General Fund Impacts for FY27
By Tony Barletta
April 7, 2026
In just three weeks, on April27, residents of Manchester-by-the-Sea will convene at the Annual Town Meeting to vote on important Town business such as the 2027 Fiscal Budget. Over the past month, we have discussed several capital exclusion infrastructure projects that need to be addressed: the Lincoln Street Well PFAS facility, Central Street culvert preparations, Rotunda preservation, harbor dredging, and Tappan Street water and sewer replacement.
However, there are some important updates this year in the General Fund, specifically in health insurance, OPEB, and sanitation. A General Fund is the primary operating fund for municipalities in the Commonwealth, accounting for all financial resources except those required to be in a separate fund. It finances day-to-day operations using property taxes, state aid, and local receipts. (Source: Mass.gov)
OPEB
One proposed budget approach to combat the increased expenses we are facing is to retire our OPEB (Other Post Employment Benefits) liability earlier than originally planned which will allow the Town to use those funds for other expenses rather than seeking additional revenue from taxpayers.
For over a decade, the Town has annually funded an OPEB Trust Account for retiree health insurance. These annual appropriations combined with strong market gains in the trust account have achieved earlier than anticipated funding goals. Voters at the Annual Town Meeting will be asked to approve the next installment of $420,000 which is $60,000 more than the FY27 planned installment to fully fund the OPEB Trust. As a result, there will be approximately $6.4 million in the OPEB Trust, and the Town will reach fully funded status next fiscal year. This is a major milestone for us as only three communities in the state have fully funded their OPEB liability: Colrain, Stockbridge, and West Newbury. (Source: Mass.gov)
Since retiree health insurance payments and OPEB contributions are paid for through the General Fund, the Town will be able to use the OPEB trust to pay for the retiree health benefits on an annual basis once fully funded. Essentially, this means the General Fund will no longer contribute an annual installment, which totaled $330,000 in FY26.
We will continue to fund the required $100,000 for the future benefits of active employees but the Town’s contribution to retiree health and life insurance premiums (about $450,000) will be paid from the Trust. As a result, about $700,000 of the General Fund budget, per year, will be available for other budget needs beginning in FY28.
Health Insurance
Health insurance costs continue to rise nationwide and are projected to be the highest yet in 2026 due to rising medical costs, use of high-cost drugs, utilization, and high employer costs. The Town is also not insulated from these increased costs. Pensions and health insurance benefits are offered to all current and retired Town employees who work more than 20 hours a week per the requirements of Massachusetts General Laws. In FY21, the Town’s annual health insurance costs were $1.450 million and have steadily increased to $2.073 million in FY27 which is a 43% increase over the past 5 years. This year, the Town is facing a 15% increase over last year and we expect this trend to continue.
Sanitation
The Town’s five-year trash and recycling contract, that began with JRM and later acquired by Republic Services, will end in June of this year. Republic is responsible for weekly curbside trash collection, recycling collection and disposal, and dumpster service at Town facilities. Market conditions have significantly changed industry wide over the past few years due to increased disposal costs, labor costs, and health insurance premiums and most companies are moving towards an automated process. As a result, the Town will face increased costs in the next collection contract.
The annual sanitation budget also includes a $35,000 contract with Black Earth for curbside compost and leaf collection and a $96,000 contract with Winwaste for trash disposal. The FY27 sanitation budget will increase in FY27 by $280,000 which is a 73.44% increase. The budget increase is reflective of the market adjustment in the cost of disposal and the transition costs to move to an automated system.
The Town is currently exploring all vendors and options. The state gives municipalities an exemption from procurement laws to solicit their own bids in the interest of public health. Any changes to sanitation operations will be widely communicated to the public once they are finalized.
Over the last several weeks we have discussed the proposed zoning articles, capital needs, and General Fund updates. Next week we will provide an overview of the FY27 Budget and Annual Town Meeting preparations.
The Annual Town Meeting will be held on Monday, April 27 at Memorial School at 6:30 PM. Public Forums will be held on Tuesday, April 7 and Tuesday, April 14 at 6:30 p.m. on Zoom or in Town Hall to ask questions and learn more about the warrant articles. Additional information related to Town Meeting can be found at manchester.ma.us/503/Town-Meetings-and-Elections.