Financial Challenges in Franklin:
Informing Public Debate in Advance of the 2011 Town Elections
Prepared by the Long Range Finance Committee
Introduction
As we approach the 2011 Town election cycle, candidates and voters alike have an opportunity to
discuss the issues that matter most to residents of Franklin. Understandably, the pre-election
dialogue gravitates toward timely matters that are likely to be voted upon in the near term or
simple topics that can be answered in a few sentences. The downside of this dynamic, however,
is that we often overlook the more complex challenges the Town of Franklin is facing.
The purpose of this document is to help candidates and voters appreciate the nature and
magnitude of Franklin’s growing financial challenges. We summarize the key issues and
highlight resources that will help inform public debate.
Summary of Key Issues
In October 2009, the Long Range Finance Committee issued a report on Franklin’s financial
outlook for the period from FY 2010 to 2014, finding that Town and School services are
declining steadily because costs are rising faster than revenues (a “structural deficit”) and
warning that this trend would continue indefinitely if not addressed. The Committee
recommended that town leaders: (i) agree on the problem; (ii) develop a comprehensive, multi-
year plan for achieving a services neutral budget, and (iii) improve transparency and accessibility
of financial information.
Over the past two years, the economic recession has compounded the problem, and the financial
outlook for Franklin, along with cities and towns across the Commonwealth, has deteriorated.
Preliminary estimates show that expenses for existing Town and School services are on track to
outpace revenue by 8-10% of the Town’s total operating budget over the next 5 years. This
projection does not include additional expenses that will be required to address the Town’s aging
infrastructure and begin funding its significant OPEB (other post-employment benefit) obligation.
The residents of Franklin, together with Town officials, determine when and how these complex
financial issues are to be confronted. The 2011 election cycle is the ideal time to move this
discussion to center stage.
How to Prepare for Discussions about Franklin’s Long Term Financial Outlook?
1. Read the “Five Year Financial Outlook” prepared by the Long Range Finance Committee
in October 2009. An Executive Summary and mid year update are also available. These
materials can be found on the Town of Franklin website.
Reports
2. Learn about OPEB. The Town currently follows a “pay as you go” approach for its
OPEB obligation, which means it pays the minimum costs incurred in that year even
though this minimum is insufficient to meet the future obligation. Across the
Commonwealth, municipalities are assessing whether to continue “pay as you go” or to
move towards fully funding the future obligations. In Franklin, the FY 2010 funding
shortfall was approximately $5M or 5% of the operating budget, based on an $80M
unfunded obligation. White papers and other general information can be found on the
web. We have not recommended any specific resources in order to avoid linking
ourselves with any particular political point of view that may be associated with the
authors or sponsoring organizations.
3. Compare Franklin with other towns. The Committee’s “Five Year Financial Outlook”
compares Franklin to neighboring and peer towns across a wide range of relevant
categories, including sources of revenue, municipal spending and school spending. If
you prefer to do your own comparisons, considerable data is available on the web as
follows:
a. Massachusetts Department of Revenue Mass DOR
b. Massachusetts Department of Elementary and Secondary Education
Department of Education
4. Follow the activities of the Long Range Finance Committee. The Committee is currently
focused on four topics: (i) long-term infrastructure requirements, (ii) post-employment
benefit obligations, (iii) legislative impediments to addressing the structural deficit, and
(iv) benchmarking the residential tax burden. The Committee’s meeting schedule is also
available on the Town’s web page and posted in Town Hall.