03/25/2019 BOARD OF SELECTMEN Agenda Packet

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Summary: Masbpee�Totvn, Massachusetts; General Obligation Strong budgetary performance Mashpee's budgetary performance is strong, in our opinion. The town had operating surpluses of 6.5% of expenditures in the general fund and 2.1%of expenditures across all governmental funds in fiscal 2018. Our assessment accounts for the fact that we expect budgetary results for fiscal 2019 could close with a surplus, albeit lower than fiscal 2018 results. General fund operating results have been stable during the past three fiscal years,with results of 5.7% of expenditures in fiscal 2017 and 4.6%in fiscal 2016. When calculating budgetary performance,we adjust for reoccurring transfers and capital outlays supported by debt proceeds.After our calculations, the town has closed with three consecutive surpluses. Fiscal 2018 results were better than budgeted due to conservative budgeting for local receipts, particularly motor-vehicle excise taxes. Officials are projecting stronger-than-budgeted fiscal 2019 results based on higher-than-expected revenue for new property tax growth, excise taxes, and building permits and lower-than-expected insurance costs. We note the town has additional unused levy capacity to absorb unforeseen expenditures.Therefore,we do not expect general fund or total governmental-fund performances to change significantly during the two-year outlook period. Very strong budgetary flexibility Mashpee's budgetary flexibility is very strong,in our view,with available fund balance in fiscal 2018 of 24%of operating expenditures, or$15.2 million. Management's formal reserve policy, adopted in January 2017, calls for maintaining unrestricted reserves of, at least, 10%of the total annual budget. Management intends to continue to grow its stabilization fund or, at least, maintain current fund balance while complying with current policy. Based on management's expectation it will close fiscal 2019 with positive operating results,we expect overall budgetary flexibility will likely remain very strong during the outlook period. Very strong liquidity In our opinion, Mashpee's liquidity is very strong,with total government available cash at 25.8% of total governmental-fund expenditures and 8x governmental debt service in fiscal 2018. In our view, the town has strong access to external liquidity if necessary. Mashpee is a regular market participant that has issued debt frequently during the past 20 years, including GO bonds and short-term BANs.The town does not have any variable-rate or direct-purchase debt, and management confirms it does not have any contingent-liquidity risks from financial instruments with payment provisions that change upon the occurrence of certain events. Town investments are subject to commonwealth laws, and Mashpee invests its cash in low-risk assets. For these reasons, available cash remains strong and stable. We expect liquidity will likely remain very strong during the next two years. Very strong debt-and-contingent-liability profile In our view, Mashpee's debt-and-contingent-liability profile is very strong. Total governmental-fund debt service is 3.2%of total governmental-fund expenditures, and net direct debt is 26.2% of total governmental-fund revenue. Overall net debt is low at 0.5%of market value and approximately 79.6%of direct debt is scheduled to be repaid within 10 years,which are, in our view, positive credit factors. MARCH 6, 201 4 WVVW.�'I AN DAR DANI�P00R',1(X)I\;I/RA r IN GSD I RECT