Andover Town Meeting Preview: $212.5 Million Budget, Pension Plan

ANDOVER, MA — Andover residents will gather June 5 to vote on key issues for the years ahead, including the Fiscal Year 2022 budget, a proposal to deal with growing retirement liabilities and a potential new school.

There are 38 articles on the warrant for the meeting, which will take place in the field behind West Middle School on Shawsheen Road on Jan. 5.

The meeting will begin at 9:30 a.m. and continue until the full warrant has been addressed. May 17 was the last day to register.

Half of the warrant deals with financial issues. Patch will preview the other warrant articles in another story.

The full warrant is available here and the Finance Committee report is here, along with letters from board and committee chairs. Town officials are holding a town meeting preview forum Tuesday.

Financial articles preview

Article 3 sets salaries for elected officials, unchanged from last year.

Article 4 is the Fiscal Year 2022 operating budget, totaling $202.9 million, up 2.58 percent over the current budget. That includes a 3.3 percent increase to the town budget, up to $44.9 million, and a 3.75 percent increase to the schools budget, to $92.6 million.

The total budget across all articles is $212.5 million, up $3.1 million or 1.5 percent over Fiscal Year 2021.

The Finance Committee estimates that the budget increase will result in a 3.7 percent or $393 increase to the average single-family home property tax bill.

Article 5 appropriate $3 million for capital projects.

Article 6 covers eight financial housekeeping articles grouped together. Voters can choose to discuss and vote separately on any of the items, but typically they're voted together.

Article 7 is the proposed pension obligation bonds. Half of the town's proposed "integrated financing plan," along with the West Elementary project, this article would permit the town to issue $165 to $185 million in pension obligation bonds to fund the town's retirement obligations. Town officials say that while this proposal would raise taxes in the short term, it would save money in the long term.

"The current pension funding schedule will cost taxpayers approximately $346M over the next 18 years," the Finance Committee wrote in their report. "Based on conservative assumptions, the cost of funding the pension system through pension obligation bonds will cost approximately $259M and may result in as much as $90M in savings over the next 18 years."

Approving the bonds would raise average taxes by somewhere from $116 to $230 next year.

The bonds would also have to be approved by a special town election ballot question.

The Finance Committee report also notes two recent reforms by the Retirement Board to reduce future liability, by raising eligibility to those working 30 hours per week and eliminating buybacks, both for future new employees only.

Article 8 is a group of four minor financial articles, which works the same way as the financial housekeeping items in Article 6.

Article 10 allows the town to pay $6,673.19 in unpaid bills.

Article 13 transfers $100,000 from the Bond Premium Stabilization Fund to the General Fund.

Article 14 appropriates $300,000 from the Water Enterprise Fund to pay for water treatment plant maintenance.

Article 15 is the West Elementary School Design and Construction funding, the other half of the "integrated financing plan." The town would borrow $114 million to build two new schools on the campus of the current West Elementary School, replacing the current school and Shawsheen Preschool.

The total budget is $151.7 million, with the Massachusetts School Building Authority covering $37.5 million.

Like the pension obligation bonds, this article would also require approval as a special town election ballot question.

This article would have no impact on next year's tax bill, the Finance Committee wrote, but it would raise the average annual single-family tax bill by $396 in Fiscal Year 2024.

"The Town Manager has proposed an Integrated Financing Plan (IFP) to help mitigate the impact to taxpayers of two exempt debt articles proposed for Annual Town Meeting," the Finance Committee wrote. "If both Article 7 (Pension Obligation Bonds) and Article 15 (West El) are approved, the IFP proposes to offset the combined borrowing costs for the two articles beginning in FY2022. This creative financing structure could significantly reduce the overall impact to taxpayers, and is explained further at www.andoverma.gov/IFP. If only Article 15 passes, no such reduction of the tax burden would be possible."

The idea is that issuing a pension obligation bond would take the pension liability off the general fund budget and that spare money would be freed up to offset the cost of the integrated plan. Once the pension debt is retired after 17 years, those funds would fully fund the school project under the levy limit and go toward other post-employment benefits.

Town officials will present on the plan Tuesday, Wednesday and Thursday.

Article 20 appropriates $1.2 million left over from the Bancroft School construction project to analyze options to deal with Andover High School's overcrowding.

Article 23 allows the town to borrow $6.6 million for capital projects including town and school building projects and Historic Mill District street design.

Article 24 appropriates $2 million from free cash for other capital projects.

Article 25 appropriates $9.4 million from the Water and Sewer Enterprise Funds for water and sewer capital projects.

Article 26 creates a new revolving fund for student technology rentals.

Article 27 allows the town to use free cash to cover unexpected deficits created in previous years.

Article 35 allows the town to spend $4 million in the Capital Improvement Plan to purchase the 44.41 acre Park Family Property at 138-140 Chandler Road, to create a park and recreation area.

Article 36 repurposes $1.2 million from past town meetings to buy land for conservation and open space.

Christopher Huffaker can be reached at 412-265-8353 or chris.huffaker@patch.com.