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 levels.

Key budget details and risks

- Fiscal year 2025: The superintendent reported the current FY25 budget is balanced and anticipates ending the year with a surplus.

- Labor agreements: The district ratified five new contracts this year and is working to finalize memoranda of agreement for two others after an extended bargaining process the superintendent described as a 14-month effort.

- Federal grants: The superintendent said Title I–IV and IDEA federal grants currently fund about $3,600,000 in salaries in the FY25 budget. Because the district has not received formal notice from the federal Department of Education or the state, those dollars cannot be relied on for long-range planning and the FY26 proposal is being prepared without assuming those funds will arrive.

- Circuit breaker (special education reimbursements): The superintendent described the circuit breaker account (state reimbursements for certain special-education costs, including tuition and transportation) as "healthy" compared with the 2017–18 crisis years, though the district used more of those funds this year.

Staffing and program impacts

The superintendent said the district has previously had to eliminate positions to balance budgets: the FY25 process followed a prior year that removed 41 positions from a proposed budget. The superintendent warned that FY26 will be similarly challenging and that further reductions are possible depending on revenue outcomes.

Facilities and capital needs

School leaders raised several capital and maintenance items. The superintendent said staff are preparing a restructuring of maintenance and custodial responsibilities and are coordinating with the mayor and the city CAFO on extraordinary maintenance versus capital-improvement roles and costs. That restructuring and associated costs will be presented to the school committee during the FY26 budget process.

Ice rink: Methuen Youth Hockey and other users have requested an upgrade to rink boards and glass. The superintendent said a full replacement has been estimated at "probably half a million" dollars and that the project is in the city’s capital improvement plan for fiscal year 2027. The superintendent and staff noted replacing the boards and glass would require a substantial shutdown of the facility while work proceeds.

Fields and groundskeeping: Councilors pressed whether the school department and the Department of Public Works have discussed shifting groundskeeping responsibility or cost-sharing for city-owned fields that are managed by the schools. The superintendent said those conversations have not resumed in detail and that some grounds work is contracted out; a councilor suggested a cost analysis comparing in‑house staffing to contracting.

Revenue, advertising and revolving funds

Councilors noted the rink generates revenue and asked whether advertising on school-site facilities could offset costs. A school committee member stated the committee has a policy restricting advertising — barring tobacco, alcohol and violent content — and that limited local vendor advertising and annual banner fees are already used to raise funds.

Public comment and follow-up

Councilors and school committee members asked for follow-up details on the FY25 surplus rollover to city free cash; the superintendent said a specific number was "not at this point" available and that staff would examine the likely amount. Several councilors asked for continued attention to high‑priority capital items such as roofing, boilers and classroom carpeting alongside recreational facility needs.

Meeting actions

The joint meeting included procedural motions to accept the joint agenda and to adjourn. The City Council motion to accept the agenda was moved by Councilor Perecra and seconded by Councilor Campagnon and carried on an "aye" vote. The School Committee similarly moved and accepted the agenda (motion from the vice chair, seconded by Member DeZaglia). The joint session was later adjourned by motion of Councilor Ferretra with a unanimous affirmative vote; the School Committee adjourned on a motion from its vice chair and a second from Member DeZaglia.

What’s next

The superintendent will present the proposed FY26 school budget to the School Committee on Monday, March 24. The district will continue to prepare the FY26 proposal without assuming federal grant renewals, and officials said they will return to both governing bodies with additional detail as numbers and grant decisions become known.