2018 Financial Summit

December 4, 2018Danvers Board of SelectmenDanvers School CommitteePeabody Institute Library Board of TrusteesDanvers Finance CommitteeDanvers Planning Board 1

2018 Financial Summit Agenda

I. IntroductionII. Community IndicatorsIII. Financial Indicators &

BenchmarkingIV. Operating Budget Drivers &

Long-Term Capital NeedsV. Smith School Project Overview

& Debt Financing Options

2

2018 Financial Summit Agenda

I. IntroductionII. Community IndicatorsIII. Financial Indicators &

BenchmarkingIV. Operating Budget Drivers &

Long-Term Capital NeedsV. Smith School Project Overview

& Debt Financing Options

3

Community Indicator – Population Estimates: Total Population

Background: Population and demographic change can directly affect municipal revenues, as some taxes are collected on a per capita basis, and some grants are distributed according to the population. Sudden changes in population, up or down, could signal major problems.

Trend/Analysis: Currently, the town’s population is relatively stable with a very modest upward trend.

Outlook: It will be increasingly important that the Town better understand the demographic changes occurring within this number, as these factors, such as average household size, or the number of school-aged children, are more likely to have budgetary ramification than the modest growth of the total population will.

Source: US Census Bureau, Census 2000, Census 2010, and ACS 5-Year

0

5,000

10,000

15,000

20,000

25,000

30,000

Total Population

4

Community Indicator – Population Estimates: Under 18 & Over 64

Background: These two population cohorts are picked out due to these two groups generally requiring more services than the average working individual. The data we see in Danvers is largely consistent with regional and national changes.

Please note that ACS datasets, such as those used for the 2014 to 2017 estimates, have a much larger margin of error than the decennial census, which has virtually no error. Because of this, it can be difficult to discern trends from the variance of the dataset from year to year. Nonetheless, when used at a high level in a broad context, such as this, the American Community Survey data offers us good insight.

Trend/Analysis: Overlooking the fluctuations in the more recent ACS data, it appears that the town is certainly experiencing an increase in the over 64 population. While this table doesn’t show it, we know that we are seeing increased school enrollment, which likely indicates an increase in the number of residents under the age of 18. More investigation into any potential differences between Danvers and comparable communities is suggested.

Outlook: Both of these population cohorts must continue to be monitored closely over the near-term.

Source: US Census Bureau, 2000, 2010, and ACS 5-Year Data

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2000 2010 2014 2015 2016 2017

Population under 18 & over 64

Under 18 Over 64

5

Community Indicator – Income Estimates: Median Household Income

Background: Household income estimates are used to draw a host of conclusions about the economic health of a given area or population.

Trend/Analysis: This table shows that since the 1980’s the resident’s median household income has been fairly stable, but is projected to rise over the coming years. This is consistent with the findings of the survey conducted by the Town in 2017 and a trend we believe is evident in other income data depicted in subsequent slides.

Outlook: Rising household income is generally a positive indicator of community health, but could reduce the community’s economic diversity if not managed appropriately.

Source: US Census Bureau; projections by Environmental Systems Research Institute

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

1980 1990 2000 2010 2018 2023

Median Household Income (current dollars)

Median Income

6

Community Indicator – Economic Estimates: Unemployment & Local Jobs

Background: The unemployment rate and the number of jobs in the community are considered together as they are closely related. These estimates relate directly to business activity and personal income. Rating agencies use these to measure our ability to attract future economic development.

Trend/Analysis: Like most of Massachusetts, Danvers is experiencing historically low unemployment and appears to have recovered from the negative effects of the last recession.

Outlook: While these are strong indicators, most projections of unemployment for the region predict a flatlining or even a slight reversing of this trend in future years.

Source: Massachusetts Department of Employment and Training

26100

26200

26300

26400

26500

26600

26700

26800

26900

27000

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2013 2014 2015 2016 2017

Unemployment & Local Jobs

Local Jobs Unemployment Rate

7

Community Indicator – Income Estimates: per Capita Income

Background: Per Capita income is a measure of a community’s ability to pay taxes and debt in particular. Credit agencies compare per capita income with per capita expenditures to determine if a community’s tax burden is increasing, which may contribute to its ability to meet its financial obligations. While Danvers enjoys a considerable commercial sector, because the growth of residential values is steeper than commercial and industrial values, the balance between the two is skewing to the residential, which will put more focus on statistics like this.

Trend/Analysis: While tempting to think that this data shows a slight dip (2015), the variance within the sample size may be at work. Given other income estimates, our population is generally earning more year over year. This estimate is likely affected by the increasing number of residents under 18 and over 64, who tend to have lower personal incomes than working individuals.

Outlook: It is expected that this estimate will start to trend upwards over the next decade.

Source: US Census Bureau, ACS 5-Year Data

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2010 2011 2012 2013 2014 2015 2016

Per Capita Income

8

Community Indicator – Income Estimates: Income Distribution

Background: To get a deeper understanding of what may be happening within the Town’s population regarding changing income, we looked at how income is distributed among the population. This estimate divides the population into five income groups (from lowest to highest) so that approximately 20% of the population is in each group.

Please note that the Census Bureau clips the upper limit at $250,000, meaning that since 2014 the actual number is something greater than this limit.

Trend/Analysis: While we see that the upper portion of the community is doing well, what is more interesting is the stability of the distribution across the first four quintiles, representing approximately 80% of the population.

Outlook: Staff will continue to investigate these findings.

Source: US Census Bureau, ACS 5-Year Data

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

2010 2011 2012 2013 2014 2015 2016

Income Quintiles

Community Indicator – Income Estimates: Poverty & Public Assistance

Background: In addition to looking at changes to personal income, an increasing proportion of households in poverty or receiving public assistance can signal increases in some services as low-income households may lack the resources to provide basic services privately.

Trend/Analysis: The current trends in Danvers appear to be similar with the region, that is, while high-income households are doing better, it does not appear to affect those at the low end of the ladder.

Outlook: More investigation is necessary to understand better what is driving this trend.

Source: US Census Bureau, ACS 5-Year Data

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2012 2013 2014 2015 2016

Poverty & Public Assistance

10

Community Indicator – Property Value Estimates

Background: Changes in property value are important because we rely on the property tax for such a substantial portion of our revenue. Generally speaking, the higher the aggregate property value, the higher the revenue. Property values are a useful sign of the local economy's health.

Trend/Analysis: While the data here is positive, the absolute value of all property types is increasing, one aspect that could signal trouble is the consistent growth of residential values relative to the rest. All else being the same, this trend increases the tax burden on residents.

Outlook: This slide demonstrates that continued attention is needed to ensure that our commercial and industrial properties are as productive as possible and that the community is maximizing its opportunities to increase these revenues.

Source: Town of Danvers, CAFRs

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2013 2014 2015 2016 2017

Percent Change in Property Values, by Type

Residential Commercial Industrial

11

2018 Financial Summit Agenda

I. IntroductionII. Community IndicatorsIII. Financial Indicators &

BenchmarkingIV. Operating Budget Drivers &

Long-Term Capital NeedsV. Smith School Project Overview

& Debt Financing Options

12

Financial Condition Analysis

Cash Solvency Budgetary Solvency

Long-Run Solvency

Service-Level Solvency

Measures of Financial Condition

2018 Financial Summit

13

2018 Financial Summit – ICMA “Constant Dollar” Calculation

**2000** 2009 2010 2011 2012 2013

Operating Revenue 55,258,948 79,292,499 79,900,878 81,328,632 85,367,056 87,826,571

CPI-U, 2000 Base Year 100.000 126.916 128.612 133.037 134.164 136.747

CPI in decimals 1.000 1.269 1.286 1.330 1.342 1.367

CPI-U, 2000 Base, adj. constant dollars 100.0% 78.8% 77.8% 75.2% 74.5% 73.1%

Op. Revenue, adj. constant dollars 55,258,948 62,476,301 62,125,426 61,132,324 63,628,653 64,225,718

Source: U.S. Bureau of Labor Statistics14

2018 Financial Summit – Population Estimates

Source: Census.gov

Year Source Figure2010 U.S. 2010 Census 26,4932011 2007-2011 ACS Survey 26,3032012 2008-2012 ACS Survey 26,5682013 2009-2013 ACS Survey 26,8992014 2010-2014 ACS Survey 27,0752015 2011-2015 ACS Survey 27,4002016 2012-2016 ACS Survey 27,5582017 5 Year AVG Increase = .94% 27,8172018 5 Year AVG Increase = .94% 28,079

15

2018 Financial Summit – Financial Indicators & Benchmarks

Financial Indicators• Total of 13 Indicators showing trends in a variety of

areas such as revenue/expenditures, employment benefits, and debt

• New Rating System for each indicator based on ratings agency terminology (Strong, Stable, Weak)

Benchmarks• Geographic proximity to Danvers (and Boston)• Population• Residential v. Commercial/Industrial/Personal Base

16

Financial Indicator 1 – Revenues per Capita

Background: Revenues are being converted to constant dollars to ensure that the Town can maintain level service while inflation increases the cost of providing these services. They are then calculated per capita to determine the revenue generated per resident.

Trend/Analysis: Revenue has increased significantly post-Great Recession, however, it has leveled off recently. The recent leveling off revenue per capita results in the outlook shifting to “Stable”.

Source: Danvers Tax Recap / Mass DLS Databank/ Census (ACS 5-Year)

Outlook

• StableOutlook: As the cost of services increases, it will be crucial to the long-term fiscal health of Danvers to grow revenue in pace with expenditures.

Revenue Source **2000** 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Tax Levy 35,328,631 53,984,593 56,031,976 58,243,194 60,347,100 62,526,780 64,756,756 67,349,955 70,286,547 72,654,228 75,354,881 State Aid (including MSBA) 8,072,483 9,549,849 8,182,276 7,755,124 7,587,770 9,305,380 9,707,273 10,013,551 10,220,626 10,587,904 10,552,161 Less MSBA (187,134) (708,449) (708,449) (694,026) (694,026) (694,026) (694,024) (694,024) (694,024) (694,024) (462,221)Local Receipts 7,702,963 9,881,539 8,940,532 9,648,880 12,216,923 10,597,760 11,364,276 11,992,959 12,648,685 12,840,623 12,735,427 Operating Revenue 50,916,943 72,707,532 72,446,335 74,953,172 79,457,767 81,735,894 85,134,281 88,662,441 92,461,834 95,388,731 98,180,248

Op. Revenue, adj. constant dollars 50,916,943 57,287,861 56,329,287 56,340,079 59,224,142 59,771,735 61,225,613 63,340,418 65,091,997 65,733,726 65,453,023

Population 25,212 27,232 26,493 26,303 26,568 26,899 27,075 27,400 27,558 27,817 28,079 Revenues (constant $) per Capita 2,020 2,104 2,126 2,142 2,229 2,222 2,261 2,312 2,362 2,363 2,331

-

500

1,000

1,500

2,000

2,500

**2000** 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Revenues per Capita (Constant Dollars)

Rev

enue

s Per

Cap

ita

17

Financial Indicator 2 – Property Tax Revenues

Background: The property tax levy is the revenue category that directly impacts every residential and commercial property in Town and is therefore shown with its own indicator.

Trend/Analysis: The long-standing practice of Danvers has been to provide level or expanded services without the use of a Proposition 2 ½ override or debt exclusion. This has resulted in property tax revenues have stayed only slightly above inflation.

Source: Danvers Tax Recap / Mass DLS Databank

Outlook

• StableOutlook: Much like overall revenue, it will be crucial to the long-term fiscal health of Danvers to keep revenue in line with expenditures. This becomes difficult when fixed costs increases exceed 2.5%.

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

**2000** 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Property Tax Revenues (Constant Dollars)

Rev

enue

s

**2000** 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Prior Year Levy Limit 34,891,631 51,438,031 54,116,618 56,077,728 58,288,759 60,355,458 62,546,370 65,016,430 67,839,074 70,394,408 72,783,734 2.5% (Proposition 2 1/2) 872,291 1,285,951 1,352,915 1,401,943 1,457,219 1,508,886 1,563,659 1,625,411 1,695,977 1,759,860 1,819,593 New Growth 712,796 1,392,636 608,195 809,088 609,480 682,026 906,401 1,197,233 859,357 629,466 912,837

Property Tax Levy Limit 36,476,718 54,116,618 56,077,728 58,288,759 60,355,458 62,546,370 65,016,430 67,839,074 70,394,408 72,783,734 75,516,164 Actual Tax Levy 35,337,374 53,984,593 56,031,976 58,243,194 60,347,100 62,529,780 64,756,756 67,349,955 70,286,547 72,654,228 75,354,881 Unused Levy Capacity 1,139,344 132,025 45,752 45,565 8,358 16,590 259,674 489,119 107,861 129,506 161,283

Property Tax Revenues (constant dollars) 35,337,374 42,535,646 43,566,610 43,779,684 44,979,935 45,726,709 46,570,806 48,114,785 49,480,867 50,067,058 50,236,223 Percent Increase over Prior Year (constant dollars) - 2.4% 0.5% 2.7% 1.7% 1.8% 3.3% 2.8% 1.2% 0.3%

18

Benchmark – Property Tax Revenues

Source: Mass DLS Databank

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lynnfield Wakefield Burlington Andover Danvers Beverly Stoneham North Reading Reading Peabody Salem State Average

87% 85% 84% 84% 84%82%

79% 79%77%

69%

64%

70.30%

Taxes as a % of Total Revenue

19

Benchmark – Average Single Family Tax Bill

Source: Mass DLS Databank

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

Peabody Burlington Salem Stoneham Danvers Wakefield Beverly Reading Lynnfield North Reading Andover

$4,381

$5,071

$5,610 $5,841 $6,025

$6,455 $6,508

$7,764

$8,674 $8,782

$9,591

2018 Average Single Family Tax Bill

20

Source: Mass DLS Databank

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Burlington Danvers Peabody Andover Salem Lynnfield Beverly Wakefield North Reading Stoneham Reading

62%

76% 79%81% 84% 86%

86% 87% 88% 90%92%

38%

24% 21%19% 16% 14%

14% 13% 12% 10%8%

FY18 Assessed Values By Class

Residental % of Total CIP% of Total

Benchmark – Assessed Values By Class

21

Financial Indicator 3 – State Aid

Background: State Aid is made up of several categories, most predominantly being Chapter 70 (Education) and Unrestricted General Government Aid. Bond rating agencies view state revenue as volatile.

Trend/Analysis: This indicator proves that the bond rating agencies are right to have concern about a community’s reliance on State Aid. As seen in the table, state aid decreased substantially during the Great Recession.

Source: Danvers Tax Recap / Mass DLS Databank

Outlook

• StableOutlook: It will be important for Danvers to continue to monitor the fiscal health of the State as well as the overall economy to guard against unanticipated declines in this revenue source.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

State Aid

% o

f Net

Ope

ratin

g

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Net Operating Revenue 72,707,532 72,446,335 74,953,172 79,457,767 81,735,894 85,134,281 88,662,441 92,461,834 95,388,731 98,180,248 State Aid (Cherry Sheet) revenues 9,549,849 8,182,276 7,755,124 7,587,770 9,305,380 9,707,273 10,013,511 10,220,626 10,587,904 10,552,161

Less: School building reimbursements (708,449) (708,449) (694,026) (694,026) (694,026) (694,024) (694,024) (694,024) (694,024) (462,221)Net State Aid revenues 8,841,400 7,473,827 7,061,098 6,893,744 8,611,354 9,013,249 9,319,487 9,526,602 9,893,880 10,089,940 State Aid as percentage of operating revenues

12.2% 10.3% 9.4% 8.7% 10.5% 10.6% 10.5% 10.3% 10.4% 10.3%

22

Source: Mass DLS Databank

Benchmark – State Aid as % of Total Revenue

0%

5%

10%

15%

20%

25%

Salem Peabody Reading North Reading Stoneham Beverly Wakefield Danvers Lynnfield Andover Burlington

21%

16%15%

14% 14%

12% 12%11%

10%

8%7%

FY17 State Aid as % of Total Revenue

23

Financial Indicator 4 – Economic Growth

Background: ICMA and GFOA consider (1) Building Permit Fees, (2) Motor Vehicle Excise, and (3) New Growth as being indicative of economic growth.

Trend/Analysis: There is not a direct correlation of building permits and new growth, however, one (1) year after a significant increase in building permits we generally see an increase in new growth.

Source: Danvers Tax Recap / Mass DLS Databank / Town Accounting Department

Outlook

• StableOutlook: Building permit fee revenue and new growth have returned to stable levels after 2008. Motor vehicle excise continues to climb but may level off as well in the near future.

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% o

f Net

Ope

ratin

g Re

venu

e

Economic Growth Revenue

New Growth % Building Permit Fees %

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Net Operating Revenues 72,707,532 72,446,335 74,953,172 79,457,767 81,735,894 85,134,281 88,662,441 92,461,834 95,388,731 98,180,248 New Growth 1,392,636 608,195 809,088 609,480 682,026 906,401 1,197,233 859,357 629,466 912,837 Building Permit Fees 280,328 152,001 306,480 430,775 471,338 494,546 663,871 712,980 768,629 599,799 Total: Economic Growth Revenues 1,672,964 760,196 1,115,568 1,040,255 1,153,364 1,400,947 1,861,104 1,572,337 1,398,095 1,512,636 New Growth % 1.92% 0.84% 1.08% 0.77% 0.83% 1.06% 1.35% 0.93% 0.66% 0.93%Building Permit Fees % 0.39% 0.21% 0.41% 0.54% 0.58% 0.58% 0.75% 0.77% 0.81% 0.61%

Economic Growth revenues as a percentage of operating revenues

2.30% 1.05% 1.49% 1.31% 1.41% 1.65% 2.10% 1.70% 1.47% 1.54%

24

Source: Mass DLS Databank

Benchmark – New Growth as % of Prior Year Levy Limit

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

Burlington Salem Beverly Wakefield Andover North Reading Reading Stoneham Danvers Lynnfield Peabody

3.08%

2.75%

2.30%2.15%

1.87%

1.45%1.36% 1.32% 1.25%

1.10%0.94%

FY18 New Growth as a % of Prior Year Levy Limit

25

Financial Indicator 5 – Uncollected Property Tax

Background: Uncollected property taxes are the amount of the levy yet to be paid by the taxpayers. A high figure could show an issue with the residents’ ability to pay, as well as challenges with tax collection efforts.

Trend/Analysis: The steady increase from 2011 to 2014 was addressed by the Treasurer/Collector and Town Counsel and recent years have showed a declining uncollected percentage.

Source: Danvers Tax Recap / Mass DLS Databank / Town Treasurer/Collector

Outlook

• StrongOutlook: The affordability of property taxes coupled with the effectiveness of the Treasurer/Collector’s Office combine for a solid outlook for this indicator moving forward.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% o

f Net

Pro

pert

y Ta

x Le

vy

Uncollected Property Tax

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Property Tax Levy 53,984,593 56,031,976 58,243,194 60,347,100 62,529,780 64,756,756 67,349,955 70,286,547 72,654,228 75,354,881Overlay Reserve for Abatements and Exemptions (883,940) (695,985) (704,514) (690,940) (676,495) (761,632) (865,802) (850,555) (792,715) (897,376)Net Property Tax Levy, less Overlay Reserve 53,100,653 55,335,991 57,538,680 59,656,160 61,853,285 63,995,124 66,484,153 69,435,992 71,861,513 74,457,505Uncollected Taxes as of June 30 1,555,716 1,389,168 1,507,856 1,578,738 1,957,784 2,412,524 1,765,335 1,982,707 1,699,714 1,741,212 Uncollected Taxes as a % of Net Property Tax Levy 2.9% 2.5% 2.6% 2.6% 3.2% 3.8% 2.7% 2.9% 2.4% 2.3%

26

Financial Indicator 6 – Expenditures per Capita

Background: Expenditures are being converted to constant, similar to “Revenues per Capita”. They are then calculated per capita to determine the costs incurred per resident.

Trend/Analysis: The largest dollar increases are generally found in the school budget, but categories that outpace Proposition 2 ½ have generally been the Retirement Contribution and Insurance & Benefits.

Source: Town Accounting Department / Census (ACS 5-Year)

Outlook

• StableOutlook: Several categories, mostly fixed costs, are increasing at a rate higher than 2.5%. The issue will need to be addressed on an ongoing basis through either increased revenue or cuts elsewhere in the budget.

-

500

1,000

1,500

2,000

2,500

**2000** 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

Expenditures per Capita (Constant Dollars)

Per C

apita

Exp

endi

ture

s

Category **2000** 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*General Government 1,773,535 2,780,370 2,700,114 2,698,261 2,719,061 2,842,413 2,909,901 3,303,550 3,207,512 3,337,272 3,184,129 Education (incl. Essex) 20,623,451 30,561,792 31,100,257 32,483,473 33,782,787 35,459,478 35,825,212 37,977,094 39,247,140 40,459,335 41,809,730 Public Safety 6,885,269 9,602,218 9,591,082 10,185,237 10,182,459 10,536,264 10,473,264 10,841,753 10,843,317 11,264,696 12,267,920 DPW (Tax Supported) 8,701,667 10,396,887 9,907,056 10,168,240 9,239,665 9,935,284 10,562,422 11,145,259 10,036,037 11,052,933 10,911,705 Planning & Human Services 1,167,590 1,338,338 1,387,719 1,451,494 1,459,753 1,471,841 1,566,494 1,617,997 1,842,783 1,666,642 1,880,844 Peabody Institute Library 826,114 1,124,958 1,153,843 1,178,425 1,186,617 1,190,589 1,220,062 1,247,858 1,281,331 1,282,971 1,297,954 Retirement Contribution (Tax) 2,535,112 3,304,166 3,964,796 3,680,583 3,859,140 4,030,812 4,444,222 4,605,919 4,977,259 5,354,574 5,762,422 Debt Service 2,672,162 3,539,828 3,964,001 4,120,841 4,790,222 5,669,824 5,454,769 5,415,417 5,505,055 5,568,456 5,162,350 Insurance & Benefits 5,867,505 8,808,292 9,069,493 9,603,384 10,029,973 10,753,164 10,863,017 11,258,516 11,577,433 12,150,525 12,958,226 Operating Expenditures 51,052,405 71,456,848 72,838,360 75,569,937 77,249,677 81,889,668 83,319,362 87,413,363 88,517,867 92,137,404 95,235,280 Op. Expenditures, adj. constant dollars 51,052,405 56,302,420 56,634,099 56,803,683 57,578,334 59,884,186 59,920,386 62,448,077 62,315,492 63,493,191 63,489,726 Population 25,212 27,232 26,493 26,303 26,568 26,899 27,075 27,400 27,558 27,817 28,079 Expenditures per Capita 2,025 2,068 2,138 2,160 2,167 2,226 2,213 2,279 2,261 2,283 2,261

* Pending completion of the FY18 independent audit 27

Source: Mass DLS Databank

Benchmark – Total Expenditures per Capita

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Burlington Lynnfield Andover North Reading Reading Danvers Salem Peabody Wakefield Stoneham Beverly

4,563

4,132 4,014 3,975

3,497 3,400 3,263

3,119 3,025 2,894

2,579

FY17 Total Expenditures per Capita

28

Source: Mass DLS Databank

Benchmark – Public Safety Spending per Capita

-

100

200

300

400

500

600

700

Burlington Salem North Reading Andover Reading Danvers Peabody Wakefield Lynnfield Beverly Stoneham

604

469 458 446 429 422

404 398 393 366 352

FY17 Public Safety Spending per Capita

29

Source: Mass DLS Databank

Benchmark – Public Works Spending per Capita

-

100

200

300

400

500

600

Burlington Peabody Wakefield Lynnfield Danvers Reading North Reading Andover Beverly Salem Stoneham

522

433

359

307

264

228 210

196

128 113

96

FY17 Public Works Spending per Capita

30

Source: MA Department of Elementary and Secondary Education

Benchmark – Per Pupil Spending

20,679 18,748 17,043 15,831 15,678 15,331 15,273 15,080 14,739 14,157 13,609 -

5,000

10,000

15,000

20,000

25,000

Burlington Salem Andover Danvers Stoneham North Reading Lynnfield Wakefield Peabody Beverly Reading

FY17 Expenditures Per Pupil

$ Per Pupil State Average

31

Financial Indicator 7 – Salary & Wages

Background: Since it is comprises more than 50% of the total budget, Salary & Wage costs increasing as a percentage of expenditures could show an unsustainable trend and lead to higher pension and other post-employment costs in the future.

Trend/Analysis: The percentage of salary & wage costs as part of total expenditures has remained remarkably consistent over the past several years.

Source: Town Accounting Department / Danvers Public Schools

Outlook

• StrongOutlook: Monitoring this indicator is critical when contemplating collective bargaining options and additional positions in the budget.

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Salaries as % of Net Operating Expenditures

% o

f Net

Ope

ratin

g Ex

pend

iture

s

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Net Operating Expenditures 71,456,848 72,838,360 75,569,937 77,249,677 81,889,668 83,319,362 87,413,363 88,517,867 92,137,404 95,235,280

School Salaries (less grants) 24,018,441 24,088,475 25,323,962 25,658,613 26,675,051 28,013,432 29,328,550 30,651,608 31,452,264 32,748,296 General Government Salaries 16,740,471 16,721,813 17,533,713 17,342,997 17,971,221 18,063,868 18,935,411 19,043,959 19,789,218 20,714,373

Salaries & Wages as % of Exp. 57.04% 56.03% 56.71% 55.67% 54.52% 55.30% 55.21% 56.14% 55.61% 56.14%

32

Financial Indicator 8 - Benefits

Background: Heath care benefits represent a significant share of the Town’s operating costs, and this analysis understates the true cost because it does not include the OPEB liability.

Trend/Analysis: The benefits as a percentage of salaries indicator has increased each of the past three years. While Danvers has been successful in negotiating below-trend renewal rates, this is still an indicator worth monitoring closely.

Source: Town Accounting Department / Danvers Public Schools

Outlook

• StableOutlook: With health care cost increases trending between 8-10% annually, it is worth diving deeper into this cost driver for potential long-term solutions.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Benefits as % of Salaries

Ben

efits

as %

of S

alar

ies

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Insurance & Benefits 8,808,292 9,069,493 9,603,384 10,029,973 10,753,164 10,863,017 11,258,516 11,577,433 12,150,525 12,958,226 less: Casualty/Liability Insurance (192,500) (197,898) (182,266) (93,246) (108,573) (216,403) (229,832) (236,231) (243,694) (263,349)Employee Benefits 8,615,792 8,871,596 9,421,117 9,936,727 10,644,590 10,646,614 11,028,684 11,341,202 11,906,830 12,694,877

School Salaries (less grants) 24,018,441 24,088,475 25,323,962 25,658,613 26,675,051 28,013,432 29,328,550 30,651,608 31,452,264 32,748,296 General Government Salaries 16,740,471 16,721,813 17,533,713 17,342,997 17,971,221 18,063,868 18,935,411 19,043,959 19,789,218 20,714,373 General Govt & School Salaries 40,758,912 40,810,288 42,857,675 43,001,610 44,646,272 46,077,300 48,263,961 49,695,567 51,241,482 53,462,669

Benefits as % of Salaries & Wages 21.61% 22.22% 22.41% 23.32% 24.09% 23.58% 23.33% 23.30% 23.71% 24.24%

33

Source: Mass DLS Databank

Benchmark – Health Care Costs as % of Total Expenditures

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Salem North Reading Lynnfield Reading Danvers Stoneham Peabody Burlington Wakefield Beverly Andover

9% 9%

10%

11%12% 12%

13%13% 14%

16%

18%

FY17 Health Care Costs as % of Total Expenditures

34

Financial Indicator 9 – Reserves & Free Cash

Background: Stabilization Funds and Free Cash are widely-accepted indicators of a community’s ability to plan long-term and face unforeseen fiscal challenges.

Trend/Analysis: Free cash has been used very effectively to pay for capital projects on an annual basis, mitigating the need to borrow. The need to borrow for projects such as the High School Project has also been mitigated by the School Building Stabilization Fund.

Source: Danvers Tax Recap / Mass DLS Databank / Town Accounting Department / Town CAFR

Outlook

• StrongOutlook: The Town will continue to estimate revenue conservatively and monitor spending in order to allow for the accrual of Free Cash. Likewise, efforts will continue to be made to grow the School Stabilization Fund to help offset the costs of the Smith School project.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

Reserves / Free Cash as % of Expenditures

Free Cash, after Appropriation % of Expenditures Stabilization Fund(s) % of Expenditures

% o

f Net

Ope

ratin

g

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

Net Operating Expenditures 71,456,848 72,838,360 75,569,937 77,249,677 81,889,668 83,319,362 87,413,363 88,517,867 92,137,404 95,235,280

Certified Free Cash (DOR) ** 5,065,890 5,541,821 3,860,866 3,083,190 2,408,514 2,924,780 2,554,469 5,162,836 6,147,819 6,574,983 Amount Appropriated (3,122,114) (2,653,000) (2,862,756) (1,904,700) (1,241,125) (1,996,900) (2,149,673) (2,458,284) (3,291,228) (3,968,876)Net of Free Cash after Appropriation 1,943,776 2,888,821 998,110 1,178,490 1,167,389 927,880 404,796 2,704,552 2,856,591 2,606,107

General Stabilization Fund 898,416 466,863 1,118,592 1,141,970 718,192 729,791 720,097 728,724 1,034,221 1,048,317 Education Stabilization Fund 129,289 100,045 366 395 25,457 50,558 75,711 76,101 76,698 77,751 School Building Stabilization Fund 6,907,741 6,500,176 6,106,404 5,404,587 4,840,310 4,475,174 4,109,879 3,678,667 4,264,587 4,886,643 Subtotal - Stabilization Funds 7,935,446 7,067,084 7,225,362 6,546,952 5,583,959 5,255,523 4,905,687 4,483,492 5,375,506 6,012,711

Free Cash + Stabilization Funds as a % of net operating Expenditures 13.8% 13.7% 10.9% 10.0% 8.2% 7.4% 6.1% 8.1% 8.9% 9.0%

*Stabilization Funds are pending completion of the FY18 independent audit.**Due to timing of when Free Cash is certified, Free Cash certified as of 7/1/16 was used to appropriate for FY2018. 35

Financial Indicator 10 – Unassigned Fund Balance

Background: Unassigned Fund Balance (UFB) is calculated by independent auditors on an annual basis. UFB includes the General Stabilization Fund, but not the School Construction Stabilization Fund, which is included in the “committed” fund balance. The Town has a policy to maintain UFB between 8-12% each year.

Trend/Analysis: The Town has maintained UFB in the desired range in relation to Net Operating Revenues for 5 consecutive fiscal years, a positive indicator for bond rating agencies.

Source: Town Accounting Department / Town CAFR

Outlook

• StrongOutlook: The Town will aim to maintain UFB in this range, but also plans to continue to move money UFB (through the appropriation of Free Cash) to the School Construction Stabilization Fund as part of the Smith School project.

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*Unassigned Fund Balance (Audit) 4,930,845 3,073,418 2,271,697 3,572,172 5,511,075 7,965,218 8,982,083 10,182,856 11,336,407 8,854,709 Net Operating Expenditures 71,456,848 72,838,360 75,569,937 77,249,677 81,889,668 83,319,362 87,413,363 88,517,867 92,137,404 95,235,280

Unassigned Fund Balance as a % of net operating expenditures 6.9% 4.2% 3.0% 4.6% 6.7% 9.6% 10.3% 11.5% 12.3% 9.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

% o

f Net

Ope

ratin

g Ex

pend

iture

s

Unassigned Fund Balance

* Pending completion of the FY18 independent audit

36

Financial Indicator 11 – Pension Liability

Background: Retirement benefits are administered by the Danvers Retirement Board. Danvers is currently using a schedule that will have the pension liability met by 2035. The most common way to measure a Town’s pension liability is the “funded ratio” of pension assets divided by pension liability.

Trend/Analysis: The Town has remained in the 55% to 65% funded range in the past 10 years. PERAC considers 60% funded to be a warning indicator. For systems that under 60% , PERAC tracks performance against the State system (PRIT) and could potentially force underperforming systems to invest through PRIT.

Source: Danvers Retirement Actuarial Studies

Outlook

• StableOutlook: The Town anticipates annual increases to the pension assessment of approximately 8% for the next 8 years.0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2009 2010* 2012 2014 2016 2018

Pension Liability - Percent Funded

2009 2010* 2012 2014 2016 2018Pension assets 75,217,536 84,017,923 83,875,130 89,955,182 102,550,595 113,315,313 Pension liability 126,644,696 130,372,380 143,155,432 162,199,777 175,743,235 193,531,449 Percent funded 59.4% 64.4% 58.6% 55.5% 58.4% 58.6%* In 2010, valuations switched to even calendar years

37

Table of Contents

Table of Contents

Pg.

Introduction to Financial Condition Analysis1

Explaining "Constant Dollars"3

Financial Condition Indicators

Revenues

Indicator 1Revenues per Capita (Constant Dollars)4

Indicator 2Property Tax Revenues (Constant Dollars)5

Indicator 3State Aid6

Indicator 4Economic Growth7

Indicator 5Uncollected Property Taxes8

Expenditures

Indicator 6Expenditures per Capita (Constant Dollars)9

Indicator 7Salaries and Wages10

Indicator 8Employee Benefits11

Reserves & Fund Balance

Indicator 9Reserves & Free Cash, after Appropriation12

Indicator 10Unassigned Fund Balance13

Liabilities

Indicator 11Pension Liability14

Indicator 12OPEB Liability15

Indicator 13Debt Service16

Indicator 14Long-Term Debt17

Year1982-84 base indexCalculationResult (2000-based index)

2000183.6Set equal to 100100.00

2001192.1100 x 192.1104.63

183.6

2002195.7104.63 x 195.7106.59

192.1

2003203.0106.59 x 203.0110.57

195.7

2004208.9110.57 x 208.9113.78

203.00

LineDescriptionSourceFiscal Year Data

20002001200220032004

1Net operating revenuesDivision of Local Services50,000,00052,000,00054,080,00056,243,20058,492,928

2Consumer price index (CPI)CPI-U Boston100.000104.630106.590110.566113.780

3CPI in decimalsLine 2, divided by 1001.0001.0461.0661.1061.138

4Net operating revenues (constant dollars)Line 1, divided by line 350,000,00049,699,11550,736,27050,868,23451,408,816

PRINT

Rev Per Capita1Revenue Source**2000**200920102011201220132014201520162017

12Tax Levy35,328,63153,984,59356,031,97658,243,19460,347,10062,526,78064,756,75667,349,95570,286,54772,654,228

3State Aid (including MSBA)8,072,4839,549,8498,182,2767,755,1247,587,7709,305,3809,707,27310,013,55110,220,62610,587,904

4Less MSBA(187,134)(708,449)(708,449)(694,026)(694,026)(694,026)(694,024)(694,024)(694,024)(694,024)Trend Analysis

5Local Receipts7,702,9639,881,5398,940,5329,648,88012,216,92310,597,76011,364,27611,992,95912,648,68512,840,623favorable

6All Other1,792,0053,462,8534,801,5433,512,7044,004,5894,849,5524,794,8193,345,0393,742,4741,807,455marginal

7Free Cash2,550,0003,122,1142,653,0002,862,7561,904,7001,241,1251,996,9002,149,6732,458,2843,291,228unfavorable

8Operating Revenue55,258,94879,292,49979,900,87881,328,63285,367,05687,826,57191,926,00094,157,15398,662,592100,487,414uncertain

9CPI-U, 2000 Base Year100.00126.92128.61133.04134.16136.75139.05139.98142.05145.11

10CPI-U, 2000 Base, adj. constant dollars100.0%78.8%77.8%75.2%74.5%73.1%71.9%71.4%70.4%68.9%

11Op. Revenue, adj. constant dollars55,258,94862,476,30162,125,42661,132,32463,628,65364,225,71866,109,98167,265,83869,457,25469,247,301

12Population (DLS)25,21227,23226,49326,30326,56826,89927,07527,40027,55827,8171formula:net op. revenue (constant $)

13Revenues (constant dollars) per Capita2,1922,2942,3452,3242,3952,3882,4422,4552,5202,489population

14

152formula:state aid

16operating revenue

3formula:economic growth revenues

State Aid10ERROR:#REF!200920102011201220132014201520162017operating revenues

32Net Operating RevenueERROR:#REF!79,292,49979,900,87881,328,63285,367,05687,826,57191,926,00094,157,15398,662,592100,487,414

3State Aid (Cherry Sheet) revenuesERROR:#REF!9,549,8498,182,2767,755,1247,587,7709,305,3809,707,27310,013,51110,220,62610,587,9044formula:property tax levy (constant $)

4Less: School building reimbursementsERROR:#REF!(708,449)(708,449)(694,026)(694,026)(694,026)(694,024)(694,024)(694,024)(694,024)

5Net State Aid revenuesERROR:#REF!8,841,4007,473,8277,061,0986,893,7448,611,3549,013,2499,319,4879,526,6029,893,880

6State Aid as percentage of operating revenuesERROR:#REF!11.2%9.4%8.7%8.1%9.8%9.8%9.9%9.7%9.8%5formula:uncollected property taxes

7net property tax levy

8

96formula:net expenditures (constant $)

10population

11

127formula:salaries

13net operating expenditures

14

158formula:benefits

16salaries

9formula:free cash & reserves

Economic Growth10ERROR:#REF!200920102011201220132014201520162017net operating exp.

42Operating RevenuesERROR:#REF!79,292,49979,900,87881,328,63285,367,05687,826,57191,926,00094,157,15398,662,592100,487,414

3 Building Permit FeesERROR:#REF!280,328152,001306,480430,775471,338494,546663,871712,980768,62910formula:unassigned fund balance

4 Motor Vehicle ExciseERROR:#REF!3,455,0753,295,2823,393,0483,478,8783,770,1704,133,3834,374,0214,713,9554,801,649net operating expenditures

5 Tax Levy from New ConstructionERROR:#REF!1,392,636608,195809,088609,480682,026906,4011,197,233859,357629,466

6Total: Economic Growth RevenuesERROR:#REF!5,128,0394,055,4784,508,6164,519,1334,923,5345,534,3306,235,1256,286,2926,199,74411formula:pension assets

7pension liability

8Economic Growth rev. as a % of operating revenuesERROR:#REF!6.5%5.1%5.5%5.3%5.6%6.0%6.6%6.4%6.2%

912formula:OPEB Balance + Pay-as-Go

10Annual Required Contribution

11

1213formula:debt service

13operating budget

14

1514formula:long term debt

16assessed valuation

Tax Levy10**2000**200920102011201220132014201520162017

22Actual Tax Levy35,337,37453,984,59356,031,97658,243,19460,347,10062,529,78064,756,75667,349,95570,286,54772,654,228

3CPI-U, 2000 Base Year100.0126.9128.6133.0134.2136.7139.1140.0142.0145.1

4CPI-U, 2000 Base, adj. constant dollars100.0%78.6%77.7%75.1%74.5%73.1%71.6%70.9%70.3%68.8%

5Property Tax Revenues (constant dollars)35,337,37442,535,64643,566,61043,779,68444,979,93545,726,70946,570,80648,114,78549,480,86750,067,058

6

7Prior Year Levy Limit34,891,63151,438,03154,116,61856,077,72858,288,75960,355,45862,546,37065,016,43067,839,07470,394,408

82.5% (Proposition 2 1/2)872,2911,285,9511,352,9151,401,9431,457,2191,508,8861,563,6591,625,4111,695,9771,759,860

9New Growth712,7961,392,636608,195809,088609,480682,026906,4011,197,233859,357629,466

10Property Tax Levy Limit36,476,71854,116,61856,077,72858,288,75960,355,45862,546,37065,016,43067,839,07470,394,40872,783,734

11

12

13

14

15

16

Uncollected10ERROR:#REF!200920102011201220132014201520162017

52Property Tax Levy ERROR:#REF!53,984,59356,031,97658,243,19460,347,10062,529,78064,756,75667,349,95570,286,54772,654,228

3Overlay Reserve for Abatements and ExemptionsERROR:#REF!(883,940)(695,985)(704,514)(690,940)(676,495)(761,632)(865,802)(850,555)(792,715)

4Net Property Tax Levy, less Overlay ReserveERROR:#REF!53,100,65355,335,99157,538,68059,656,16061,853,28563,995,12466,484,15369,435,99271,861,513

5Uncollected Taxes as of June 30ERROR:#REF!1,555,7161,389,1681,507,8561,578,7381,957,7842,412,5241,765,3351,982,7071,699,714

6Uncollected Taxes as a % of Net Property Tax LevyERROR:#REF!2.9%2.5%2.6%2.6%3.2%3.8%2.7%2.9%2.4%

7

8

9

10

11

12

13

14

15

16

Expenditures1Category**2000**200920102011201220132014201520162017

62General Government1,773,5352,780,3702,700,1142,698,2612,719,0612,842,4132,909,9013,303,5503,207,5123,337,272

3Education (incl. Essex)20,623,45130,561,79231,100,25732,483,47333,782,78735,459,47835,825,21237,977,09439,247,14040,459,335

4Public Safety6,885,2699,602,2189,591,08210,185,23710,182,45910,536,26410,473,26410,841,75310,843,31711,264,696

5DPW (Tax Supported)8,701,66710,396,8879,907,05610,168,2409,239,6659,935,28410,562,42211,145,25910,036,03711,052,933

6Planning & Human Services1,167,5901,338,3381,387,7191,451,4941,459,7531,471,8411,566,4941,617,9971,842,7831,666,642

7Peabody Institute Library826,1141,124,9581,153,8431,178,4251,186,6171,190,5891,220,0621,247,8581,281,3311,282,971

8Retirement Contribution (Tax Supported)2,535,1123,304,1663,964,7963,680,5833,859,1404,030,8124,444,2224,605,9194,977,2595,354,574

9Debt Service2,672,1623,539,8283,964,0014,120,8414,790,2225,669,8245,454,7695,415,4175,505,0555,568,456

10Insurance & Benefits5,867,5058,808,2929,069,4939,603,38410,029,97310,753,16410,863,01711,258,51611,577,43312,150,525

11Operating Expenditures51,052,40571,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,404

12CPI-U, 2000 Base Year100.00126.92128.61133.04134.16136.75139.05139.98142.05145.11

13CPI-U, 2000 Base, adj. constant dollars100.0%78.8%77.8%75.2%74.5%73.1%71.9%71.4%70.4%68.9%

14Op. Expenditures, adj. constant dollars51,052,40556,302,42056,634,09956,803,68357,578,33459,884,18659,920,38662,448,07762,315,49263,493,191

15Population (DLS)25,21227,23226,49326,30326,56826,89927,07527,40027,55827,817

16Expenditures per Capita2,0252,0682,1382,1602,1672,2262,2132,2792,2612,283

Salaries10ERROR:#REF!200920102011201220132014201520162017

2Net Operating ExpendituresERROR:#REF!71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,404

3School Salaries (less grants)ERROR:#REF!24,018,44124,088,47525,323,96225,658,61326,675,05128,013,43229,328,55030,651,60831,452,264

4General Government SalariesERROR:#REF!16,740,47116,721,81317,533,71317,342,99717,971,22118,063,86818,935,41119,043,95919,789,218

5Salaries & Wages as % of Exp.ERROR:#REF!57.0%56.0%56.7%55.7%54.5%55.3%55.2%56.1%55.6%

6

7

8

9

10

11

12

13

14

15

16

Benefits10ERROR:#REF!200920102011201220132014201520162017

2Insurance & BenefitsERROR:#REF!8,808,2929,069,4939,603,38410,029,97310,753,16410,863,01711,258,51611,577,43312,150,525

3less: Casualty/Liability InsuranceERROR:#REF!(192,500)(197,898)(182,266)(93,246)(108,573)(216,403)(229,832)(236,231)(243,694)

4Employee BenefitsERROR:#REF!8,615,7928,871,5969,421,1179,936,72710,644,59010,646,61411,028,68411,341,20211,906,830

5

6School Salaries (less grants)ERROR:#REF!24,018,44124,088,47525,323,96225,658,61326,675,05128,013,43229,328,55030,651,60831,452,264

7General Government SalariesERROR:#REF!16,740,47116,721,81317,533,71317,342,99717,971,22118,063,86818,935,41119,043,95919,789,218

8General Govt & School SalariesERROR:#REF!40,758,91240,810,28842,857,67543,001,61044,646,27246,077,30048,263,96149,695,56751,241,482

9

10Benefits as % of Salaries & WagesERROR:#REF!21.6%22.2%22.4%23.3%24.1%23.6%23.3%23.3%23.7%

11

12

13

14

15

16

Free Cash10ERROR:#REF!200920102011201220132014201520162017

Reserves2Net Operating ExpendituresERROR:#REF!71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,404

3

4Certified Free Cash (DOR) **ERROR:#REF!5,065,8905,541,8213,860,8663,083,1902,408,5142,924,7802,554,4695,162,8366,147,819

5Amount AppropriatedERROR:#REF!(3,122,114)(2,653,000)(2,862,756)(1,904,700)(1,241,125)(1,996,900)(2,149,673)(2,458,284)(3,291,228)

6Net of Free Cash after AppropriationERROR:#REF!1,943,7762,888,821998,1101,178,4901,167,389927,880404,7962,704,5522,856,591

7

8General Stabilization FundERROR:#REF!898,416466,8631,118,5921,141,970718,192729,791720,097728,7241,034,221

9School Building Stabilization FundERROR:#REF!6,907,7416,500,1766,106,4045,404,5874,840,3104,475,1744,109,8793,678,6674,264,587

10Subtotal - Stabilization FundsERROR:#REF!7,806,1576,967,0397,224,9966,546,5575,558,5025,204,9654,829,9764,407,3915,298,808

11

12Total as a % of net operating expendituresERROR:#REF!13.8%13.7%10.9%10.0%8.2%7.4%6.1%8.1%8.9%

13*Stabilization Funds are pending completion of the FY18 independent audit.

14**Due to timing of when Free Cash is certified, Free Cash certified as of 7/1/16 was used to appropriate for FY2018.

15

16

UFB10ERROR:#REF!20092010201120122013201420152016

2Unassigned Fund Balance (Audit)ERROR:#REF!4,930,8453,073,4182,271,6973,572,1725,511,0757,965,2188,982,08310,182,856

3Net Operating ExpendituresERROR:#REF!71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,867

4UFB as a % of net operating expendituresERROR:#REF!6.9%4.2%3.0%4.6%6.7%9.6%10.3%11.5%

5FY2017 is unavailable as of 10/26/17, but the FY2017 UFB is projected to decrease as money was moved from the unassigned fund balance to the assigned fund balance (School Construction Stabilization)

6

7

8

9

10

11

12

13

14

15

16

Pension1020092010*201220142016

2Pension assets75,217,53684,017,92383,875,13089,955,182102,550,595

3Pension liability126,644,696130,372,380143,155,432162,199,777175,743,235

4Percent funded59.4%64.4%58.6%55.5%58.4%

5* In 2010, valuations switched to even calendar years

6

7

8

9

10

11

12

13

14

15

16

OPEB102011201220132014201520162017

2OPEB Reserve Balance1,445,7691,755,2172,170,9862,648,7723,151,5373,758,0414,355,107

3

4OPEB Reserve Increase334,004309,448415,769477,786502,765606,504597,066

5Pay As You Go - Total Contributions4,909,7285,354,0005,727,0004,416,4144,606,1064,963,7945,667,829

6Annual Determined Employer Contribution (Formerly ARC)13,595,00014,548,00014,954,00013,202,89913,805,30712,415,12013,153,123

7Percent of ARC Funded36.1%36.8%38.3%33.5%33.4%40.0%43.1%

8

9

10

11

12

13

14

15

16

Debt Service10ERROR:#REF!200920102011201220132014201520162017

2Exempt Debt ServiceERROR:#REF!- 0- 0- 0- 0- 0- 0- 0- 0- 0

3Debt ServiceERROR:#REF!3,539,8283,964,0014,120,8414,790,2225,669,8245,454,7695,415,4175,505,0555,568,456

4Less: MSBA ReimbursementsERROR:#REF!(708,449)(708,449)(694,026)(694,026)(694,026)(694,024)(694,024)(694,024)(694,023)

5Total Debt ServiceERROR:#REF!2,831,3793,255,5523,426,8154,096,1964,975,7984,760,7454,721,3934,811,0314,874,433

6

7Operating Expenditures (w/o Warrant Articles)ERROR:#REF!71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,404

8Debt Service as % of ExpendituresERROR:#REF!4.0%4.5%4.5%5.3%6.1%5.7%5.4%5.4%5.3%

9

10

11

12

13

14

15

16

Long Term1fiscal year2008200920102011201220132014201520162017

Debt2Outstanding Long Term Debt (General Fund)24,420,04531,255,50628,573,47028,654,57055,258,87051,804,67048,403,07053,686,02750,071,00058,424,300

3Assessed Valuation4,363,590,5834,292,626,5054,096,958,9243,930,282,8863,922,581,4653,894,807,2003,934,210,5674,056,879,9824,391,700,4134,526,570,664

4

5Long-Term Debt as a % of assessed valuation0.56%0.73%0.70%0.73%1.41%1.33%1.23%1.32%1.14%1.29%

6

7

8

9

10

11

12

13

14

15

16

Revenues per Capita

FINANCIAL INDICATOR 1 - Revenues per Capita

A decrease in net operating revenues per capita (constant dollars) is considered a warning indicator

Trend Analysis

•Neutral

source data:DLS Databank

formula:net op. revenue (constant $)

population

Sources:Revenue Source1999 CPI**2000**200120022003200420052006200720082009201020112012201320142015201620172018

DLS WebsiteTax Levy35,328,63151,331,36853,984,59356,031,97658,243,19460,347,10062,526,78064,756,75667,349,95570,286,54772,654,22875,354,881

DLS Website, includes MSBAState Aid (including MSBA)8,072,4839,181,4559,549,8498,182,2767,755,1247,587,7709,305,3809,707,27310,013,55110,220,62610,587,90410,552,161

Less MSBA(187,134)ERROR:#REF!(708,449)(708,449)(694,026)(694,026)(694,026)(694,024)(694,024)(694,024)(694,024)(462,221)

DLS Website, total local receiptLocal Receipts (Recap Pg 2, IIIb)21,798,82122,371,91020,743,92922,382,79924,832,87124,645,81624,985,98329,210,10227,784,17727,634,77627,125,149

DLS Website, A-2 for water and sewerLess: Enterprise Funds (Schedule A-2)

Ahern, Travis: Ahern, Travis:from FY2006 Budget Book, water and sewer budgets - DLS gateway only has 1 number for local receipts

Ahern, Travis: Ahern, Travis:from FY2007 budget book(12,306,993)

Ahern, Travis: Ahern, Travis:from DLS Gateway (2008 - 2016) backs water and sewer out of local receipts(12,782,910)(11,650,599)(13,236,429)(14,394,218)(14,319,316)(14,915,434)(18,562,301)(16,591,177)(16,281,776)(15,767,149)

Local Receipts7,702,9639,491,8289,881,5398,940,5329,648,88012,216,92310,597,76011,364,27611,992,95912,648,68512,840,62312,735,427Estimated changed to actual?

DLS WebsiteAll Other1,792,0053,794,1763,462,8534,801,5433,512,7044,004,5894,849,5524,794,8193,345,0393,742,4741,807,4552,048,792

Free Cash2,550,0002,685,5653,122,1142,653,0002,862,7561,904,7001,241,1251,996,9002,149,6732,458,2843,291,2283,968,876

Operating Revenue55,258,948- 0- 0- 0- 0- 0ERROR:#REF!79,292,49979,900,87881,328,63285,367,05687,826,57191,926,00094,157,15398,662,592100,487,414104,197,916115,253,769115,947,793

Based on ICMA worksheetCPI-U, 2000 Base Year100.000104.630106.590110.566113.780118.301122.603123.600131.404126.916128.612133.037134.164136.747139.050139.978142.048145.114150.001

from "Evaluating FinancialCPI-U (1982-84=100) - July175.300183.600192.100195.700203.000208.900217.200225.100226.929241.258233.018236.132244.256246.326251.067255.296256.999260.800266.429275.402as of July to keep consistent with fiscal year

Condition"CPI in decimals1.0001.0461.0661.1061.1381.1831.2261.2361.3141.2691.2861.3301.3421.3671.3911.4001.4201.4511.500

CPI-U, 2000 Base, adj. constant dollars100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#REF!78.8%77.8%75.2%74.5%73.1%71.9%71.4%70.4%68.9%66.7%

Would hide most rowsOp. Revenue, adj. constant dollars55,258,948- 0- 0- 0- 0- 0ERROR:#REF!62,476,30162,125,42661,132,32463,628,65364,225,71866,109,98167,265,83869,457,25469,247,30169,464,773

ACS 5 Yr Population25,21225,20725,44625,58825,65926,04525,83326,73626,76227,23226,49326,30326,56826,89927,07527,40027,55827,81728,079Change to ACS?

Revenues (constant $) per Capita2,192- 0- 0- 0- 0- 0- 0- 0ERROR:#REF!2,2942,3452,3242,3952,3882,4422,4552,5202,4892,474

Background: Revenues are being converted to constant dollars to ensure that the Town can maintain level service while inflation increases the cost of providing these services.

Trend/Analysis: The impact of the constant dollar calculation is best illustrated in the years immediately following the market crash of 2008, while a relatively stable market environment from 2012 to 2016 illustrates that revenues have kept up with and exceeded inflation. The increase in revenue above inflation is most closely tied to significant increases in motor vehicle excise.

Forecast/Projection: The tax levy remains stable due to Proposition 2 1/2, but the Town is preparing for local receipts (due mainly to Motor Vehicle Excise) to flatten out.

Source: DLS Databank (11/11/15)200020012002200320042005200620072008200920102011201220132014201520162017

25,21225,20725,44625,58825,65926,04525,83326,73626,76227,23226,49326,88027,02027,48327,48327,48327,72427,724

1.01%1.25%0.65%1.20%0.58%5 Year AVG Increase in Pop

Revenues per Capita (Constant Dollars)

**2000**20092010201120122013201420152016201720182191.77169601776952294.22376145671612344.97514285952324.15783781385472394.93573490982822387.66193450944822441.73520116608732454.95760527682932520.40257580553952489.38377376620612473.9466128516865

Tax Levy

FINANCIAL INDICATOR 2 - Property Tax Revenues

A decline in property tax revenues (constant dollars) is considered a warning indicator

source data:DLS Databank

formula:property tax levy (constant $)

1999 CPI**2000**200120022003200420052006200720082009201020112012201320142015201620172018

Prior Year Levy Limit34,891,63151,438,03154,116,61856,077,72858,288,75960,355,45862,546,37065,016,43067,839,07470,394,40872,783,734

2.5% (Proposition 2 1/2)872,2911,285,9511,352,9151,401,9431,457,2191,508,8861,563,6591,625,4111,695,9771,759,8601,819,593

New Growth712,7961,392,636608,195809,088609,480682,026906,4011,197,233859,357629,466912,837

Property Tax Levy Limit36,476,71841,262,32443,090,53045,378,30647,382,87749,535,83951,438,03154,116,61856,077,72858,288,75960,355,45862,546,37065,016,43067,839,07470,394,40872,783,73475,516,164

Actual Tax Levy35,337,37451,331,36853,984,59356,031,97658,243,19460,347,10062,529,78064,756,75667,349,95570,286,54772,654,22875,354,881

Unused Levy Capacity1,139,344- 0- 041,262,32443,090,53045,378,30647,382,87749,535,839106,663132,02545,75245,5658,35816,590259,674489,119107,861129,506161,283

CPI-U, 2000 Base Year100.000104.303107.026111.057114.107117.865122.603123.600131.404126.916128.612133.037134.164136.747139.050139.978142.048145.114150.001

CPI-U (1982-84=100)176.000183.600191.500196.500203.900209.500216.400225.100226.929241.258233.018236.132244.256246.326251.067255.296256.999260.800266.429275.402

CPI in decimals1.0001.0431.0701.1111.1411.1791.2261.2361.3141.2691.2861.3301.3421.3671.3911.4001.4201.4511.500

CPI-U, 2000 Base, adj. constant dollars100.0%0.0%0.0%75.9%78.6%77.7%75.1%74.5%73.1%71.6%70.9%70.3%68.8%66.5%

Property Tax Revenues (constant dollars)35,337,374- 0- 0- 0- 0- 0- 0- 039,063,73742,535,64643,566,61043,779,68444,979,93545,726,70946,570,80648,114,78549,480,86750,067,05850,236,223

Percent Increase over Prior Year (constant dollars)ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!8.9%2.4%0.5%2.7%1.7%1.8%3.3%2.8%1.2%0.3%

Background: The Property Tax Levy is the revenue category that directly impacts home owners and is therefore shown with its own indicator.

Trend/Analysis: Any decrease in property tax revenues should be monitored to ensure that the collection rate of taxes remains high.

Forecast/Projection: Proposition 2 1/2 limits property tax increases to 2.5% increase to the tax levy + new growth.

Tax Levy35,337,374.0-0-0-0-0-0-0-038,982,733.942,431,874.543,531,065.743,745,461.344,973,706.645,714,580.146,384,803.047,767,878.349,405,050.249,977,972.650,128,930.9

Property Tax Revenues (Constant Dollars)

**2000**20092010201120122013201420152016201720183533737442535646.30516096943566610.21284703943779684.03173718644979935.37020045545726708.8386765246570805.65931310548114785.41939849449480866.67638034450067058.24365963850236222.509640425

State Aid

FINANCIAL INDICATOR 3 - State Aid

Reductions in State Aid, as a percentage of operating revenues, is considered a warning indicator

Trend Analysis

Xfavorable

marginal

unfavorable

uncertain

source data:DLS Databank

formula:state aid

operating revenue

200320042005200620072009201020112012201320142015201620172018

Net Operating Revenue- 0- 0- 0- 0- 079,292,49979,900,87881,328,63285,367,05687,826,57191,926,00094,157,15398,662,592100,487,414104,197,916

State Aid (Cherry Sheet) revenues9,183,5407,668,9457,694,1838,181,1488,893,7339,549,8498,182,2767,755,1247,587,7709,305,3809,707,27310,013,51110,220,62610,587,90410,552,161

Less: School building reimbursements(82)- 0- 0(893,949)(893,949)(708,449)(708,449)(694,026)(694,026)(694,026)(694,024)(694,024)(694,024)(694,024)(462,221)

Net State Aid revenues9,183,4587,668,9457,694,1837,287,1997,999,7848,841,4007,473,8277,061,0986,893,7448,611,3549,013,2499,319,4879,526,6029,893,88010,089,940

State Aid as percentage of operating revenuesERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!11.2%9.4%8.7%8.1%9.8%9.8%9.9%9.7%9.8%9.7%

Background: Bond rating agencies view state revenue as volatile. Considering the current budget environment for the Commonwealth of Massachusetts, that concern appears to be valid. Towns that overly rely on state aid can be hit very hard when the state makes budget cuts. MSBA revenue is removed from the calculation because the state is contractually obligated to pay it.

Trend/Analysis: This table perfectly exemplifies why bond rating agencies don't like to see Town's relying on state aid - following the market crash of 2008 state aid began to decline for the Town at the exact point when the Town could have used more non-tax-levy revenue.

Forecast/Projection: The Town will continue rely on state aid, but at approximately 10% of net operating revenue bond rating agencies would not consider this an over-reliance.

State Aid

20092010201120122013201420152016201720180.11150361145762359.3538734330303602E-28.6821797273068602E-28.0754149469556502E-29.8049529908209671E-29.8048963296564623E-29.8978003821855176E-29.6557386207733117E-29.8458897892034658E-29.6834374307447763E-2

Economic Growth

FINANCIAL INDICATOR 4 - Economic Growth

Decreasing economic growth revnues, as a percent of net operating revenues, is considered a warning indicator

Trend Analysis

favorable

Xmarginal

unfavorable

uncertain

source data:DLS Databank; Accounting Dept.

formula:economic growth revenues

operating revenues

200620072009201020112012201320142015201620172018

Operating Revenues- 0- 079,292,49979,900,87881,328,63285,367,05687,826,57191,926,00094,157,15398,662,592100,487,414104,197,916

100-2410-44201 Building Permit Fees280,328152,001306,480430,775471,338494,546663,871712,980768,629599,799

Gateway Motor Vehicle Excise3,445,2193,640,8403,455,0753,295,2823,393,0483,478,8783,770,1704,133,3834,374,0214,713,9554,801,6495,039,928100-1050-41500

Gateway Tax Levy from New Construction870,113968,3901,392,636608,195809,088609,480682,026906,4011,197,233859,357629,466912,837

Total: Economic Growth Revenues4,315,3324,609,2305,128,0394,055,4784,508,6164,519,1334,923,5345,534,3306,235,1256,286,2926,199,7446,552,564

Economic Growth revenues as a percentage of operating revenuesERROR:#DIV/0!ERROR:#DIV/0!6.47%5.08%5.54%5.29%5.61%6.02%6.62%6.37%6.17%6.29%

Background: ICMA and GFOA consider (1) Building Permit Fees, (2) Motor Vehicle Excise and (3) New Growth as being indicative of economic growth. Tracking these factors as compared to operating revenues (which generally increase annually) means that even if this ratio is flat, the Town is still experiencing economic growth.

Trend/Analysis: The reason for the decrease from 2009 to 2010 is due to the timing of when new growth is calculated. The significant drop in building permits from 2008 ($977k) to 2009 ($280k) corresponds with the drop in New Growth from 2009 ($1.4m) to 2010 ($608k).

Forecast/Projection: Building permit fee revenue and new growth have returned to stable levels after 2008. On the flipside, motor vehicle excise tax is the highest it has ever been and will likely stagnate.

Economic Growth Revenue

20092010201120122013201420152016201720186.4672435156823596E-25.0756363403165604E-25.543700771949539E-25.2937669538469269E-25.6059731627231581E-26.0204185975676089E-26.6220407419393876E-26.3715049266088605E-26.1696725239579288E-26.2885749077745468E-2

Uncollected

FINANCIAL INDICATOR 5 - Uncollected Property Tax

Uncollected property taxes (as a percent of the tax levy) of 5-8 percent is considered a warning indicator

Trend Analysis

Xfavorable

marginal

unfavorable

uncertain

source data:DLS Databank; Treasurer/Collector

formula:uncollected property taxes

net property tax levy

200620072009201020112012201320142015201620172018

Property Tax Levy 46,774,55048,845,34153,984,59356,031,97658,243,19460,347,10062,529,78064,756,75667,349,95570,286,54772,654,22875,354,881

Overlay Reserve for Abatements and Exemptions685,825671,300(883,940)(695,985)(704,514)(690,940)(676,495)(761,632)(865,802)(850,555)(792,715)(897,376)

Net Property Tax Levy, less Overlay Reserve46,088,72548,174,04153,100,65355,335,99157,538,68059,656,16061,853,28563,995,12466,484,15369,435,99271,861,51374,457,505

Uncollected Taxes as of June 301,222,3341,781,8161,555,7161,389,1681,507,8561,578,7381,957,7842,412,5241,765,3351,982,7071,699,7141,741,212

Uncollected Taxes as a % of Net Property Tax Levy2.7%3.7%2.9%2.5%2.6%2.6%3.2%3.8%2.7%2.9%2.4%2.3%

Background: Uncollected property taxes signify a potential problem where tax payers may be experiencing an inability to pay their local taxes.

Trend/Analysis: The uncollected property tax ratio went in a positive direction for the Town following the market downturn of 2008, which is a good indication that the Town's tax payers do not fall into a risk category for bond rating agencies. The steady increase from 2011 to 2014 was addressed by the Treasurer/Collector and Town Counsel that followed through with past due tax payers.

Forecast/Projection: The Town has been tracking this category through the CAFR for a number of years and will maintain its current process of working with passed due tax payers to ensure payment without putting undue pressure on the Town's residents.

DLS Databank

DOR CodeMunicipalityFiscal YearResidential LevyOpen Space LevyCommercial LevyIndustrial LevyPersonal Prop Levy Total Tax LevyOverlay Reserve

071Danvers200326,530,433011,010,8073,033,498673,12441,247,862686,028

071Danvers200429,519,303010,093,8622,795,808677,97243,086,945719,746

071Danvers200529,398,349011,490,2343,018,0591,035,20744,941,849702,539

071Danvers200631,020,818011,625,7933,073,2751,054,66446,774,550685,825

071Danvers200732,400,905012,143,3553,138,1811,162,90048,845,341671,300

071Danvers200834,331,294012,640,1393,147,7371,212,19851,331,368744,375

071Danvers200935,924,009013,280,1063,369,7411,410,73653,984,592883,940

071Danvers201037,272,132013,545,3953,566,1491,648,30056,031,976695,985

071Danvers201138,484,157014,318,2203,677,7391,763,07858,243,194704,514

071Danvers201240,058,409014,746,1873,863,9351,678,56960,347,100690,940

071Danvers201341,563,369015,162,9984,011,5661,788,84762,526,780676,495

071Danvers201442,876,602015,867,2214,151,9561,860,97864,756,757761,632

071Danvers201544,772,174016,358,7434,344,8921,874,14667,349,955865,802

17,101,1974,493,9402,023,33870,286,547850,555

72,654,227.65

75354881

Uncollected Property Tax

20092010201120122013201420152016201720182.929749295232581E-22.5104240000776133E-22.6205953767887293E-22.6463956111154322E-23.1652061810460028E-23.7698559659014023E-22.6552718510229046E-22.8554456311360828E-22.3652633086086013E-22.3385312199220212E-2

% of Net Tax Levy

Expenditures

FINANCIAL INDICATOR 6 - Expenditures per Capita

Increasing net operating expenditures per capita, in constant dollars, may be considered a warning indicator.

Trend Analysis

favorable

Xmarginal

unfavorable

uncertain

source data:DLS Databank; Accounting Dept.

formula:net expenditures (constant $)

population

Sources:Category1999 CPI**2000**200120022003200420052006200720082009201020112012201320142015201620172018*

Fund 100General Government1,773,5352,745,3922,780,3702,700,1142,698,2612,719,0612,842,4132,909,9013,303,5503,207,5123,337,2723,184,129

Education20,623,45128,193,38029,351,41529,821,82431,346,34732,473,50633,923,52134,354,33236,053,47237,254,75038,558,44939,738,745from Keith 11/5/2018

Education (Vocational)1,150,8461,210,3771,278,4331,137,1261,309,2811,535,9571,470,8801,923,6221,992,3901,900,8862,070,985

Education (incl. Essex)20,623,451- 0- 0- 0- 0- 0- 0- 029,344,22630,561,79231,100,25732,483,47333,782,78735,459,47835,825,21237,977,09439,247,14040,459,33541,809,730

Public Safety6,885,2699,544,3439,602,2189,591,08210,185,23710,182,45910,536,26410,473,26410,841,75310,843,31711,264,69612,267,920warrant articles not included because they are mainly funded/dependent on free cash

DPW (Tax Supported)8,701,66710,009,19710,396,8879,907,05610,168,2409,239,6659,935,28410,562,42211,145,25910,036,03711,052,93310,911,705includes capital outlay

Planning & Human Services1,167,5901,370,0911,338,3381,387,7191,451,4941,459,7531,471,8411,566,4941,617,9971,842,7831,666,6421,880,844

Peabody Institute Library826,1141,087,9921,124,9581,153,8431,178,4251,186,6171,190,5891,220,0621,247,8581,281,3311,282,9711,297,954

Retirement Contribution (Tax)2,535,1123,081,6713,304,1663,964,7963,680,5833,859,1404,030,8124,444,2224,605,9194,977,2595,354,5745,762,422

Debt Service2,672,162

Ahern, Travis: Ahern, Travis:from FY2006 Budget Book, water and sewer budgets - DLS gateway only has 1 number for local receipts

Ahern, Travis: Ahern, Travis:from FY2007 budget book3,446,8623,539,8283,964,0014,120,8414,790,2225,669,8245,454,7695,415,4175,505,0555,568,4565,162,350

Insurance & Benefits5,867,5058,559,8428,808,2929,069,4939,603,38410,029,97310,753,16410,863,01711,258,51611,577,43312,150,52512,958,226

Operating Expenditures51,052,405- 0- 0- 0- 0- 0- 0- 069,189,61671,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,40495,235,280

Based on ICMA worksheetCPI-U, 2000 Base Year100.000104.630106.590110.566113.780118.301122.603123.600131.404126.916128.612133.037134.164136.747139.050139.978142.048145.114150.001

from "Evaluating FinancialCPI-U (1982-84=100)175.300183.600192.100195.700203.000208.900217.200225.100226.929241.258233.018236.132244.256246.326251.067255.296256.999260.800266.429275.402

Condition"CPI in decimals1.0001.0461.0661.1061.1381.1831.2261.2361.3141.2691.2861.3301.3421.3671.3911.4001.4201.4511.500

CPI-U, 2000 Base, adj. constant dollars100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!76.1%78.8%77.8%75.2%74.5%73.1%71.9%71.4%70.4%68.9%66.7%

Would hide most rowsOp. Expenditures, adj. constant dollars51,052,405- 0- 0- 0- 0- 0- 0- 052,654,06156,302,42056,634,09956,803,68357,578,33459,884,18659,920,38662,448,07762,315,49263,493,19163,489,726

DLS WebsitePopulation (DLS)25,21225,20725,44625,58825,65926,04525,83326,73626,76227,23226,49326,30326,56826,89927,07527,40027,55827,81728,079

Expenditures per Capita2,025- 0- 0- 0- 0- 0- 0- 01,9672,0682,1382,1602,1672,2262,2132,2792,2612,2832,261

*Pending completion of the FY18 independent audit

Background: Increasing per capita expenditures (in constant dollars) can indicate that the cost of providing service is increasing more rapidly than the Town's ability to pay, especially if spending is increasing faster than residents' collective personal income. Increasing expenditures may also indicate that the demographics of the Town are changing, which is also monitored.

Trend/Analysis: The Town's increase in expenditures has largely been related to increasing costs for retirement and health care benefits (see Indicator 8). In FY2015, Tax-Supported DPW expenditures spiked due to snow and ice costs associated with historic snowfall.

Forecast/Projection: The retirement contribution is scheduled to have 8% increases in the coming few years. Additionally, a 5.75% increase in health care premiums was the highest increase since the Town switched to Tufts in FY2012, which is being monitored as a potential problem in the coming years (70% of premiums paid by Town, 30% by employees).

Veteran's Services in Planning & HS through FY16 - will change in FY17

Expenditures per Capita (Constant Dollars)

**2000**2009201020112012201320142015201620172018*2024.92483737902582067.50955457549572137.70047016746182159.58952790365722167.20617947700842226.26069717382322213.12599119531662279.12690398096542261.24871559348052282.52822562982562261.1488628102957

Salaries

FINANCIAL INDICATOR 7 - Salaries & Wages

Increasing personnel costs as a percentage of total spending is considered a warning indicator.

Trend Analysis

Xfavorable

marginal

unfavorable

uncertain

source data:Accounting; School Dept.add warrant articles?

formula:salaries

net operating expenditures

Sources:2009201020112012201320142015201620172018

Net Operating Expenditures71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,40495,235,280

Keith Email School Salaries (less grants)24,018,44124,088,47525,323,96225,658,61326,675,05128,013,43229,328,55030,651,60831,452,26432,748,296from Keith 11/5/2018

Fund 100, Obj 51110-51999General Government Salaries16,740,47116,721,81317,533,71317,342,99717,971,22118,063,86818,935,41119,043,95919,789,21820,714,373

Salaries & Wages as % of Exp.57.04%56.03%56.71%55.67%54.52%55.30%55.21%56.14%55.61%56.14%

Background: Increasing salaries and wages as a percent of operating expenditures may be an indicator of two trends: (1) It may point to future pension and health insurance costs since both are related to the number of employees and their compensation levels; and (2) If salaries and wages as a percent operating expenditures are increasing because the Town is reducing its expenditures on maintenance and capital outlay, it may be an indicator of deferred maintenance of the Town's infrastructure.

Trend/Analysis: Salaries and Wages as a percent of net operating expenditures was highest in FY2009, follownig the market crash when "other expense" lines can be cut but salary and wage costs can only be altered by laying off staff. The Town was able to get through the 2008 crash without significant personnel cuts.

Forecast/Projection: The Town's collective bargaining agreements expire 6/30/2016 and must be renegotiated.

Salaries as % of Net Operating Expenditures

20092010201120122013201420152016201720180.570398965385099380.560285644887693610.567125985728256450.556657472184176160.545200306266280130.553020312062565860.552134817049949710.561418488806469610.556142016235104620.56137461661167098

Benefits

FINANCIAL INDICATOR 8 - Benefits

Increasing benefits costs as a percentage of total spending is considered a warning indicator.

Trend Analysis

favorable

Xmarginal

unfavorable

uncertain

source data:Accounting; School Dept.

formula:benefits

salaries

Sources:2009201020112012201320142015201620172018

100-9100Insurance & Benefits8,808,2929,069,4939,603,38410,029,97310,753,16410,863,01711,258,51611,577,43312,150,52512,958,226

(less 57401)less: Casualty/Liability Insurance(192,500)(197,898)(182,266)(93,246)(108,573)(216,403)(229,832)(236,231)(243,694)(263,349)

Employee Benefits8,615,7928,871,5969,421,1179,936,72710,644,59010,646,61411,028,68411,341,20211,906,83012,694,877

Keith Email (9/28/16)School Salaries (less grants)24,018,44124,088,47525,323,96225,658,61326,675,05128,013,43229,328,55030,651,60831,452,26432,748,296

Fund 100, Obj 51110-51999General Government Salaries16,740,47116,721,81317,533,71317,342,99717,971,22118,063,86818,935,41119,043,95919,789,21820,714,373

General Govt & School Salaries40,758,91240,810,28842,857,67543,001,61044,646,27246,077,30048,263,96149,695,56751,241,48253,462,669

Benefits as % of Salaries & Wages21.61%22.22%22.41%23.32%24.09%23.58%23.33%23.30%23.71%24.24%

Operating Expenditures71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,40495,235,280

Benefits as % of Op. Expenditures12.06%12.18%12.47%12.86%13.00%12.78%12.62%12.81%12.92%13.33%

Background: Health care benefits represent a significant share of the Town's operating costs, and this analysis understates the true cost because it does not include the OPEB Liability.

Trend/Analysis: While the cost of premiums has been favorable for the Town since changing to Tufts in 2012 (as compared with the market and the GIC), this ratio has increased slightly.

Forecast/Projection: After a 5.75% increase in premiums in FY2017 the Town's IAC will convene prior to the FY2017 budget process in order to determine if the cost structure of the current Tufts plan should be altered to help save employees and the Town from significant increases in premiums in the future.

69,189,61671,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,404

ERROR:#REF!12.06%12.18%12.47%12.86%13.00%12.78%12.62%12.81%12.92%

Benefits as % of Salaries

Benefits as % of Salaries & Wages 20092010201120122013201420152016201720180.216107140605803550.22223546759557750.224076166617713510.233246454112920080.240852438885004320.235756371603732390.233269620369534110.232967117570064140.237122820409818640.24237894894473

FC+Res - Stag

FINANCIAL INDICATOR 9 - Reserves / Free Cash (After Appropriation)

Declining reserves as a percentage of operating expenditures is considered a warning indicator

Trend Analysis

favorable

Xmarginal

unfavorable

uncertain

source data:DLS Databank; Accounting; CAFR

formula:free cash & reserves

net operating exp.

2009201020112012201320142015201620172018*

Net Operating Expenditures71,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,40495,235,280

Free Cash Certified as of: **7/1/077/1/087/1/097/1/107/1/117/1/127/1/137/1/147/1/157/2/15

Certified Free Cash (DOR) **5,065,8905,541,8213,860,8663,083,1902,408,5142,924,7802,554,4695,162,8366,147,8196,574,9836,574,983

Fiscal Year AppopriatedFY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017

Amount Appropriated(3,122,114)(2,653,000)(2,862,756)(1,904,700)(1,241,125)(1,996,900)(2,149,673)(2,458,284)(3,291,228)(3,968,876)(3,968,876)

Net of Free Cash after Appropriation1,943,7762,888,821998,1101,178,4901,167,389927,880404,7962,704,5522,856,5912,606,1072,606,107

General Stabilization Fund898,416466,8631,118,5921,141,970718,192729,791720,097728,7241,034,2211,048,317

Education Stabilization Fund129,289100,04536639525,45750,55875,71176,10176,69877,751

School Building Stabilization Fund6,907,7416,500,1766,106,4045,404,5874,840,3104,475,1744,109,8793,678,6674,264,5874,886,643

Subtotal - Stabilization Funds7,935,4467,067,0847,225,3626,546,9525,583,9595,255,5234,905,6874,483,4925,375,5066,012,711

Free Cash + Stabilization Funds as a % of net operating Expenditures13.8%13.7%10.9%10.0%8.2%7.4%6.1%8.1%8.9%9.0%

*Stabilization Funds are pending completion of the FY18 independent audit.

**Due to timing of when Free Cash is certified, Free Cash certified as of 7/1/16 was used to appropriate for FY2018.

Background: Free Cash is generated when revenue comes in higher than projected and/or when expenditures end up less than budgeted. It is certified annually by MassDOR. During the budget process Free Cash is used to pay for large one-time expenditures, generally capital improvements. Town Meeting is the mechanism for appropriating Free Cash. The Town's financial policy states that the desirable level of Free Cash, after appropriation at Town Meeting, is no less than one percent (1%) of the annual Operating Budget. The School Building Stabilization fund is used to offset debt service on school building projects during the peak years.

Trend/Analysis: Reserves are needed to help the Town weather economic downturns, such as 2008, and this indicator illustrates the long-term impacts of the housing market crash. Free cash has been used very effectively to pay for capital projects on an annual basis, mitigating the need to borrow. The need to borrow for projects such as the High School Project has also successfully been mitigated by the School Building Stabilization Fund, allowing the Town to avoid a Proposition 2 1/2 override.

Forecast/Projection: The Town will continue to estimate revenues conservatively and watch spending which will allow healthy Free Cash numbers in the future. In the FY2017 budget, the Town made a concerted effort to reverse the draw-down on the School Building Stabilizaion Fund by putting $1.1 million into the fund and only using $500,000 to offset debt service.

Free Cash, after Appropriation % of ExpendituresERROR:#REF!2.7%4.0%1.3%1.5%1.4%1.1%0.5%3.1%3.1%2.7%

Stabilization Fund(s) % of ExpendituresERROR:#REF!11.1%9.7%9.6%8.5%6.8%6.3%5.6%5.1%5.8%6.3%

ERROR:#REF!13.8%13.7%10.9%10.0%8.2%7.4%6.1%8.1%8.9%9.1%

ERROR:#REF!0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.1%0.1%

School Building Stabilization7,170,9046,907,7416,500,1766,106,4045,404,5874,840,3104,475,1744,109,879

Education Stabilization346,630129,289100,04536639525,45750,55875,711

Percent of Free Cash (current year)ERROR:#REF!7.09%7.61%5.11%3.99%2.94%3.51%2.92%5.83%

Percent of Free Cash (prior year)ERROR:#REF!7.76%5.30%4.08%3.12%3.57%3.07%5.91%

fiscal year2006201120122013201420152016*2017

7/1/097/1/107/1/117/1/127/1/137/1/147/1/15

Sewer - Retained Earnings1,563,5801,797,8031,307,0802,470,5821,183,266956,305904,306

Appropriation(26,856)(875,000)(100,000)(656,000)(249,667)

Net Retained Earnings, after Appr.1,536,724922,8031,207,0801,814,5821,183,266706,638904,306

Net Operating Revenues6,885,0888,085,2286,894,3527,462,8096,899,4727,503,155

22.32%11.41%17.51%24.31%17.15%9.42%

7/1/097/1/107/1/117/1/127/1/137/1/147/1/15

Water - Retained Earnings620,086331,6392,446,2071,194,0474,623,0753,857,4923,664,126

(15,185)- 0(500,000)(540,000)(1,955,000)(1,352,667)

604,901331,6391,946,207654,0472,668,0752,504,825

Net Operating Revenues7,096,9937,035,0427,217,7098,464,48710,113,5269,088,022

8.52%4.71%26.96%7.73%26.38%27.56%

5%5%5%5%

344,718373,140344,974375,158

360,885423,224505,676454,401

Reserves / Free Cash as % of Expenditures

Free Cash, after Appropriation % of Expenditures2009201020112012201320142015201620172018*2.720209533786561E-23.966070880946182E-21.3207765365293092E-21.5255597823037726E-21.4255632341461334E-21.1136427048722142E-24.6308251699969556E-33.0553741277134741E-23.1003597694164674E-22.736493230395946E-2Stabilization Fund(s) % of Expenditures2009201020112012201320142015201620172018*0.111052281044978599.7024204911279263E-29.5611591883965522E-28.4750542370942886E-26.818880982585418E-26.307685098545214E-25.6120561556257609E-25.0650700961232538E-25.8342277710238664E-26.3135331331742622E-2

Unassigned FB

FINANCIAL INDICATOR 10 - Unassigned Fund Balance

The Town of Danvers has a goal to maintain a UFB in the range of 8-12% of net operating expenditures; below 5% is considered a warning indicator

Trend Analysis

favorable

marginal

xunfavorable

uncertain

source data:CAFR

formula:unassigned fund balance

net operating expenditures

200620072009201020112012201320142015201620172018*

Unassigned Fund Balance (Audit)4,670,9407,846,2854,930,8453,073,4182,271,6973,572,1725,511,0757,965,2188,982,08310,182,85611,336,4078,854,709

Net Operating Expenditures- 0- 071,456,84872,838,36075,569,93777,249,67781,889,66883,319,36287,413,36388,517,86792,137,40495,235,280

Unassigned Fund Balance as a % of net operating expendituresERROR:#DIV/0!ERROR:#DIV/0!6.9%4.2%3.0%4.6%6.7%9.6%10.3%11.5%12.3%9.3%

*Projected Unassigned Fund Balance Pending completion of the FY18 independent audit

Background: Unassigned Fund Balance is calculated by independent auditors on an annual basis - Free Cash is a more conservative component of Unassigned Fund Balance. Unassigned Fund Balance includes the General Stabilization Fund balance, but not the School Contruction Stabilization Fund which is in the "committed" fund balance.

Trend/Analysis: Following the 2008 market disruption the Town's Unassigned Fund Balance began to decline as Free Cash and the General Stabilization Fund were needed to cover capital costs. The Town has returned to having UFB at 10% of Net Operating Revenues, a positive indicator for bond rating agencies.

Forecast/Projection: The Town will aim to maintain UFB at its current levels, but also plans to continue to move money from Unassigned Fund Balance (through the appropriation of Free Cash) to the School Contstruction Stabilization Fund, which is in the Assigned Fund Balance as the Town prepares for the Smith School Construction Project.

Total Governmental Fund Balance (Audit)13,148,11815,936,03815,084,64416,405,43715,468,45716,544,78817,809,92817,809,929

Total Fund Balance as % of net operating expendituresERROR:#REF!18.4%21.9%20.0%21.2%18.9%19.9%20.4%20.1%

Total Governmental Fund Balance includes committed, assigned and unassigned fund balances; for details, see the Fund Balance Policy or CAFR document

HS/MS Stabilization Fund Balance6,907,7416,500,1766,106,4045,404,5874,840,3104,475,1744,109,8793,678,667

UFB + HS/MS StabilizationERROR:#REF!11,431,0219,179,8227,676,2848,412,4829,986,24912,075,09712,660,750

Total, as percent of Net Op. Rev.ERROR:#REF!16.0%12.6%10.2%10.9%12.2%14.5%14.5%

fiscal year2006200720082009201020112012201320142015

Trial BalanceSewer - Unrestricted Cash3,252,8022,522,1112,551,2323,283,0583,697,5293,155,8562,566,7922,006,688

DLSNet Operating Revenues5,544,1916,415,4976,062,5856,885,0888,085,2286,894,3527,462,8096,899,472

58.67%39.31%42.08%47.68%45.73%45.77%34.39%29.08%

Trial BalanceWater - Unrestricted Cash3,049,1611,522,0931,347,0402,772,6224,071,2666,173,5256,739,3865,710,012

DLSNet Operating Revenues5,405,6805,591,3896,215,1857,096,9937,035,0427,217,7098,464,48710,113,526

56.41%27.22%21.67%39.07%57.87%85.53%79.62%56.46%

Unassigned Fund Balance

Unassigned Fund Balance as a % of net operating expenditures2009201020112012201320142015201620172018*6.9004512755707417E-24.219504647320084E-23.0060855974832653E-24.6241902253490751E-26.7298783015960414E-29.5598643341993014E-20.102754118211152680.115037295524848160.123038055474274169.2977192554358115E-2

Liability - Pension

FINANCIAL INDICATOR 11 - Pension Liability

An increase in unfunded pension liability is considered a warning indicator

Trend Analysis

favorable

Xmarginal

unfavorable

uncertain

source data:Actuarial Studies

formula:pension assets

pension liability

1/1/981/1/011/1/03

1998200120032005200720092010*2012201420162018

Pension assets49,283,74572,004,87072,105,46674,769,88880,141,76675,217,53684,017,92383,875,13089,955,182102,550,595113,315,313

Pension liability69,977,30786,832,82996,413,574101,890,509112,391,450126,644,696130,372,380143,155,432162,199,777175,743,235193,531,449

Percent funded70.4%82.9%74.8%73.4%71.3%59.4%64.4%58.6%55.5%58.4%58.6%

* In 2010, valuations switched to even calendar years

Background: Ret