Natick finance director presents FY26 year‑end and 5‑year forecast, urges board to set OPEB and free‑cash guardrails

Ari Skye, the town's assistant town manager and director of finance, told the Select Board the town finished FY26 with revenue slightly above budget and expenditures generally under budget, with a property tax levy collection rate of about 98.5%.

"Revenue was a little bit above budget but point 8%," Skye said, presenting a year‑end snapshot and a set of sensitivity scenarios for the next five years. He described three broad pathways: an "operation supportive" approach that directs about 30% of pension savings into the OPEB trust, an FMP‑aligned option that moves most pension savings into OPEB, and a "stable funding baseline" that would dedicate a set annual amount (staff used $10 million as an example) toward pension normal cost plus OPEB to smooth contributions.

The models show limited near‑term differences in fiscal 2028 but diverge in the early 2030s when pension payoff and OPEB choices take effect. Under the FMP‑aligned scenario the town would put nearly $12 million annually toward OPEB by 2031, producing larger long‑term deficits under historical growth assumptions; more moderate growth assumptions shrink shortfalls. Skye emphasized these are forecasts and sensitivity analyses rather than budgets.

Board members pressed for the analysis behind key assumptions: the basis for a 30% operation‑supportive share, the timing of pension payoff (Skye said the pension liability is projected to be paid off in 2030), and the proposed $6 million per year in levy borrowing used in capital planning. Several members said they want to avoid actions that would imperil Natick’s strong bond rating and asked staff to engage the town’s financial advisors and actuary for peer context.

Next steps: the Select Board directed the finance department to deliver actuals‑versus‑budget back to 2022, a clear debt schedule showing what obligations drop off, and comparative information from financial advisors so the board can adopt a regular cadence for reviewing and updating financial management principles.

Skye said staff will return with scenario runs and suggested language for annual review in September; board members signaled support for a goal to phase out the operational use of free cash around 2031 but asked for more operational impact analysis before finalizing any specific percentages or schedules.