes actual receipts in excess of revenue estimates and unspent amounts in departmental budget line items for the year just ended [“turnbacks”], plus unexpended free cash from the previous year.
- MA DLS, Department of Revenue, February 2016
Free Cash as of July 1, $8,139,482
Free Cash as of July 1, $5,877,594
Increase $2,261,888, or 38.5%

19. Free Cash
Explanation of Changes in Free Cash from 7/15 to 7/16: 7/15 FC Balance: $5,877,594 ATM17 Use of FC -$888,234 FY16 Budget Turnbacks +$1,818,266 FY16 Regional Turnback +$453,639 (one time E&D redux) FY16 Snow & Ice (Recap) -$274,586 FY16 Misc. +$77,219 (Police Det. & overlay) FY16 Excess Rev over Expend. +$1,075,584 (encumbrance, adjustments) 7/16 FC Balance: $8,139,482

20. Free Cash History

21. Free Cash History

22. Free Cash History

23. Free Cash History

24. Free Cash History

25. Free Cash
An analysis of an appropriate level of Free Cash would include reviewing:
The General Economic Environment and Expectations
Expected Future Revenue Development and Expenditure Operating and Capital) Needs And Wants
Debt Capacity
Debt Rating
Tax Rates
Comparable Towns
Preference to Avoid Overrides
Demographic Trends, Housing Market Trends
Other Factors, Etc.

26. Free Cash Considerations
Historically, the Warrant Committee has recommended using a “prudent” amount of Free Cash.
Other towns have substantial funds in “Stabilization Funds” in addition to their Free Cash. Dover has not made use of Stabilization Funds to a large extent (current balance approx. $886k).

27. Operating (Article 4) Budget Growth
Over Past 10 Years How much has the Operating Budget Grown and why?

28. Operating (Article 4) Budget Growth FY08 (actual) to FY18 (requested)
Over Past 10 Years How much has the Operating Budget Grown and why?
FY08 (actual) FY18 (req.) $ growth % growth
Operating Budget (Art 4) $26,391,662
$36,874,166
$10,482, %
Operating Budget (Art 4) Compound Annual Growth Rate (CAGR) of 3.4%
US CPI CAGR during the period was 1.2%, 1.7% (for Boston area)
Property Tax Rate (“Mill Rate”) $9.20 (FY07) $13.05 (FY17) CAGR 3.6%

29. Operating (Article 4) Budget Growth FY08 (actual) to FY18 (requested)
Over Past 10 Years How much has the Operating Budget Grown and why?
For at least the past 10 years, guidance from the Warrant Committee on budgets has been for “level service”

30. Operating (Article 4) Budget Growth FY08 (actual) to FY18 (requested)
Components of Operating Budget Growth
Accounts for $8.9 million of $10.5 million, or 85%
FY08 (actual) FY18 (req.) $ growth % growth
Schools
Dover School Operating $7,759,641 $10,357,943 $2,598, %
Dover's Share Regional --
Operating Assessment $7,472,389 $11,235,560 $3,763, %
Debt Assessment $809,892 $581,416 -$228,476 (28.2%)
Total $8,282,281 $11,816,976 $3,534, %
Schools Total $16,105,621 $22,244,452 $6,138, %
Insurance/Pensions Total $2,370,286 $4,237,266 $1,866, %
(mostly Group Health & Ret.)
Protection Of Persons
And Property Total $2,280,447 $3,180,178 $899, %
$1.3m of $6.1m is teachers salaries
$1.3m of $6.1m schools incr is SPED OOD Tuitions
$337k due to SPED transportation (+1,521%)
Some Maintenance has been added to the budget (previously was in capital budget only) approx $120k
Rest is mainly Salaries, shifting share between Dover and Sherborn at the Region
Chickering Students (Oct 1): FY
FY – 20%
Region Dover
~650 15% %

31. Operating (Article 4) Budget Growth FY08 (actual) to FY18 (requested)
The rest of the categories: FY08 (actual) FY18 (req.) $ growth % growth
General Government Total $1,480,935 $2,149,968 $669, %
Protection Of Persons
And Property Total $2,280,447 $3,180,178 $899, %
Health And Sanitation Total $470,701 $538,954 $68, %
Highway And Bridges Total $920,296 $1,543,169 $622, %
Other Public Agencies Total $883,762 $1,308,504 $424, %
Unclassified Services Total $16,939 $15,400 -$1,539 (9.1%)
Insurance-sub-total $1,741,293 $3,026,808 $1,285, %
Pensions
Norfolk County Retirem. $628,993 $1,210,458 $581, %
Insurance/Pensions Total $2,370,286 $4,237,266 $1,866, %
Maturing Debt And Interest
Maturing Debt Principal $1,155,401 $1,392,900 $237, %
Maturing Debt Interest $696,274 $259,375 -$436,899 (62.7%)
Bank Charges $11,000 $4,000 -$7,000 (63.6%)
Debt & Interest Total $1,862,675 $1,656,275 -$206,400 (11.1%)
General Government Total 1,480,935 2,149, , %
Protection Of Persons
And Property Total 2,280,447 3,180, , %
Health And Sanitation Total 470, , , %
Highway And Bridges Total 920,296 1,543, , %
Other Public Agencies Total 883,762 1,308, , %
Unclassified Services Total 16,939 15, ,539 (9.1%)
Insurance-sub-total 1,741,293 3,026,808 1,285, %
Pensions
Norfolk County Retirem. 628,993 1,210, , %
Insurance/Pensions Total 2,370,286 4,237,266 1,866, %
Schools
Dover School Operating 7,759,641 10,357,943 2,598, %
Dover's Share Regional --
Operating Assessment 7,472,389 11,235,560 3,763, %
Debt Assessment 809, , ,476 (28.2%)
Total 8,282,281 11,816,976 3,534, %
Schools Total 16,105,621 22,244,452 6,138, %
Maturing Debt And Interest
Maturing Debt Principal 1,155,401 1,392, , %
Maturing Debt Interest 696, , ,899 (62.7%)
Bank Charges 11,000 4, ,000 (63.6%)
Debt & Interest Total 1,862,675 1,656, ,400 (11.1%)
Town Budget Grand Total 26,391,662 36,874, ,482, %

32. Annual Town Meeting 5/1/17
Blue Books will be sent to households according to the normal schedule
The Annual Town Meeting will be held Monday, May 1, 2017 at 7:00 PM in the Alan Mudge Auditorium in Dover-Sherborn Regional High School.
Thank you