Select Board, School Committee, Finance Committee Discuss CIP at Tri-Board Meeting

On Monday, December 2, the Select Board, Finance Committee, and School Committee convened as a Tri-Board at Memorial Hall Library to review the Town Manager’s recommended Capital Improvement Program (CIP) for FY2026 through FY2030 and to consider preliminary information for the FY2026 operating budget. The meeting was led by Town Manager Andrew Flanagan, who provided a comprehensive presentation detailing the Town of Andover’s budget model, the process of developing the CIP, investments recommended in FY2026 through the CIP, and the long range financial plan, which serves as a foundation for the budget planning process. Flanagan also outlined a proposed process for the three committees to review and consider adjustments to the long range financial plan, which he expects to take place over the next several months.

Overview of Budget Model
Flanagan began his presentation by providing a general overview of the budget model. According to Flanagan, building the budget always begins with determining available revenue. The Town's revenue primarily comes from three sources: property taxes, state aid, and local receipts. Property taxes, the largest share, are calculated by adding 2.5 percent plus new growth to the previous fiscal year's levy limit. The other two main sources of revenue of state aid, which primarily comes in the form of Chater 70 funding for education, and General Government aid, and local receipts, which include motor vehicle excise taxes, licenses and permits, and hotel, motel, and meals taxes.

A wide range of major obligations are funded out of available revenue, including debt service, health insurance, solid waste, retirement funding, other post employment benefits (OPEB), state assessments, and the portion of the CIP in cash.

After these major obligations are funded, the remaining balance of available revenue is appropriated to Town and School department budgets. These budgets are developed within fixed annual increases established in the Town’s long range financial plan.

According to Flanagan, the revenue projected to be available for FY2026 is $234,949,950. Total expenditures, inclusive of all major obligation categories and Town and School budgets, are estimated to be $233,115,869, a 4.36 percent increase over the current fiscal year.

FY2026-FY2030 Capital Improvement Program (CIP) 
Town Manager Andrew Flanagan provided a comprehensive overview of the recommended Capital Improvement Program (CIP) for FY2026-FY2030, detailing the financial framework that the plan was developed around, and the investments that are recommended in the program for the upcoming fiscal year. 

The presentation highlighted the implementation of a new funding target, shifting from a percentage of overall revenue to a percentage of the Town and School Operating Budget. This change aims to provide greater predictability and stability in managing debt service and planning future capital expenditures. The new target is set at 7.5% of the operating budget, replacing the previous target of 5.72% of overall revenue. The previous 5.72% target has been in use since 2015.

Flanagan detailed the outcomes of the previous CIPs developed using the 5.72% target, noting successful projects such as the construction of the Municipal Services Facility, the new Ballardvale Fire Station, and the renovation and expansion of the Senior Center. The CIP has also supported the Park & Playgrounds program, which has seen significant improvements to municipal playgrounds and playing surfaces, as well as the establishment of the Town Sidewalk Program.

The total recommended CIP for FY2026 is $23,539,722, with funding sourced from General Fund Revenue ($2,503,528), General Fund Borrowing ($4,830,000), Free Cash ($3,865,000), Special Dedicated Funds ($2,041,194), and Water and Sewer Enterprise Funds ($10,300,000). This comprehensive plan includes significant investments in various areas: 

• Infrastructure Improvements: Continuation of the sidewalk improvement program, increased funding for roadway improvements, drainage improvements, and bridge evaluation and maintenance.
• Water & Sewer Infrastructure: Continuation of the water main replacement program, investment in the Water Treatment Plant, and investment in both water and sewer pumping stations.
• Active Transportation: Funding for Elm Square design improvements in addition to sidewalk enhancements.
• Recreation Facilities: Improvements to Rec Park, Pomps Pond, and the Playstead, along with phased investments at the Chandler Road Recreation Area.
• River and Open Space Access: Construction of an ADA kayak launch at Nason’s Landing and annual funding for access improvements to the Shawsheen River.
• Conservation Priorities: Funds allocated for invasive plant species management, boardwalk restoration at the Mary French Reservation, accessibility improvements, and survey work on conservation priorities. 

The full plan can be viewed online at: andoverma.gov/FY2026CIP.

Long Range Plan
Town Manager Andrew Flanagan also presented an overview of the Long-Range Financial Plan, which has been the cornerstone of the Town’s financial planning since its initial release in August 2016. This plan helps identify future opportunities and budgetary challenges. Revenue assumptions are updated throughout the year based on new information, such as the release of the state budget and the closeout of the fiscal year. Local receipt projections are reviewed and approved by the Department of Revenue.

Expense assumptions are guided by the plan’s longstanding principles, including fixed increases for operating budgets (2.75% for Town Departments and 3.75% for Andover Public Schools), the CIP as a percentage of the budget, and annual appropriations for Other Post-Employment Benefits (OPEB). The current plan projects a deficit beginning in FY 2028, which is typical at this stage of planning.

To ensure a balanced plan through FY 2030, current assumptions will be reviewed and adjusted. This review will focus on established increases to operating budgets, long-term capital spending, and revenue assumptions, including alternative revenue sources. The plan will also leverage future flexibility expected from fully funding the retirement system.
 
Next Steps
Looking ahead in the budget development process, the Town Manager’s Recommended Budget & Financial Plan will be released on February 7, followed by a Tri-Board meeting on March 8.

To initiate planning for FY2026 and beyond, Town Manager Andrew Flanagan proposed a series of workshops with the Select Board, Finance Committee, and School Committee to review the long-range financial plan in detail, followed by an additional Tri-Board meeting to review feedback from these workshops. The goal will be to implement changes to the plan that emerged through this process in September 2025.

The full presentation from Monday's Tri-Board meeting can be viewed online.

A recording of the meeting is available to stream online through AndoverTV.