Regional school finance panel: FY25 closeout shows unexpected one-time revenue; committee urged to replenish reserves

The finance subcommittee of the regional school committee heard an end-of-year budget update Tuesday that shows the district likely will end fiscal 2025 with just under $3 million available from an original $65 million operating budget, and roughly $1 million of unexpected one-time revenue.

That outlook came as Nancy Haines, the district business manager, reported returning funds and higher-than-anticipated reimbursements that together put the district “roughly 1,000,000 in revenue over anticipated.” Haines said the district received “just over $1,000,000 from Minute Man to Show,” and that $536,000 of the receipts will go to the general fund. She also reported a return of “just under 250,000” from the Valley Collaborative.

The money prompted discussion about the district’s excess and deficiency fund balance, commonly called E&D. Haines told members the district used some E&D to balance the FY26 budget and urged replenishment. “We think, as far as expenses go on the expense side, that we’ll end up with roughly just under $3,000,000 remaining in the budget. We started with 65,000,000, and we’ll end up with just under 3,000,000 available,” she said. Later she recommended placing additional circuit-breaker funds into FY26 rather than spending them in FY25 to help rebuild reserves: “My recommendation on this is … we put it in FY26.”

Why it matters: E&D is the district’s reserve that functions like municipal free cash. Multiple committee members and administrators warned that repeatedly using E&D to support operating budgets risks depleting reserves, which can affect short-term borrowing costs and long-term fiscal flexibility. Superintendent Brad Morgan asked Haines to explain the importance of restoring E&D, noting that depleted reserves can “affect our bond rating” when the district borrows for capital projects such as the high school.

Committee discussion and staff guidance

Members asked how the district should treat the unexpected funds. Haines said she checked with the Department of Elementary and Secondary Education (DESE) on rules for using returned school-choice money: “I did check with DESE on that. We were allowed to replenish school choice only up to the amount that we originally took out.” She added that circuit-breaker receipts must be put into the circuit-breaker fund and that some districts choose to carry those funds into the next fiscal year.

Several committee members pushed for a policy or target range for E&D to avoid “big swings.” Haines noted some districts set a formal policy (for example, a 3–5 percent reserve target) and said certification of E&D by state local services typically occurs between October and January following closeout.

Uncertainties and limits

Haines and other administrators repeatedly cautioned that much of the revenue is one-time and that the district cannot rely on it for long-term staffing or program restorations. She said state-level funding decisions — including chapter 70 and transportation formula changes — remain uncertain until the governor’s budget proposal and state actions are finalized, which affects multi-year planning.

Next steps

Committee members asked staff to prepare updated FY25 closeout figures and two-year projections and to bring options for rebuilding E&D to an upcoming meeting before the full school committee’s August session. Haines said the district will submit required schedules to the state for certification of the FY25 balances, and staff will return with refined figures once final warrants and purchase orders are posted.

A note on votes and formal actions

The subcommittee received the staff update as an informational briefing; there was no vote to spend the newly returned funds. The minutes from the April 17 meeting were approved at the start of the session.