The purpose of this section is to help residents who would like to understand Ashland’s annual budget.
Download/Print How to Read the Budget
Section 7-1 (Budget Process)
of the Ashland Town Charter states that “the town manager shall prepare a budget in accordance with the schedule established in subsection (a). This budget shall provide a complete financial plan for all town funds and activities and shall be in such form as the town manager, in consultation with the finance committee and board of selectmen, may establish”. Additionally, “the town manager shall also issue a budget report. This budget report shall explain the town manager’s budget in fiscal terms and in terms of what specific projects are contemplated for addition or deletion in the ensuing fiscal year. It shall also include:- a description of the important features of the budget;
- an indication of any major changes from the current fiscal year in financial policy;
- a summary of the town’s debt position;
- a report showing an estimate of revenues from all significant sources for the ensuing year, along with the probable amount required to be levied and raised by taxation;
- a budget, including revenue, expenses, and general subsidies for each enterprise fund; and
- vi. such other material as the town manager may deem appropriate”.
The town manager’s budget contains the recommended budgets for all departments including the school department and the Enterprise Fund (Water, Sewer, & Trash) budgets.
What we typically refer to as the budget is a one page financial spreadsheet summary that incorporates general government, school department and enterprise funds that is separated into revenues and expenditure sections. This spreadsheet is produced from the same data from both the town manager’s and the school department’s budgets. It shows the total for each budget item, the expected revenue from each revenue source and the recommended expenditures. This summary demonstrates that recommended appropriations are balanced by the anticipated revenues.
The following section will provide an explanation of the major components of the budget.
Revenues
The Town’s budget contains an estimate of all monies received from any source. The following is an explanation of the primary revenue line items.
Levy Limit: A levy limit is one of two types of levy (tax) restrictions. It states that the real and personal property taxes imposed by a city or town may only grow each year by 2 ½ percent of the prior year’s levy limit, plus new growth and any overrides or exclusions. The levy limit can exceed the levy ceiling only if the community passes a capital expenditure exclusion, debt exclusion, or special exclusion.
Levy Ceiling (Allowable Increase): The levy ceiling states that, in any year, the real and personal property taxes imposed may not exceed 2 ½ percent of the total full and fair cash value of all taxable property.
New Construction (Growth): The additional tax revenue generated by new construction, renovations and other increases in the property tax base during a calender year. It does not include value increases caused by normal market forces or by revaluations. New growth is calculated by multiplying the assessed value associated with new construction, renovations and other increases by the prior year tax rate. The additional tax revenue is then incorporated into the calculation of the next year’s levy limit.
Override: A vote by the community at an election to permanently increase the levy limit.
Excludable Debt: An action taken by a community through a referendum vote to raise funds necessary to pay debt service costs for a particular project from the property tax levy, but outside the limits under Prop. 2 ½ , by approving a debt exclusion, a community calculates its annual levy limit under Prop. 2 ½, then adds the excluded debt service cost. The amount is added to the levy limit for the life of the debt only and may increase the levy above the levy ceiling.
Reserved Bond Premium: Additions to the levy limit for a Prop 21/2 debt exclusion are restricted to the true interest cost incurred to finance the excluded project. A premium will occur when the bond’s stated interest rate is set higher than the true interest cost (the market rate).
Cherry Sheet Reimbursements: Includes items such as Police Career Incentives, State-Owned Land, Veterans Benefits, & Public Library subsidies.
Local Receipts: Locally generated revenues, other than real and personal property taxes. Examples include motor vehicle excise, investment income, fees, rentals and charges.
Local Aid: Revenue allocated by the Commonwealth to cities, towns, and regional school districts. Estimates of local aid are transmitted to cities, towns, and districts by the “Cherry Sheets.”
School Debt Reimbursement: State program that reimbursed cities, towns, and regional school districts varying percentages of their school construction costs.
Charter School Reimbursement: A component of Chapter 70 state aid provided to a municipality for public education.
School Choice Aid: Provided to a municipality for public education from a sending district under school choice.
Pension Reserve Fund: Pension Reserve Fund enables a community to set aside funds to absorb future assessment increases.
Enterprise Funds: A separate accounting and financial mechanism for municipal services for which a fee is charged for goods or services. Enterprise funds allow surpluses to be used to reduce fees for the services or to pay for capital improvements. Ashland has three Enterprise Funds: Water, Sewer, and Trash.
Community Preservation Funds: A special revenue fund established to receive all monies to support a community preservation program including but not limited to, tax surcharge receipts, proceeds from borrowings, and proceeds form the sale of certain real estate. Community Preservation funds may only be used for expenditures related to the following types of projects: Affordable housing; open space; recreation; and historical preservation.
Free Cash: Remaining, unrestricted funds from operations of the previous year. Unpaid property taxes reduce the amount that can be certified as free cash. Free cash is certified by the State Bureau of Accounts and is not available for appropriation until certified.
Stabilization Fund: A fund designed to accumulate amounts for capital and other future spending purposes, although it may be appropriated for any lawful purpose. A 2/3 vote of ton meeting is required to establish, amend the purpose of, or appropriate money from the stabilization fund.
Expenses
Omnibus Budget-General Government: Expenditures for town programs and services other than local schools, regional school, and benefits & insurance . Includes police, fire, public works, community center, library, etc.
Omnibus Budget-Local Schools: Expenditures for Ashland Public Schools (link to public school budget)
Omnibus Budget-Keefe: Assessment for Ashland students enrolled at South Middlesex Regional School. Enrollment is based on number of students as of October 1 of the previous year.
Omnibus Budget-Benefits & Insurance: Benefits and insurance beyond direct salaries and wages paid to employees. These are fixed costs that are legally or contractually mandated and include retirement, workers’ compensation, unemployment, health insurance, life insurance and any other employee benefit.
Debt Service: The repayment cost of the principal and interest on bond issues.
Enterprise Funds: See section under revenue. Total cost of delivering service is recovered through user charges. With enterprise funds, all costs of service delivery—direct, indirect, and capital costs—are identified.
Reserve Fund: An amount set aside annually to provide a funding source for extraordinary or unforeseen expenditures. The Finance Committee can authorize transfers from the reserve fund.
Stabilization Fund: See section under revenue.
Overlay: An account established annually to fund anticipated tax abatements, exemptions and uncollected taxes. The over is not established by the normal appropriation process, but rather is raised on the tax recap sheet.
Offset Items: Type of state aid distributed via the Cherry Sheet. An offset item constitutes categorical aid as such the funds must be spent for specific municipal programs.
State Charges: Cherry Sheet charges that include payments for mosquito control, MBTA, etc.
Charter School Assessments:Payments for Ashland students attending local charter schools.
School Choice Assessments: Payments as a “sending” district under school choice.
Warrant Articles: An authorization for an action.
Net Available Headroom: the difference between total revenues and total expenses.