March 10, 2023 By Carol Britton Meyer
The School Committee, Advisory Committee, and Select Board are in the process of creating a Fiscal 2024-2028 memorandum of understanding — also referred to as a financial management plan — that will constitute a “public commitment to the residents and taxpayers of the Town of Hingham” in conjunction with the proposed Fiscal 2024 $7.9 million operational override in an effort to exercise fiscal discipline while continuing to provide quality municipal and educational services.
“This would be a public pledge,” Town Administrator Tom Mayo told the Select Board last night.
The understanding is that no further operational overrides would be sought until at least Fiscal 2028 if the proposed FY2024 override passes. The MOU would not apply if the override doesn’t pass at the April 24 Town Meeting and at the April 29 Town Election through a ballot question.
Under the proposed MOU, both municipal and school departments would commit to budget growth rates of no more than 3.5 percent annually, with a 2 percent cap on the special education budget, with contingencies.
Since special education out-of-district costs can fluctuate significantly, they are excluded from the overall education budget cap, School Committee Chair Michelle Ayer told the Hingham Anchor in a follow-up email to discussions about the MOU that took place Tuesday night during School Committee, Select Board, and Advisory Committee meetings.
Under the MOU, the School Department would be able to access the reserve fund transfer process for such tuitions and specialized contracts that would constitute more than a 2 percent increase.
During the earlier School Committee discussion about the proposed MOU, Ayer said such a financial management plan “could be a powerful document for the townspeople to know that we all [meaning the two committees and Select Board] share in this fiscal responsibility and that we realize that asking the town for an override of this size is not insignificant.
“We want to protect the town from unnecessary additional overrides for the next several years while continuing to provide the services that people rely on in this town,” Ayer said.
The Town Administrator and School Superintendent “will be responsible for proposing and implementing prioritizations, recognizing that this may lead to reductions or limitations in municipal and school departmental activities and plans,” the draft document states.
While current boards/committees cannot bind their successors, the expectation is that future boards/committees would honor and respect this public pledge of fiscal management consistent with the plan’s parameters. (See related draft document in its entirety in this post.)
Other commitments proposed for the MOU include pursuing economic development opportunities; seeking efficiencies in operations; continuing to fund capital needs within financial policy guidelines and also OPEB (Other Post-Employment Benefits); continuing to advance tax relief programs; and seeking new non-tax revenue sources when available, with the high-priority goal of maintaining Hingham’s AAA credit rating.
Mayo noted that such an MOU doesn’t preclude moving forward in the process of evaluating options for a possible new Senior Center.
The School Committee will discuss the proposed MOU at their meeting next Monday, and the Select Board is expected to vote next week. The Advisory Committee discussed the draft document Thursday night.
##
FY24 OVERRIDE FRAMEWORK AND FY24-28 FINANCIAL MANAGEMENT PLAN DRAFT:
PURPOSE
The purpose of this document is to make a public commitment to the residents and taxpayers of the
Town of Hingham to implement a Financial Management Plan (the “Plan”) in conjunction with a
proposed operational override for Fiscal Year 2024. The Select Board, School Committee, and Advisory
Committee acknowledge the necessity of following the Plan’s parameters and pledge to work together
in Fiscal Years 2024 to 2028 in order achieve balanced budgets consistent with the Plan’s fiscal
constraints.
DEFINITIONS
● Balanced Budget: A budget that balances anticipated expenditures with anticipated revenue.
● Excess Unassigned Fund Balance (EUFB): Fund Balance is the accumulation of each year’s actual
surpluses and deficits. Excess Unassigned Fund Balance is that portion of Fund Balance that is
not otherwise use-restricted and that is in excess of the Town’s Financial Policy guideline of 20%
of Total Annual Expenditures.
● Debt Exclusion: A voter-approved temporary tax increase allowed under Proposition 2½ to pay
the debt service from bonding for a specific capital project.
● Forecast Group: A group of elected/appointed officials and staff that meet periodically for the
purpose of reviewing and discussing the Town’s projected revenues and expenditures for the
coming fiscal year. This group is comprised of the following individuals:
o Select Board Chair
o School Committee Chair and Vice Chair
o Advisory Committee Chair and Vice Chair
o Town Administrator
o School Superintendent
o Assistant Town Administrators
o Director of School Business and Support Services
o Town Accountant
● Level Services: The budget that provides expenditures that cover the next fiscal year’s costs of
the current fiscal year’s services.
● Municipal Budget: In any given fiscal year, the Municipal Budget includes the amount budgeted
in Warrant Article 4 plus the General Fund operating budget amounts in Warrant Article 6 for
the General Government, Public Safety, Public Works, Human Services, and Culture and
Recreation departments. However, the Municipal Budget does not include Capital Outlay
amounts for any departments or self-supporting operations (Sewer Department, South Shore
Country Club, and Weir River Water System).
● Out-of-district (OOD) special education tuitions and special education contracts: Please see the
line items and account numbers in Appendix A.
● Override: A voter-approved, permanent property tax increase allowed under Proposition 2 ½
generally to fund operating expenses.
● School Budget: The School Budget includes the General Fund operating budget amount for
Education in Warrant Article 6. The School Budget does not include the Capital Outlay
allocation, which is considered part of the Shared Services Budget as defined below.
● Shared Services Budget: The Shared Services Budget includes the General Fund amounts
budgeted in Article 6 for Employee Benefits, Debt Service, Capital Outlay (all departments), and
Property/Liability Insurance.
● The Town: The Town refers to the Town of Hingham government operation as a whole and,
where relevant, includes both the Municipal and School Departments.
● Total Annual Expenditures (TAE): As defined by the Town’s Financial Policy, TAE is the sum of
Warrant Articles 4, 5, and 6 excluding the expense and revenue amounts attributable to the
Weir River Water System, the Sewer Department, and the South Shore Country Club.
ACKNOWLEDGEMENTS
In an effort to exercise fiscal discipline while continuing to provide quality municipal and educational
services, we acknowledge that budgetary limitations in each fiscal year will require the Town to
prioritize the utilization of available resources in order to achieve the Plan’s goals. The Town
Administrator and School Superintendent will be responsible for proposing and implementing
prioritizations, recognizing that this may lead to reductions or limitations in municipal and school
departmental activities and plans. While current boards/committees cannot bind their successors, we
expect that future boards/committees will honor and respect our public pledge of fiscal management
consistent with the Plan’s parameters.
COMMITMENTS
Fiscal Commitments
● The Town will seek an operational override in the amount of $7,890,467 for FY24.
● No further operational overrides will be sought until at least FY28.
● The Plan includes the following tools to help meet this timeframe in the following order:
1. Annual operating budget growth rate caps.
a. The Municipal Departments will operate with a total FY24 budget of
$34,731,577.
General Government $6,027,145
Public Safety $17,817,682
Public Works $6,730,128
Human Services $1,088,922
Culture and Recreation $2,765,203
Article 4 $302,497
Total FY24 Municipal Budget $34,731,577
b. Annual operating budget growth for the Municipal departments will be capped
at 3.5% after FY24. The Municipal Budget growth rate will be calculated as
follows: the prior year’s approved Municipal Budget (as defined above)
multiplied by 1.035. For example, if the approved FY24 Municipal Budget is
$34,731,577, the maximum FY25 Municipal budget would be $35,947,182. The
maximum Municipal budgets for FY25-27 are listed in Appendix B.
c. The School Department will operate with a total FY24 budget of $65,703,895.
Annual operating budget growth for the School Department will be capped at
3.5% after FY24, with the exception of the accounts listed in Appendix A which
will be accounted for based on section (d) below. The School Budget growth
rate will be calculated as follows: the prior year’s approved School Budget (as
defined above) multiplied by 1.035. For example, if the approved FY24 School
Budget is $65,703,895, the maximum FY25 School budget would be
$68,003,624. The maximum School budgets for FY25-27 are listed in Appendix
B.
d. Within the School budget, OOD special education tuitions and special education
contracts (transportation, specialized services) as outlined in Appendix A will be
considered as a separate category for growth calculations due to the
unknown/uncontrollable nature of these expenditures. The MA Operational
Services Division’s 10-year average rate of increase in out-of-district tuitions
from 2013 to 2023 of 2% is being used as a basis for the projected increase in
tuitions. If the projected annual increase for OOD tuition and special education
contracts is at or below 2.0% for a given fiscal year, then the budget for those
line items will increase to match the anticipated growth. If the projected annual
increase for OOD tuition and special education contracts is above 2.0%, those
line items will be budgeted at 2.0% within the School budget and any variance in
costs above that amount will be paid through the Reserve Fund process if the
School operating budget or any applicable grants are insufficient to cover these
expenses. The School Department will apply applicable grant funding and, to
the extent possible, Special Education Stabilization Trust funds to the OOD
tuition and special education contracts costs before seeking to use the Reserve
Fund. The application of excess OOD special education tuition and special
education contract costs to the Reserve Fund shall only take place for the
duration of this Financial Management Plan.
e. Changes in School enrollment during this period will not impact the School
Department’s budget growth as stated above.
f. Some service reductions and/or increased fees may be necessary in FY 25-27 to
ensure the municipal and school departments manage to the budgeted growth
rates outlined above.
2. Creation of a Tax Mitigation Stabilization Fund with $1,000,000 of EUFB in FY24
(potential to add more in future years). This stabilization fund will be utilized, as
needed, to fund budget deficits in FY25-FY27 and potentially beyond. If Town Meeting
does not create the Tax Mitigation Stabilization Fund or fund it in a sufficient manner,
the Town will use EUFB to fund budget deficits in FY25-FY27 and potentially beyond.
3. Excess Overlay funds will be applied as operating revenue, as needed, to fund budget
deficits in FY25-FY27 and potentially beyond.
● In the event of a general budgeted surplus in operational revenue, excess revenue should be
earmarked for the Tax Mitigation Stabilization Fund.
Other Commitments
● The Town will focus on economic development efforts to facilitate new growth.
● Municipal and School officials will seek strategies that provide for efficiencies in service delivery.
● The Town will continue to fund capital outlay at a level that maintains compliance with the
Town’s Financial Policy.
● This Financial Management Plan will not be construed as precluding the Town from evaluating
and pursuing capital projects that may require debt exclusions.
● During the five-year period the Town will continue making annual contributions to its Other
Post-Employment Benefits Trust Fund consistent with its past levels of contributions.
● The Town will continue to advance appropriate tax relief programs and publicize existing
exemptions and relief programs.
● The Town will continue to investigate new and pre-identified non-tax revenue sources in
accordance with the recommendations outlined in the January 31, 2022 Sustainable Budget Task
Force final report.
● The Town will use its best efforts to maintain its AAA bond rating and strong financial position
consistent with the Town’s Financial Policy.
● In the event of extraordinary and unforeseen external circumstances, such as a major natural
disaster, public health emergency, or significant economic crisis, this Plan may be subject to
review at the request of all three signatory boards.
If the FY24 Override Fails:
● The School and Municipal Departments will implement service reductions as of July 1, 2023.
Specific actions will be at the discretion of the Town Administrator and School Superintendent in
accordance with departmental budgets approved by Annual Town Meeting 2023.
● The School Department will operate with a total FY24 budget of $61,092,221, which represents
a decrease of $3,909,890 from the proposed FY24 level services School Budget of $65,002,111.
● The Municipal Departments will operate with a total FY24 budget of $31,952,874, which
represents a decrease of $2,105,326 from the proposed FY24 level services Municipal Budget of
$34,058,200.
● One-time unemployment costs for staff who are laid off as part of the FY24 service reductions
will be funded from the Reserve Fund, per the vote of the Advisory Committee on February 21,
2023.
● The remainder of this Financial Management Plan for FY25-28 will not apply and the Town will
need to reevaluate its approach to service provision.
IMPLEMENTATION
The Select Board, School Committee, and Advisory Committee shall each vote to approve and adhere to
this Financial Management Plan as presented and authorize the respective chairperson to sign on behalf
of the Board/Committee.
PROPOSED VOTES
1. That the Select Board of the Town of Hingham hereby votes to 1) approve and adhere to the
FY24-28 Financial Management Plan dated March ___, 2023 attached hereto, 2) authorize the
Chair of the Select Board to execute said plan, and 3) authorize the Town Administrator to
manage the implementation of said plan on behalf of the Select Board in accordance with its
terms.
2. That the School Committee of the Town of Hingham hereby votes to 1) approve and adhere to
the FY24-28 Financial Management Plan dated March ___, 2023 attached hereto, 2) authorize
the Chair of the School Committee to execute said plan, and 3) authorize the School
Superintendent to manage the implementation of said plan on behalf of the School Committee
in accordance with its terms.
3. That the Advisory Committee of the Town of Hingham hereby votes to 1) approve and adhere to
the FY24-28 Financial Management Plan dated March ___, 2023 attached hereto and 2)
authorize the Chair of the Advisory Committee to execute said plan on behalf of the Advisory
Committee.
APPENDIX A:
APPENDIX B:
