1. T OWN OF N ORTH A NDOVER F INANCIAL F ORECAST F ISCAL Y EARS 2015-2019 Andrew Maylor Town Manager December 2, 2013

2. B UDGET D EVELOPMENT P ROCESS Selectmen adopt Fiscal Year Budget Calendar. Selectmen hold Strategic Planning Meeting (Oct). Selectmen approve annual Budget Policy Statement (Nov) Budget request packages are sent to departments. Revenue and Fixed Cost Review Committee approves draft report. Town Manager presents Five Year Financial Forecast. Revenue and Fixed Cost Review Committee approves final report. Superintendent submits budget to School Committee. Departmental operating budget requests submitted to Town Manager. School Committee holds public hearing. School Committee approves school department budget. Town Manager recommends budget to Selectmen. Selectmen approve its budget recommendations Finance Committee holds meetings with Town Manager and Department representatives. Finance Committee holds public hearing. Finance Committee approves its budget recommendations. Town Meeting approves final budget.

3. N ORTH A NDOVER M ISSION S TATEMENT The Town of North Andover is dedicated to serving residents and to creating a community in which residents may join together for the common good. The Town’s purpose is to offer services and government that provide for the general welfare, education and public safety of its residents. The administration of the Town fosters this commitment to community by delivering municipal services in a professional, cost-effective manner through prompt, courteous and equitable service and by insuring that the public’s business is conducted with the highest level of integrity.

4. B UDGET P RESSURES The economic recovery has been inconsistent and uncertainty remains; Non-discretionary spending, like health insurance and pension costs, have risen faster than inflation for the past decade; State revenues have not shown steady growth which will impact local aid; Deferred building maintenance and space needs will need to be addressed; Increasing the reserve balances to reach acceptable national standards, such as Stabilization at 5% of revenues.

5. F IVE Y EAR F INANCIAL F ORECAST P RO F ORMA A SSUMPTIONS – G ENERAL F UND R EVENUES B ASED ON P RELIMINARY R EVENUE AND F IXED C OST R EVIEW C OMMITTEE E STIMATES Increase Tax Levy by less than the allowed 2.5%. New Growth to remain steady at $600k per year. Debt Exclusion figures are actual based on the debt schedule. Local Receipts are assumed to increase by slightly more than 1.3% in FY15 and 2.5 % annually thereafter. State Aid projected to be level funded in FY15 and increase by 2.5% in each fiscal year from FY16-FY19. Operating Transfers are assumed to increase at 2.5% during the five year period.

6. R EVENUE A LLOCATION BY P ERCENTAGE FY05-FY15

7. F IVE Y EAR F INANCIAL F ORECAST P RO F ORMA A SSUMPTIONS – G ENERAL F UND E XPENSES Health Insurance is assumed to decrease by $1.2 million in FY15 and increase by 2% in FY16 with 7.5% increases in FY17, FY18 and FY19. Other Personnel Benefits (primarily Retirement) are projected to increase by 9% in FY15 and 8% in each of the other four fiscal years. Debt Service figures are actual based on existing debt schedules. Public Works expenses assumed to increase by 4% in FY15 and FY16 and 3.5% in FY17, FY18 and FY19. School Department appropriations are projected to increase by 4% in FY15 and FY16 and 3.5% in FY17, FY18 and FY19. Additional School Department increases in FY15 include funding of free full-day kindergarten ($660,000) and SPED reserve fund ($150,000). Support Services and General Government projected to increase by 4% in FY15 and FY16 and 3.5% in FY17, FY18 and FY19. Public Safety expenses are assumed to increase by 4% in FY15 and FY16 and 3.5% in FY17, FY18 and FY19.

11. F IVE Y EAR F INANCIAL F ORECAST R EVENUE AND E XPENDITURE S UMMARY G ENERAL F UND FY14 AdoptedFY15-EST FY16-ESTFY17-ESTFY18-ESTFY19-EST REVENUES Property Taxes $ 61,181,444 $ 62,862,619 $ 65,049,185 $ 67,290,414 $ 69,587,675 $ 71,942,367 New Growth 600,000 Debt Exclusion 1,742,044 1,705,849 1,867,461 1,853,589 1,842,680 590,633 Total Tax Revenue $ 63,523,488 $ 65,168,468 $ 67,516,646 $ 69,744,004 $ 72,030,355 $ 73,133,000 Local Receipts- 8,845,336 8,995,995 9,220,895 9,451,417 9,687,703 9,929,895 State Aid 9,435,614 10,331,504 10,589,792 10,854,537 11,125,900 Total Operating Revenues $ 81,804,438 $ 83,600,077 $ 87,069,045 $ 89,785,213 $ 92,572,594 $ 94,188,795 Operating Transfers/Other 1,637,762 1,576,647 1,616,063 1,656,465 1,697,876 1,740,323 Total Revenues $ 83,442,201 $ 85,176,724 $ 88,685,108 $ 91,441,678 $ 94,270,471 $ 95,929,118 EXPENSES General Government $ 4,224,026 $ 4,392,987 $ 4,568,707 $ 4,728,611 $ 4,894,113 $ 5,065,407 Group Health 11,091,614 9,871,537 10,068,968 10,824,140 11,635,951 12,508,647 Other Personnel Benefits 4,562,465 4,973,087 5,370,934 5,800,609 6,264,658 6,765,830 Other Non-Departmental 2,148,693 2,384,641 2,480,026 2,566,827 2,656,666 2,749,650 Debt Service 6,375,190 5,353,417 5,965,789 6,450,320 6,709,545 5,929,514 Public Works 4,114,638 4,279,223 4,450,392 4,606,156 4,767,371 4,934,229 Schools 39,863,136 42,267,661 43,802,368 45,335,451 46,922,192 48,564,468 Support Services 1,344,659 1,479,125 1,538,290 1,592,130 1,647,855 1,705,530 Public Safety 9,735,131 10,124,536 10,529,517 10,898,050 11,279,482 11,674,264 Total Expenses $ 83,459,553 $ 85,126,215 $ 88,774,991 $ 92,802,295 $ 96,777,832 $ 99,897,539 Surplus/(Deficit) $ (17,352) $ 50,509 $ (89,883) $ (1,360,618) $ (2,507,362) $ (3,968,421)

12. P LAN THE WORK, WORK THE PLAN … OUR PATH TO FISCAL STABILITY Maintain acceptable service levels. Recognize the impact to the taxpayer of our decisions. Understand that employees represent our most important asset. Control the increases of discretionary spending to sustainable levels. Build reserves to create financial flexibility. Develop strategic partnerships. Invest in our infrastructure. Reduce our energy costs. Keep debt service costs under control. Use technology to reduce the cost of service delivery. Facilities Master Plan Financial Reserve Policies Solid waste contract savings - $556k GIC Health Insurance Streetlight purchase savings - $260k Integrated Financial Software Pay-as- you-go

13. S USTAINABILITY THE NORTH A NDOVER DEFINITION If the decisions we make today do not result in a quality of life for future generations that is at least as good as we have, then we have not achieved our goal of sustainability.