1. Financial Reserves Strategy
Sponsored by:
The Board of Selectmen

2. 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

3. 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

4. 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

5. 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.

6. 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

7. 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.