MELROSE — Officials want to make clear that setting an amount of money to spend in the coming fiscal year is an ever-evolving process, and this week the School Committee was told the city was going to provide about $200,000 more to help with a looming shortfall in city education.
The School Department is now working with a $4 million deficit as it struggles mightily to keep services where they are now.
In a memo to her school board colleagues, Mayor Jen Grigoraitis explained:
As we continue to move through the FY 26 budget process, I wanted to provide several updates from the City “side.” As you are all aware and we have discussed in multiple meetings, the budgeting process is in its early stages, and numbers and estimates continue to marginally shift as we receive new information from a variety of stakeholders. I am also providing regular updates to the City Council to keep both of our legislative bodies informed, as the City and School budget influence and support one another. Of note: Deficit “Split”: I recognize that after settling MPS’s contractual obligations for next fiscal year, the total amount of the projected FY 26 school deficit came in at an estimated -$4.2M, and that the school budget presented to the community and the School Committee currently reflects approximately $4M in reductions. Given how little is left that can feasibly be reduced from the school budget, please be aware that I have informed Superintendent (Adam Deleidi) that no further cuts are needed; the City will absorb the remaining shortfall on its side of the ledger. The new working number to describe the projected budget deficit is: -$4M school budget and -$2.1M city budget. To account for this shift, the City’s allocation to MPS will now be $1.2M in new revenue for FY 26.
State Aid: As requested by my School Committee colleagues at our most recent meeting, I spoke with our state delegation regarding the likelihood of any potential increases to Melrose’s Chapter 70 allocation above what has been proposed by the Governor in her budget. While the state budgeting process is largely being driven by potential cuts to federal funding (https://www.bostonglobe.com/2025/03/06/metro/trump-federal-funding-cuts-medicaidmassachusetts-budget/), we are still very early in the state’s budgeting process. Should we see an increase to Chapter 70 funds above the original number presented by the Governor, that increase would go to the MPS budget in addition to the City funds that have already been allocated. Should other state assessments increase and/or non-school state aid be reduced, which often happens when Chapter 70 funding is increased, the City “side” of the budget will bear these reductions and/or cost increases. The delegation will provide us with a more detailed update in writing, which I will share in the March 25th meeting packet. The next step in the state budget process (https://malegislature.gov/Budget) will be the release of the House Ways and Means budget, which is anticipated around mid-April. Potential Funding Source for Non-Recurring, Non-Personnel School Expenses: In advance of my administration submitting free cash requests for consideration by the City Council in the coming months, I have requested that the Superintendent and (schools’ Director of Finance and Administrative Ken) Kelley provide me with a list of non-personnel needs and associated costs that are currently identified in the FY 26 school budget (e.g., Chromebooks) by March 15th. On the recommendation of the School Committee, my administration will make a request on behalf of MPS to the Council to appropriate free cash funds to fund these items. If the free cash request is approved, this would enable the funds currently dedicated in the proposed school budget to non-personnel costs to be reallocated by the Superintendent to address other unfunded needs.
FY 27 Forecasting: As you are all aware, neither the state nor federal government provide budget forecasts for future years, and we also recognize the need to help forecast the fiscal challenges that are in store for all departments, City and School, in FY 27 without a successful override. I have asked our City and School finance teams to provide me by March 15th with a high-level overview, to the best of their current knowledge, of the anticipated fiscal concerns for the FY 27 budget. My administration and the Superintendent will then develop a one-page summary to provide to the School Committee and City Council to assist with building the early framework for FY 27.
Anticipated Changes to Federal Education Funding Policy: Given potential changes to federal education policy, my administration has also begun discussions with MPS leadership on options we may be able to consider to help MPS prepare for a potential reduction in federal funding support for special education costs (e.g., IDEA and Title I grants). By March 15th, the Superintendent and his team will provide my administration with a recommendation on a target for the fund balance of the Special Education Stabilization fund (currently just over $750k) so we can attempt to provide the district with some protection from a claw back and/or reduction of federal funds in future years. Pending available free cash funds and on the recommendation of the School Committee, my administration will make a request to the Council to increase the balance of the Special Education Fund to bring us closer to the recommended target amount that accounts for possible changes to federal education funding.
Financial Task Force: My Financial Task Force (https://www.cityofmelrose.org/mayor-jennifer-grigoraitis/news/mayorappoints-financial-task-force) held its first meeting this week and mapped out a timeline for its work, including: information it needs to gather on the City and Schools’ future financial needs; stakeholder input; and community engagement. I have advised the Task Force of my intention to submit a question or questions, formulated with their recommendations, to the Council during the City budget process later this Spring.
City Council Feedback: In the interest of collaboration and inclusive decision-making, I am requesting input from Councilors regarding their individual suggestions and recommendations for cuts to the FY26 City operating budget as my team works to develop it. My office will schedule meetings with all interested individual councilors by April 1st so the CFO and I can answer questions and provide any needed clarity to help inform their recommendations.
City Fees: With substantial budget shortfalls anticipated for FY26, the City must consider fee increases to help bridge the gap and preserve services and municipal capacity. As part of the FY 26 budget process, I have requested information related to any fees charged for licenses, permits, applications, and City-provided services from all municipal regulatory bodies.
By Tuesday, April 15th, regulatory bodies will submit a summary of current fees charged to the public, when fees were last reviewed, and recommended changes. Chairs will be prepared to speak about fees during their FY 26 budget hearing with the City Council, though the Council does not vote on such fee changes.
Retiree Health Insurance Opt-Out Incentive Program: Our HR, Audit, and Legal Departments have worked to develop a voluntary health insurance opt-out option for eligible Non-Medicare retirees. This option, like the program offered to active employees, would enable eligible retirees to “opt out” of health insurance coverage from the City in exchange for a defined financial incentive. There are 71 eligible retirees, half of whom currently carry a family health plan through the City. Exact savings will depend on the number of retirees opting into the program and the cost of each of their current health plans.
City Department Budget Process (Excluding School Operating Budget): Each city department is currently developing its budget proposal for FY26. I am working with department heads to propose budget reductions which will cause the least harm and/or impact to Melrose residents wherever possible. I am also asking all department heads to review and update any fee schedules managed by their departments to offset budget cuts.
There are additional budget items, totaling approximately $20 million annually, that support the School Department, which are housed in City department budgets including:
• School Nurses (Health & Human Services Department)
• Employee Benefits and Medicare Tax (Human Resources Department)
• School Custodial and Facilities Staff (Department of Public Works)
• Facility Costs and Utilities (Department of Public Works)
• School Resource Officers (Police Department)
• Technology Procurement and Support (Information Technology Department)
• School Solicitor (Legal Department)
• Property Insurance (Legal Department)
• Vocational Schools Tuition Assessment
• Charter School Tuition Assessment
• Pension costs for non-MTRS retirees (Paraprofessional, Nurses, Custodial, Administrative Assistants) The Council should anticipate hearings on all departmental budgets, including the School Department, beginning in May 2025.
Donation Accounts: Earlier this week, the City Council approved four appointees to serve on the Melrose Education Fund Committee, enabling this committee to meet for the first time in its existence.
The purpose of the Melrose Education Fund is to provide supplemental educational funding for local educational needs or funding for existing adult literacy. These funds are collected under Chapter 60 Section 3C of Mass General Law and are to be distributed by a committee appointed by the Mayor, consisting of at least four residents and the Superintendent or designee. MGL Ch. 60 Sec 3C was first adopted by the then Board of Aldermen in 2002; however, to the best of my administration’s knowledge, there has never been a standing committee in place to manage this Fund. The Education Fund consists entirely of voluntary individual donations. Residents have the option to donate to the fund when paying their quarterly taxes to the City, and donations can be made at any time via the Treasurer/Collector’s office as well as through the City’s website.
At the time of this memo, the fund has a balance of $15,671.67, which has been donated over 22 years. Per state law, the Education Fund Committee will establish parameters and guidelines for allocating this and any future funding donated to the account.
Our legal department is also working on written guidance regarding the parameters for using donations to support the Melrose Public Schools. Thank you for your continued collaboration as we move through this predicted yet challenging budget process.