Health insurance costs putting squeeze on North Attleboro budget

NORTH ATTLEBORO — The school and town budgets for the upcoming fiscal year starting July 1 are again projected to be tight as rising expenses outpace available revenues.

About 75 residents and town officials Monday night turned out to the middle school cafetorium for a joint meeting of the town council and school committee that featured a state of the town address of its financial picture.

Town Manager Michael Borg outlined the budget expenses and revenue that are being stretched by skyrocketing employee health insurance and other costs.

Health insurance is the biggest expense in the $100 million-plus budget, accounting for roughly $13 million.

Claims have been exceeding premiums several months, including by 140% in October. An anticipated $2 million shortfall in this year's budget is slated to be covered by reserve funds. There were 15 claims exceeding $50,000, Borg said.

Energy and other utility costs are also volatile.

Debt costs are largely on the school side along with DPW, at about $4 million annually.

For the next fiscal year, the town has fielded $26.4 million in building and equipment requests known as capital items, half for water and sewer that are covered by customer fees.

Only about a quarter of the requests, excluding water and sewer, are expected to be funded. For those, $3 million would be borrowed, and $350,000 in reserve funds would be tapped.

Pension payments are about $6 million a year, and growing about 8% a year.

All town employee contracts are being negotiated as well, Borg said.

Under state property tax levy-limiting Proposition 2 1/2, the budget can only increase by 2 1/2% each year along with new tax growth, predicted to run about $800,000.

"Expenses are growing two to three times faster than 2 1/2," Borg said.

The new growth estimate mirrors pre-pandemic years, he said.

"This is why the town must plan conservatively," Borg said. "Growth is expected to be incremental."

State aid, about $21 million, is again expected to be flat or show modest growth.

Despite the dim forecast in several areas, there is some bright light, officials say.

The town's bond rating is strong as is its reserve funds and economic development outlook.

Concerning reserve funds, the stabilization fund sits at $8.1 million, capital stabilization at $3.6 million, and free cash — unanticipated funds and budget savings, at $6.17 million. About $5.3 million of the latter is earmarked for the capital stabilization fund.

Besides using reserve funds for health insurance and capital items, about $2.7 million in reserve funds are planned to be used to cover the town's annual tab for the new Tri-County Regional Vocational Technical High School now under construction.

Many district towns were unable to cover Tri-County building costs without a tax increase.

Tuition costs for Tri-County are estimated to amount to about $3.8 million. North Attleboro sends the most students to the school of any town.

"The signs are positive," Borg said. "North Attleboro is entering Fiscal 27 by a position of financial stability."

However, the town manager cautioned, "the pressures are real."

Another challenge facing both the town and school side are persistent employee vacancies in hard-to-fill positions due to retirements, job market competition and other reasons.

That has led to overtime having to be paid for public safety and public works, Borg said.

A preliminary town budget will be presented to the town council in February, with a more finalized budget going before members in April.