The most pressing discussion revolved around the town’s OPEB liabilities. Dan Sherman, the auditor, presented a positive report, noting a significant reduction in liabilities from $7.165 million to $6.6 million, attributing this to an experience gain of $754,000. More impressively, the funding status of OPEB improved from 54% to 69%, situating Manchester as one of the best-funded municipalities in the state. Sherman commended the town for its approach, comparing it favorably to Wellesley, another well-funded entity.

Sherman outlined a proposed contribution schedule aimed at fully addressing OPEB obligations by fiscal year 2027. The plan involves increasing contributions from $300,000 in 2025 to nearly $600,000 by 2027, with retiree insurance premiums directed into a trust to manage payments. However, concerns were raised about the feasibility of this schedule amid uncertain market conditions. One committee member expressed skepticism about future stock market performance, which could impact investment returns and the proposed funding plan.

The conversation also delved into the logistics of managing payments from the OPEB trust and distinguishing costs between active employees and retirees. Questions were raised about aligning the OPEB payment schedule with other financial obligations, such as pension liabilities. Members acknowledged the need for ongoing evaluation, especially considering potential market fluctuations, to ensure the town’s financial strategy remains robust.

In addition to OPEB, the financial audit conducted by Renee Davis from CBIZ CPAs was a focal point. The audit confirmed the financial statements’ accuracy and revealed no deficiencies in internal controls, providing the town with a clean bill of financial health. Despite this, cybersecurity was highlighted as an area of concern. Davis emphasized the importance of robust internal controls and staff training to mitigate risks such as ransomware and fraudulent wire transfers, which have increasingly affected local governments.

The audit also examined the town’s handling of pension and OPEB liabilities, noting the systematic approach to funding these obligations, which allows for a more favorable discount rate. The audit emphasized the critical role of accurate financial reporting and internal controls while cautioning about potential external threats.

Budgetary discussions further highlighted the town’s financial management strategies. The general fund budget was reported at $41.1 million, with revenues exceeding expectations by $1.3 million, attributed to conservative revenue forecasting. There was a noted budgetary loss of $580,000, which was intentional as free cash was used for capital needs. The town maintained a strong fund balance, currently at 12%, above the target of 8%, sparking debate on whether excess revenue should address OPEB liabilities more aggressively.

The committee also discussed the sustainability of OPEB funding, considering the consistent pattern of excess revenue. Questions arose about whether to maintain a healthy balance between immediate needs and future liabilities, with some members advocating for a cautious approach to avoid over-funding OPEB at the expense of budgetary flexibility.

Debt management was another key topic. The town’s anticipated borrowing is expected to increase, but it benefits from a AAA rating due to sound financial practices. Discussions touched on the implications of exempt debt under Proposition 2½ and the potential impact of future capital projects on tax rates.

In closing, the committee addressed various budget allocations, including a motion to approve $330,000 for OPEB funding and adjustments to the Emergency Management budget to enhance inter-community coordination. There was also debate over funding a $50,000 boat storage structure, reflecting broader concerns about harbor expenditure priorities.