Episode 47

April 12, 2024


Spotlight: Town Budget 101 and Hanover's FY25 Budget Top Highlights

Hosted by

Alex Torpey
Spotlight: Town Budget 101 and Hanover's FY25 Budget Top Highlights
Hanover Happenings
Spotlight: Town Budget 101 and Hanover's FY25 Budget Top Highlights

Apr 12 2024 | 00:39:23


Show Notes

In this episode I sit down with Ellen Bullion, Finance Director, to talk some budget!

We start off with a basic Budget 101 - revenue/appropriations, operating/capital, how the budget leads to the tax rate, and some differences between private and public sector budgeting.

We then move on to cover a very broad overview of the FY25 budget, and the "Top 12" highlights of things to keep an eye on in the FY25 budget that was approved by the Selectboard on April 1st, and endorsed by the Finance Committee.

What we cover in this episode will be largely mirrored in the Town Report as well.

Then we discuss the many backup documents that contain more information if you want more on any specific topic. We summarize some of the key ones below. The available backup documents can all be accessed at hanovernh.org/budget:

  • A full Excel Workbook of the budget. This is broken down by department, includes a summary tab, and tax rate calculation tab. You can see down to the account level across the organization.
  • All slides and videos from the budget presentations. These include department presentations and plans, budget highlights, social service applications, and more. It’s a lot of information – three meetings of more than three hours each.
  • All items not included in the budget. Over $600,000 of evaluated budget requests were not included in the budget due to affordability constraints. This memo outlines what items weren’t included, why, and what may be evaluated in future years.
  • Updated Undesignated Fund Balance tracking. These include a revised tracking sheet that looks at the ‘surplus’ funds in each of the Town’s funds.
  • A new draft template for tracking personnel levels. This draft of a new tracking template includes information such as FTEs, headcount, PTO utilization, and more, meant to give a sense of the staffing levels and pressure on the organization and trends over time.
  • Retention and Recruitment memo. This is a somewhat more detailed memo on the Retention and Recruitment issues and personnel costs.
  • The full report of the newly formed Capital Improvement Program Committee. This is the first year that Hanover has been in compliance for capital planning, and the multi-stakeholder group that reviewed the capital requests has an even bigger job in coming years to incorporate all of the cost items that haven’t been included before. This is the Town’s most transparent capital plan so far, and you can read the full report (it’s long) or the summary.
  • Memo summarizing the FY22 audit and related issues. The FY22 was recently completed, and identified a number of serious, but resolvable, issues in how the Town has been conducting accounting practices. Through collaboration with the Finance Committee and Selectboard, this resulted in a new accounting position added to the Town organizational chart to both help fix these issues and prevent issues from arising in the future.
  • A summary of the union contracts. These are the first multi-year contracts in some time, agreed to through a more collaborative approach, and in line with the updates policies and programs offered to all Town staff.
  • Links to the Town’s Master Plan. These documents are important planning documents, and one of the goals in the FY25 budget was to not only connect budget items to the Selectboard’s goals, but the Master Plan as well.



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Episode Transcript

[00:00:00] Speaker A: All right, everybody, welcome to this special episode of Hanover Happenings. I'm Alex Torpy, your town manager, and. [00:00:07] Speaker B: I am here with Ellen Boyen, the finance director for the town. [00:00:12] Speaker A: Ellen, thank you for joining. We're gonna do a little, and not just joining the podcast, but joining the town. And so Ellen has been here just over a year, and what we're gonna do is give you all a very, very, very quick, simple kind of budget 101, like if you haven't really looked at municipal budgeting before. And we're going to include some links to some further resources. So if you want to learn a little bit more about how budgets work, you can go look at those. But we're going to do like sort of a five minute overview, and then we're going to run through the sort of top twelve highlights that are in this year's budget. So some of the biggest cost drivers, some of the biggest changes, things that are sort of the most worth paying attention to, so to speak. And that is going to be mirrored in probably what will be in the town report as well. But we wanted to put this out and give people a chance to not just read about the budget, but listen to it as well. So without going down too many existential rabbit holes, Ellen, why don't we zoom out for a second? And just what is a budget? Why do we budget? [00:01:20] Speaker B: Yeah, we budget to really provide a roadmap for the fiscal year, for a year of spending, and that we budget really to put into dollars and cents what are the priorities of the residents of the town of Hanover? And we learn about those priorities in a number of ways, and particularly through the guidance of the select board. And so we really are aware that we're spending the tax dollars of our residents. And a good budget allocates scarce resources effectively and efficiently, and it supports delivering the, the services that the town demands and would like to see. So again, really, I think a budget is a roadmap that allows us to recognize and operate under the priorities of our residents. [00:02:31] Speaker A: That's great. And I think one of the things that we did this year, we've made a lot of process changes over the last year, and there'll be many more in future years. And we work on those things with the select board, with the finance committee, with our department heads and staff who work on the budget. One of those things was to have the select board discuss what their goals and priorities are for the upcoming year before we really begin getting into the budget process, which just helps reframe our requests a little bit to make sure. We have a new master plan that has some really important goals and values outlined in them. And the select board also now has what we've called an aspirations document, because some of these are definitely we're reaching for, and goals feels a little bit more kind of tactical. And that document is available, and we'll link to that as well. And that was a meeting in October of last year where the select board brought in individual goals and priorities, and then we kind of talked about them as a group. And so that does sort of inform the budget. And our goal is, is to bring a budget back to the select board that is based on those things. And hopefully we're pretty close this year. There's a lot in this budget, and we're going to talk about some of that in a minute. But before we do, just want to do a few overview items about the budget. One thing you did mention, Ellen, was the fiscal year. So Hanover is on a fiscal year, which not all towns and all states are. So we're July to June, but we have two other years that we have to work around. And so what are those years? [00:04:05] Speaker B: We do? We, of course, have the calendar year, which everyone's most familiar with. And then we also have our tax year, which runs from April 1 to March 31. So we have a lot of intersecting data points and different ways of looking at the numbers. [00:04:27] Speaker A: It just makes your job easier having all those different years. So. All right, so that's the year that we're on, which is why, of course, everything is timed the way it is with town meeting. And actually not every town is in that situation. But Hanover is lucky to be that. We have our town meeting before the fiscal year turns, before our fiscal year turns over. And so we have two big buckets in any budget, basically got money coming in and money coming out. So what are those? [00:04:57] Speaker B: Sure. So the revenues, again, as Alex said, are all the inflows to the town. And the great majority of our revenue comes from the property taxes, the town portion of the property taxes. And so for our general fund, the property taxes do provide 62% of our overall revenue. So that is, that's the biggest piece of our revenue. And then other revenue sources are coming from user fees and other fees. So I think another big piece that all of you can relate to are the motor vehicle registration fees and that portion that the town retains. We do have actually, our parks and Rec has program fees that goes to support those programs. We have building permits, and then we also have some investment income. But again, the largest portion really is coming from the property taxes. [00:06:09] Speaker A: And we're only getting a portion of the property tax bill, which I think most folks in town are probably aware of. [00:06:14] Speaker B: Absolutely. Yep. Yes. So that goes to the schools and to the county. But again, our portion provides 62% for the general fund. So that's really the revenue side, the inflow side, and then the expense side. In municipal government speak, our appropriations, and they kind of fall into three, I guess, big buckets. We can say compensation or, you know, all of our wages and compensation for our important town staff. And then we have capital expenditures, which, if you think about it, is really an investment in the future. And then we have just, not just, but then we have the operating expenses. So I think those are the three buckets. And compensation really accounts for over 70% of the appropriations. So, you know, our town employees are our biggest asset. So it's an important area. [00:07:22] Speaker A: It is. And really the employee compensation, which includes the salaries and benefits and everything there and the general operating cost, those two things are different than capital because those two are, that's basically money coming in in the year that the money's going back out. And so you mentioned that capital was like an investment in the future. And so what sort of things get charged to capital accounts? What's a capital project? [00:07:51] Speaker B: Sure. Well, you know, a lot of our building maintenance. So I know that I think we're just finishing up a new roof on the RW black rec center and then all of the vehicles that are public works department uses to maintain our roads and to make sure we can get around when we have 2ft of snow in April. So I think that those are some of the big pieces and these are generally large expenditures. I know that at last year's town meeting, we approved a bond for a new fire truck. So, you know, I think that that's where Alex, you were saying that it's a. And I've said it's an investment in the future. So for these large capital expenditures, we have two funding mechanisms. One is really we have capital reserve funds or savings accounts where we'll save over multiple years to spread out the tax burden and then make a large purchase in a given year when they're needed. And then like the fire truck, if we have really large expenditures, over a million dollars, we will go out and to the bond market and issue debt. And again, that spreads the burden of that purchase over multiple years. [00:09:19] Speaker A: And part of the value of spreading that burden is not just that spending that much money in one year. I mean, think we can think about the water or wastewater bonds from last year. We could never accommodate that much money if an increase in taxes to pay that full amount in that year. But the other benefit is that it spreads it out for the people that are going to be using it. [00:09:40] Speaker B: Correct. [00:09:41] Speaker A: Whereas a salary for me or for you, that tax money is being raised right now and we're here right now. Whereas if we're building a bridge or a road or buying a building or a fire truck, that's going to be around for 2030 years. And if you spread that out, whether it's through self funding or through bonding, you're at least spreading that cost out a little bit over some of the people that are going to be using it. Otherwise, you could have a huge tax spike in one year to buy the new school building. You could move to town the next year, get the new building and not have to pay anything for it. So that's a little bit of a basic overview. Very, very basic overview. Now, once the budget is set, how does that translate to someone's tax bill? [00:10:31] Speaker B: Sure. So once we set the budget, we take a look at all of the appropriations or the expenses that are approved by the select board, and then we compare them to all of our non property tax revenues, and there is a gap between them, and that's the portion of the revenues that need to be raised through property taxes. And the way the property tax rate is calculated is we have something called the grand list, which basically accounts for all the taxable properties in town. And our assessing department oversees that grand list. And basically our tax rate is a pretty simple math equation where we have the revenue that needs to be raised by taxation divided by the net assessed value or the net assessed value of that grand list, and we end up with a property tax rate per thousand of each of the properties assessed value. [00:11:48] Speaker A: Right. So that makes sense. Now, that's a little different than you've spent many years in the private sector doing budgeting. That's probably one difference, is that you're not raising money through the same mechanism to fund the budget. Are there other differences that just sort of jump out at you before, before we move into covering some of the specific items about this year's budget, the FY 25 budget, you've been here for a year now. It's been a whirlwind, is probably an understatement. You came in kind of right as we were nearing the kind of end of the budget process last year. What are some kind of reflections and some differences between private sector budgeting and public sector budgeting? [00:12:31] Speaker B: Yeah, I think one of the biggest differences between private and public sector budgeting is in the private sector, you set your budget and then throughout the year, revenue and expenses are always evaluated together. And there's a lot more flexibility in changing direction if your circumstances change, either in a positive or a challenging direction. And so in the private sector, if sales are great and we need to, you know, need to hire three additional sales individuals or four more people to work on the production line, there's the flexibility to do that within the year. And of course, there's a hierarchy in the private sector as well, with board approval. But I think in municipal budgeting, really, once the appropriations are set, there is very little flexibility within that. And you really, it is, again, as we said, a statement of the priorities. And as a town, we execute and do make sure that the appropriations that we are actually spending match that. And I think a great example is if there is a category of spending that was not included in the budget appropriations, even if there's a compelling reason to do it in the fiscal year, without appropriations, there is no spending. So I think there's a rigidity to municipal budgeting, but I think that that's appropriate. I think it recognizes that state laws have to be followed and that again, there's always that awareness that we are spending the taxpayers dollars. [00:14:35] Speaker A: Right. These are not voluntary contributions, obviously they are not. And as such, the sort of stewardship responsibility is higher. Interesting. So anything else on that, Ellen, before I'm going to pull up our top twelve highlights and start running through that for folks? [00:14:54] Speaker B: Yeah, no, I think that the only other thing that I'd say about the process is that each of our department heads really does take to heart the priorities that are set. And they spend a lot of time and effort really putting their budgets together and, you know, with appropriate spending. And, yeah, I think that they do a great job of running their departments. [00:15:20] Speaker A: Totally agree. And it makes what we need to do and what the select board needs to do and ultimately what town meeting needs to do a little easier. Not that it's anywhere near easy, but easier. Just that we know that departments are out there keeping an eye on their spending and working within the constraints they've been set and being creative. But also this year, you know, we asked them to kind of come to us and tell us things that we want to do a little differently. And some of those things I'll talk about in a minute, because even for very low cost, it enabled us to move some things around in a few departments and be able to provide a little bit better service to the community and in some cases without spending any additional money. And so some of those ideas about how to provide a higher level of service were sourced from the department heads, who may in turn have sourced some of those ideas from some of the staff that are out kind of in the field, so to speak, every day. We've got a good organization here and a good team that takes everybody working well together to make this all work. [00:16:24] Speaker C: Okay, so now that we have a little bit of a basic overview of kind of how the budget is structured on a very simplified, high level, I'm going to jump into some details about the f 425 budget. Just a reminder that there's tons of documents available if you want to go into more detail. This is a pretty high level overview. Obviously the budget is relatively complicated and there's a lot of information here, so we're trying to pull out the stuff that's most important, but you can find all of the documents [email protected]. Budget so the select board provided guidance to staff to put together a budget for FY 25 with between a 5% and a 7% tax rate increase. This year's budget started at a little more than a 12% tax increase before it came to the select board. Obviously that isn't workable. And so, based on including the most high priority items that were consistent with the most important goals from the select board and from the new master plan, the draft that was introduced in February had a 7.16% increase and after a few weeks of additional work, it settled down to 6.55%. Now, we really appreciate that select board is thoughtful in giving Hanover's budget a little bit of room to catch up on some important historical issues and to prevent getting behind on some rising costs and to invest a little more in some key areas. But proposed tax increases, especially ones like these, should always be thoroughly justified and explained, and we hope that all of the documentation that we've produced really help do that. We've done our best to limit the burden year over year, even while making several critical long term investments. This difficult balance has been accomplished largely through a mix of our department's tight spending control throughout the year, carefully considered budget requests, and several areas where we've taken a really creative look, reallocated existing staff resources that enable us to actually do more with less. The biggest expense in our budget, around two thirds, is always personnel costs, and that's common in a lot of organizations such as ours. The FY 25 budget, similar to last year's budget, has approximately $900,000 of increased personnel related spending that goes to the general fund. That itself is equivalent to more than a 7.5% tax rate increase. Now, some of that comes from fixed costs that are largely beyond our control, such as our health insurance costs that rose by 13.1%, or $300,000, and we just get a bill for that. And some of that money is also catching up and making important investments in our pay and benefit structure. We have fallen behind. We found some of this through our very comprehensive retention and recruitment study that we completed last year and talk about in detail elsewhere. There's also some savings that help offset some of those costs and a little bit of a retirement cliff where some folks are exiting at the top of the pay scale. Of course, the flip side of that is that high turnover has really high costs if it's not managed well. And in some positions, the large one time payments that have not been budgeted in the past for unused time off can also kind of hit the budget. On the revenue side, we do have some non tax revenue that's slightly up in a few areas, such as in our clerk's office, and that's often related to motor vehicle registrations and things like that in our planning department, our meals and room distribution from the state, and a big one, which is short term interest, which is more than $300,000 of an increase in revenue. So what I wanted to do here, some of the information that we've put out in the past about the budget is the sort of top twelve highlights. And these are things just sort of calling out some of the key items in our budget. So if you want to go look at things in more detail, these are some things that you might sort of guide you of sort of what to look at if you're trying to see what the biggest impact on the budget is or things like that. So I'm going to run through these twelve different items. And again, all this information is available online and a lot more than this information is available online. In fact, I'll link to many of those documents in the show notes here at the end. So number one is personnel related, which is investing more in the town government's greatest asset, its staff. So the select board's top priority, which was determined from our October 2023 goal setting workshop, is to help improve and support compensation for town staff that has fallen behind the market and which we've really discussed at length previously. So on the heels of the retention and recruitment study, the budget continues moving forward towards more competitive wages and benefits, improved personnel policies and a better workplace that addresses some historically growing issues, such as really high turnover and decreasing employee morale, that we first noted in 2022 when we did a survey of our staff. So the takeaway here, this is the largest piece of the budget. This budget proposes over 1.1 million of new spending, $900,000 to the general fund, about one third of which is really non discretionary like healthcare costs that we're getting billed for. And two thirds is what we might call more discretionary, but is increased investment in staff. Number two is personnel related, which is expanding services to meet key community needs. So this year's budget does something really important, which is start to expand some programming to better respond to some key identified community needs. So instead of just sort of caring, carrying the budget over from year to year, we did a goal setting process with the select board. We have a new master plan, and we brought all of that into conversations with department heads to make sure the budget represents what the community actually needs. So this includes a few things, such as more capacity for sustainability activities by turning a part time position into a full time position at very little cost, more bandwidth and expertise on transportation and mobility projects. That ended up not being an FTE in this budget, but a pilot agreement with our regional planning commission. More capacity to care for green spaces in collaboration with local stakeholders such as our Conservation commission. So this was a reorganization of a number of staff, position in grounds and more involvement and support and investment in social and senior services. This is another reorganization in human resources and parks and recommendations. We also did some small increases in hours at the how Aetna libraries. So with minimal. The takeaway here is with minimal impact to taxpayers. All of that I just described is under $60,000. And by overall reducing the total headcount of staff, we converted a bunch of seasonal positions into a full time position. And through more creatively sort of moving some things around, we're actually able to offer better services to the public that were really identified as high priority areas for a pretty small amount of overall money, less than the cost of one total staff person who were able to accomplish all those different goals. So that's pretty exciting. The next is also personnel related. So this is signing collective bargaining unit multi year contracts. So after many years of one year contracts, since 2019 they've been one year contracts. Those take considerable time and expense. It strains the relationships and the morale, and it really prevents long term planning because you don't know what's happening beyond just one year in front of you. The aim was to bring three year contracts that were built through a more collaborative process. And so we do have two unions with a three year contract and one union with a two year contract. And those are starting to move in the direction of some of the broader personnel policies that we're moving all of the non union and union staff over to in town. The next is personnel related. So this is addressing accrued earned time liabilities. So we've discussed this before, but the town in the past had not budgeted for the cost of paying out retiring staff, earned and unused paid time off. This is a really significant financial liability, especially as we have begun to see more retirements in the last few years. And to add to that challenge, the budget has actually been structured for many years in a way that requires positions to basically be kept vacant for several months, which saves money and then frees up money to make those payments. But that really challenges our ability to do proper succession planning and knowledge transfer to new staff, which I'm sure all of you know is very important in any organization. So although we didn't increase this. So the takeaway here is that we did, although we didn't increase this budget account in FY 25 because there's already such tight financial constraints, this is something we did add into the FY 24 budget and something we really think is important to be transparent about these costs. So that means that they aren't charged to other accounts, but that we actually report out every year how much we're paying. For example, in last calendar year we saw over $120,000 of payments and again in the past, zero had been budgeted for that. So that's something we just wanted to call out and kind of keep our attention on. In FY 25, we do think that because of the high vacancy rate of a number, we have twelve open positions at the time I'm recording this, that we will still have money available and we will be able to make those payments, but again, want to be transparent about those costs. So the next highlight is capital related, and this is starting down the road to more accurate capital planning. So this year's budget includes recommendations of the newly formed capital improvement plan committee. This is a multi stakeholder group that was created at town meeting last year, and it's tasked with evaluating and making capital recommendations to the select board, which are the longer term and large asset or projects. Buildings, roads, vehicles, things like that. A number of new costs were identified through this year's process, and many more we expect to be uncovered as part of the FY 26 budget. There's millions of dollars of existing but unbudgeted and unaccounted for costs. For example, none of our recreation fields or none of our town facilities except the Howe library have had an evaluation done about what the future costs are and or has been included in the town's capital budgeting. So the takeaway here is that extensively detailed recommendations are included in the budget folder on our website. There's also a summary document if you want to just check that out. So this is Hanover's most transparent capital plan, which is really great. And that's only going to continue to improve over time due to the energy and work of the multi stakeholder CIPC. That includes staff on it, select board representatives, a planning board representative, a school board representative, Dartmouth student representative, residents as well. So it's a really good mix of people that are evaluating this, whereas that multi stakeholder group didn't exist in the past. Next is the next highlight is revenue related, and this is tracking anticipated revenues. So there's a number of revenues every year, non tax revenues that we have to anticipate. Some tend to be a little more stable or at least somewhat predictable, such as motor vehicle registrations or building permit fees, where we often know the projects ahead of time so we can predict the revenue related to them. And some can be kind of a moving target each year without really a whole lot of ability to predict. And those might be things like state aid or the meals and rooms distribution. So all of these things in our budget, we always encourage a conservative estimate so that we keep those spikes and dips down each year. So most of those are shown if you're looking for them, if you're in the budget workbook, the spreadsheet that we've made available under the town manager general, and then a couple of those revenues, like, for example, building permits, that's in the planning department's revenue line. So next highlight is also revenue related. This is the need for more comprehensive revenue planning and forecasting. So we started to talk about this a little bit last year, and we'll continue to lay a little bit of groundwork this year. We've been incrementally building some of the existing but unbudgeted cost into our budget, especially with capital projects I just mentioned a moment ago. So the goal is that in FY 26, we can proceed with really a full, robust accounting of all of our existing and potential future costs, no more unknown unknowns. And we can spend time ensuring that, knowing what expenses may be coming down the line in the future, that we can actually know what revenue is coming down the line in the future to help pay for those expenses. And so we can't just rely on tax increases. A, we want to make Hanover more affordable, not less affordable, and b, some of the cost coming down the line you couldn't accommodate just by increasing taxes. It would just be too significant of a burden. And so some of this really relates strongly to conversations around housing and redevelopment. Those have really significant future revenue implications. We talked a little bit about this in last year and this year's budget process, that creating new taxpayers is often the biggest dial that a local government has to reduce the tax burden on existing taxpayers. So the next highlight is the undesignated fund balance. So tracking the fund balances a little bit better and working on reducing usage. So we're really trying. The goal is to try to reduce the undesignated fund balance usage by 10% each year over the next several years. The fund balance in Hanover is actually in really strong shape. The select board has a policy of keeping it to about ten to 15%. And what is in the budget in FY 25? The anticipated ending balance at the end of FY 25 is just over 14%. So we're at the high end of the select board's policy. But this is something that's a little bit of a moving target every year. And historically there has been some higher usage. So it's hard to reduce that each year because each dollar reduced in basically relying on the fund balance is charged to taxpayers. But that is something that's important to the finance committee, to the select board, to all of us, is to work on bringing that number down over time. The next highlight is non personnel operating expense costs, which are tracking variable cost increases and decreases. So there's dozens and dozens of accounts in our budget that increase or decrease a little bit every year based on market conditions, about pricing material costs, outside contracting labor costs, all these sorts of things. And we have definitely seen some areas of a decrease which has been helpful in this year's budget, such as actually in energy and fuel costs. There's been a number of these accounts that have seen an increase in costs as well. So some of those include, for example, that in material and contracting costs in public works, that's seen an increase of $100,000. Some of that has been due to short staffing, and some of that has been an increase in material costs that probably a lot of us have seen in our homes and personal lives, in additional consulting fees, additional critical facility repairs. So there is almost $200,000 in the budget in unanticipated repairs to buildings. 175,000 of that is for one electrical fix to town hall that we had some pretty serious electric issues, and that if we want to continue using the building, we have to make that repair in FY 25. We do intend on, as I mentioned before, doing more comprehensive sort of facility planning in our budget next year. So we have $150,000 to hire a firm that will do architectural engineering, programmatic reviews of all of the town buildings that will enable us to understand all of the costs into the future. Next is non personnel related, and that's an increase in some fixed costs. So I already mentioned this a little bit, but there are a bunch of things that town just gets a bill for, and we don't have a ton of control a little bit, but it's really in long term, as far as evaluating different options of purchasing some of these services, there's very little that we can do in a given year. So I mentioned health insurance went up by $300,000, property liability insurance went up over $10,000, and workers comp went up almost $20,000. So you can find those kinds of costs if you're looking in our spreadsheet under the town manager, General admin, or Hr. Fringe benefits. The next highlight is something we've sort of called beyond the budget. And this is understanding dynamics that are outside of the town budget documents. And I think this is really important to do because not everything that impacts the town budget is actually in a town budget document. So this is one of the limitations of kind of traditional municipal government budgeting processes. So, for example, all of us here know that the region's extreme housing and child care shortage has prevented a lot of hiring from employers. And we've talked about in the past that we've actually lost a number of staff in town due to people not being able to find housing or find childcare. And because those costs are so high, it contributes partially to the cost, sorry, to the need to raise wages. These dynamics have also pushed more employees to live farther away than they used to. So that's something I'm trying to get some old historic data out so we can actually look at this a little bit more objectively. But anecdotally, we know very well from knowing all of our recent hires of staff that every year over the last decade, staff in Hanover are getting farther and farther away from living in Hanover, and fewer and fewer are actually living in town. So, for example, this really complicates some things with departments that have on call programs, whereas in the Hanover to fire department, years and years ago, the $1 per hour on call program generally worked okay because many of the firefighters lived in Hanover. So the dollar an hour was fine compensation because you were hanging out at home, having dinner with your family, and if you needed to get called in, you would get called into the fire station. However, if you live 30 minutes away or 40 minutes away, that doesn't work anymore. And not only are people, only a few people, there's only a couple people who take that on call time. And that has largely been a product of staff moving farther and farther away. But that stuff, all that stuff I just talked about, the housing, the childcare, those high cost, all that, none of that is in a budget document. It's not in a spreadsheet, it's not in one budget account. But it's really important to know those broader contexts. So we do try to share some of those things when we go through the budget process and discuss it. But also, it's important to know that we want to try and build that into the conversation better as we continue improving the budget process. All right, so the last highlight is accounting and control issues, and it's responding to issues identified in the FY 22 audit. So we just recently completed the fiscal year 22 audit. Next up is the fiscal year 23 audit. So we are. The town is a couple years behind in our audits, and the FY 22 audit highlighted a number of serious issues. Myself and Ellen have been reporting on some of these issues for the last year or so, but that, basically, the short story is the town's internal accounting practices really fell behind over the last three to five years. And there are some serious accounting, control and reporting issues identified in the audit that do need to be addressed. And although the comments in the audit are serious and require a detailed plan to address, some of which are actually already in process, it is really important to note that there's no indication of any impropriety in the town's finances at all. There's very minimal budget tax impact. In fact, a few of the mistakes that have been made in the past actually ended up having a positive budget impact just by happenstance. But it is important to note that these are not issues about how the town was spending money necessarily, but how the town was reporting or accounting for how money was being spent. So that's a big difference. And it's important to note that. So we did work with the finance committee and the select board on some of those issues, and the finance committee and select board were really supportive of trying to understand, how do we kind of get it? How do we catch up and get ahead of these things so it doesn't happen again in the future. And what we did was we have added a new FTE under finance and HR as an accounting and HR analyst. So this is someone that we are looking at hiring right now, actually in FY 24 because we do have the funds available and the select board did approve adding that to our organizational chart and that we've talked about this a little bit in separate memos, but basically that is an accounting position that we don't have currently. That's going to make a really big difference in helping us keep on top of all of these things in the future. I know that was a whole lot of stuff I just threw out there. And amazingly, that is the tip of the iceberg with all of these things. So we have a ton more documentation available, including the full Excel workbook of the entire budget broken down by department and including a summary tab. We've got all the slides and videos from the budget presentations. We've got a memo that identifies that $600,000 of stuff that we wanted to put in the budget this year, but we could not because of where we were already with the tax rate. We included updated documents about tracking our fund balances, about tracking personnel levels, memos on our retention and recruitment process, the summary and full report from the Capital Improvement Program Committee, a memo summarizing the FY 22 audit issues, the union contracts, links to the master plans and the select board goals. So there's a whole lot of stuff out there. Hopefully these top twelve kind of highlights have given you some idea of what's happening in the budget, what some of the biggest issues were that we addressed over the last couple months. And if you want to go into more detail which direction that you can go in, all of those documents are [email protected]. Budget so we appreciate you engaging with the process, and please don't hesitate to reach out if you have any questions leading up to town meetings.

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