Medfield Town Administrator Michael Sullivan said at the Nov. 15 Board of Selectmen meeting the town’s debt was in “very good shape” and the town has been able to get its “debt down at a time when governments in general and corporations seem to be worried about their estimated debt.”
“We are doing well for bringing our debt down,” Sullivan said.
But how well is the town really doing?
According to Sullivan, in fiscal year 2016 the town will see a “big drop” in debt owed and in 2029, the town would be free of its current debt as shown in the town's projected debt schedule.
“By 2029, Medfield will be out of debt,” Sullivan said, referring to the current projections. “We do have a big drop off in FY2016. The library will be paid off, town hall will be paid off and there are a couple other big projects that will be paid off.”
That projection for 2029 does not include the pending projects of a new Town Garage, renovations to schools and the Medfield Parks and Recreation Department in addition to new Police and Fire stations.
But the town, through effective reduction of debt since peaking at $67 million in 2003, has put itself in a favorable position to take on those pending projects, according to Sullivan's projected debt schedule.
The numbers support Sullivan’s claim that Medfield has done well at handling its debt, seeing a reduction each year since it peaked in 2003, with the exception of 2006-2007, when the town’s debt increased by $39,752.
The increase from 2006-2007, according to the figures in Sullivan’s presentation, was a result of several projects taking effect in June 2007:
- A vertical lift at the Ralph Wheelock Elementary School cost $100,000
- A ladder truck for the Medfield Fire Department cost $375,000
- Council on Aging community center plans and construction cost $2,958,5000
- Street sweeper for Department of Public Works cost $106,000
- Plans for Town Garage replacement cost $100,000
“The good news is that from 1994 [debt was] $7.5 million or $7,450,000 in principle [and] went up as high as $67 million in 2003,” Sullivan said. “But now we have been reducing that [debt] rapidly over the past several years and at the end of 2012, [debt] will be down to $36,248,349.”
Here’s a look at the town’s permanent debt figures year-by-year since 1994.
Historical Debt Figures (Outstanding principal debt):
1994 - $7,450,000
1995 - $11,810,000
1996 – $10,800,000
1997 – $19,725,000
1998 – $18,315,000
1999 – $19,430,000
2000 – $27,329,811
2001 – $34,852,935
2003 – $67,052,736
2004 – $62,612,309
2005 – $58,360,171
2006 – $54,775,223
2007 – $54,814,975
2008 – $50,354,905
2009 – $46,928,929
2010 – $44,653,721
2011 – $40,308,906
2012 - $36,248,349 (estimated)
The town’s debt peaked at $67 million in 2003, jumping from $46.7 million in 2002. The $20.3 million increase was mainly the result of school renovations that totaled $55,620,000 – $10 million was allocated to the projects in March 2002 and $23,620,000 was allocated to the projects in September 2002.
Since 2003, with the exception of the Council on Aging senior center project, Sullivan said the town has shown “considerable progress” in reducing its debt and the breakdown in historical debt figures supports that.
Schools are Town’s Largest Remaining Debt
55 percent of the town’s remaining debt ($44,343,603), according to Sullivan, is allocated to schools.
“The largest [amount of debt] is schools, but that is down considerably from several years ago,” Sullivan said. “Total outstanding [debt] is $25.4 million.”
Of the town’s total amount owed, several of its debts will be partially paid for using various appropriated funds, according to Sullivan.
“We really will be paying $22 million as a result of money in the bank and funds [appropriated to debt payment],” said Medfield Board of Selectmen chair Osler “Pete” Peterson.
Unfunded Retiree Health Insurance Liability a Concern
Sullivan said "the item of most concern" regarding Medfield's debt is the unfunded retiree health insurance liability.
"Medfield has an actuarial study done every two years to determine what that unfunded liability is," Sullivan said. "The last study was done using a date of Jan. 1, 2011 and the unfunded liability at that time was $39,775,805 (assumes no funding schedule in place)."
Sullivan said as of Sept. 30 "has a reserve of $261,475.57 towards this liability" and that is a concern.
"Obviously, The unfunded retiree health insurance liability is a greater concern to us than the unfunded pension liability," Sullivan said.
How Much is Owed Where?
Here’s a closer look at what Medfield owes (principle and interest) for various purposes in town:
- Sewer (Construction): $6,897,448 outstanding. “90 percent of that money [owed], the town will get back through governments,” Sullivan said.
- Water Enterprise: $1,520,138 outstanding. “That’s paid for out of water and sewer rates,” Sullivan said.
- Sewer Enterprise: $2,504,005 outstanding
- Land Purchase: $3,410,329 outstanding
- Schools: $25,422,021 outstanding
- Fire: $308,874 outstanding. “Ambulance has been paid off,” Sullivan said.
- Town Hall/Downtown Parking: $636,087 outstanding
- Library: $489,157 outstanding
- Council on Aging: $2,737,849 outstanding
- Dwight-Derby House: $33,444 outstanding. “They just celebrated their 15th anniversary, so they should be paid for in five years,” Sullivan said.
- Post Office: $64,099 outstanding. “We own the land on the post office and charge rent on that,” Sullivan said. Peterson added: “The rent is $80,000 so that should have no trouble being paid off.”
- Public Works: $287,130 outstanding
- Board of Health: $33,022 outstanding. “We are using the balance of funds in that,” Sullivan said.
Medfield's Pension Debt
Sullivan said as of two years ago, the town's pension debt was "about $6 million" with "$4,061,748.92 in our pension reserve fund to offset this amount." Sullivan said the amount is "over and above the amount the Norfolk County Retirement System has funded."
Sullivan explained Medfield is part of the Norfolk County Retirement System and the Massachusetts Teachers’ Retirement System.
"We receive notice of our Norfolk County Retirement liability every couple of years when they have an audit and/or an actuarial study of the system done," Sullivan said. "Pensions for members of the Mass Teachers’ Retirement System are the responsibility of the Commonwealth of Massachusetts, so I don’t know what the unfunded liability of that system might be."
Since 2003, the town has reduced its debt by $29.7 million. The “big drop” in fiscal year 2016, according to Sullivan, will be when the Town Hall, downtown parking and Medfield Public Library are paid off.
Medfield’s current debt schedule may soften the financial burden of the town’s need for a new Town Garage and police and fire stations, in addition to renovations to schools and the Medfield Parks and Recreation building.
To better organize spending for those projects and make them more cost-effective, the Permanent Building Committee has been working on a potential “master plan” that centers around the concept of a campus of buildings in the current area of the Dale Street School, Parks and Recreation department and Medfield Police and Fire Departments. To read more on the potential Dale Street Campus, click here.