Methuen schools project FY25 surplus but warn of FY26 funding gap, capital needs

Methuen City officials heard a biannual update from the school department Tuesday night during a joint meeting of the Methuen City Council and the Methuen School Committee. The superintendent said the district’s FY25 budget "is in the black and we do anticipate ending the year in the black, once again," while warning of major uncertainties that could squeeze the FY26 budget.

The update put the budget status plainly: the superintendent told the joint body that the FY25 operating budget is balanced and that five new labor contracts have been ratified this year, with two additional tentative agreements still being finalized. At the same time, the district faces two primary pressures going into FY26: reduced Chapter 78 (Student Opportunity Act) funding based on lower inflation indexing, and unknown federal grant funding that currently supports several staff salaries.

Why it matters: the Student Opportunity Act and related Chapter 78 foundation calculations determine a significant portion of local school revenue. The superintendent said the inflation factor used to set the foundation was 1.35 last year and 1.93 this year — well below recent actual inflation and below the 4.5% cap used in FY23–FY24 — and that the district is already feeling the effect. The superintendent also said the district cannot rely on federal grants for planning because the U.S. Department of Education and the state Department of Elementary and Secondary Education had not confirmed future funding…