Summit Takes In-depth Look At Harwich’s Financials

 HARWICH – The town’s first financial summit was held on Aug. 27 and included the select board, finance committee, Monomoy Regional School District administration, Town Administrator Jay McGrail and Finance Director Jennifer Mince.

 The financial team has been digging deeply into the town’s financial condition, budgeting methods, procurement habits, and school district operating costs as they prepare a five-year financial plan for the community.

 McGrail said their efforts will be used to start the conversation on budgeting and planning for the future as costs continue to outpace revenues. Statistics put together by Mince show that operating expenditures rose 12.6 percent over the past couple of years while revenues rose only 10.4 percent. However, revenue in FY26 totalled $86,361,619, while expenditures were $84,123,091, resulting in a $2,238,528 surplus. 

 Those are two different measures, said McGrail. The 10.4 percent and 12.6 percent are growth rates for revenues and expenditures over two years, and $86.4 million and $84.1 million are single-year revenue and expenditure totals for FY26. Over the past three years town revenues have been greater than expenditures, with FY26 being the strongest of those years. 

 McGrail said the town is going to have a healthy amount of free cash moving into next year thanks to last year’s surplus. The decision by the select board to increase building fees increased revenue by $400,000, and tax title collections generated $1,025,844. McGrail is recommending that a portion of the free cash be directed to a stabilization fund for future use.

Mince said there is $10,706,220 in articles and capital appropriations that remain unexpended; $2,474,556 of those funds were voted before FY24. She said closing completed articles could strengthen fund balance and free cash should procurements come in under the appropriations.

McGrail said the logjam is due to procurement in the administrative office. There are 79 procurement appropriations still open, he said.

 “We’ve started knocking off a lot of these projects,” said McGrail. “We’re working backward and starting to make progress.” 

Given that operating expenses are growing faster than revenue, the town will face financial pinches in the future. McGrail said that when the town received its AAA bond rating from Standard and Poor’s this year, the firm said there is one thing missing: a five-year financial forecast.

That forecast is being put in motion, said McGrail, and it will provide guidance for the select board on the budget process. It will also provide clarity for the school district. The forecast will help the town know where it is going, he said.

 “Every good forecast I’ve worked on has shown deficits over years,” McGrail said. “It leads to fine-tuning the numbers and bringing down expenses, showing where you need to address level services and balance the budget. You are going to see deficits. What I don't want the takeaway to be is the sky is falling and there is an override needed tomorrow.

 “This is not what we’re trying to project here. The assumptions are valid, but they are meant to guide the budget over the next few years,” McGrail said. 

“It’s a planning tool based on current information,” Mince said of the financial plan.

 They spoke of using a 3 percent increase across the board in developing the forecast, but Mince said there are costs the town does not control when developing a budget, including regional school assessments, health insurance and other post-employment benefits, Barnstable County retirement, debt service and other state and county assessments. 

 “Sixty dollars of every $100 of the town budget is already committed,” McGrail said. 

By way of example, Mince noted that 58.8 percent of operating spending since FY24 is related to the five categories that cannot be controlled by town meeting. Those category increases run 7 to 11 percent, she said. 

Mince projected a $12.9 million shortfall over five years, with expenditures increasing by 5 percent. Those numbers will be fine-tuned in the budget process. She added that the town’s free cash strength will help deal with the projected deficit. 

McGrail said one of the challenges for Monomoy Regional School District officials is to get clarity on the budget early enough in the budget planning process. McGrail said he would meet on a monthly basis with the school department. At 40 percent, the MRSD budget is the single largest driver of the town’s budget, he said.

 “Being part of this discussion is incredibly important,” said Michael MacMillan, assistant superintendent of finance for the school district. 

MacMillan said the district is operating on a relatively tight budget. He said unexpended funds for FY26 were 0.5 percent of the budget, or $222,000, adding the percentage is lower than the average of 1.2 percent over the past five years. The funds will be transferred to the district excess and deficiency account, the district’s reserve fund. 

He said the district has been using the excess and deficiency funds in increased portions in recent years, noting that $1 million was applied to the district budget in FY26, and this year $900,000 is being used. But he cautioned that if the district keeps using those funds, it will run out and funding would have to be made up in the budget appropriation. He also said as the account is diminished it could impact the district’s AA-plus bond rating. 

The timing for the regional school committee to present the annual budget is also very tight, MacMillan said, adding that the regional agreement requires a Jan. 15 presentation, but he added that the district often does not have the state Chapter 70 contribution numbers or health insurance cost increases at that time. 

 “It causes consternation when numbers change,” said MacMillan.

He welcomed the proposed annual summit and the commitment from McGrail to provide early and frequent communication with the school district.