Canton school committee hears Q2 finance report as deficit grows; previews FY26 budget

At a virtual meeting of the Canton School Committee, finance staff reported the district’s operating deficit had increased from an $849,000 Q1 shortfall to about $1.5 million as of Dec. 30, and outlined steps to refine the proposed FY26 operating budget.

Committee members said the change in the deficit and repeated reliance on reserve and revolving funds were their primary concerns. Finance staff described the difference between the revised budget and anticipated spend as largely the result of FY24 encumbrances that carried into FY25—primarily payroll timing for employees paid after the fiscal year closes—and an ongoing payroll and accounts review to correct charged salary lines.

Why it matters: the committee must reconcile rising special-education tuition and transportation costs, unsettled labor negotiations and encumbrances within the district’s operating totals before a compressed FY26 budget calendar. Committee members pressed for clarity about oversight of high-variance lines and whether town finance officials still expect the district to keep more special-education costs in the operating budget rather than draw on the special-ed reserve.

Finance details and discussion Finance staff explained that the “revised budget” column in the district spreadsheet includes carry-forwards and encumbrances from FY24 (for example, salary obligations that pay out after June) while “anticipated spend” represents staff estimates of where expense lines will end the current year. Staff said some large variances are administrative encumbrances, position changes not fully rolled off encumbered lines, or unanticipated student-service expenses such as contracted tutors or out-of-district tuition.

Committee members noted several specific concerns raised in the Q2 materials: a paraprofessional line that the memo flagged at about 186% of a typical comparison percentage; classroom teaching lines shown as substantially over budget (figures discussed by staff but not finalized); and repeated use of revolving accounts to balance operating shortfalls. Several members asked who tracks and authorizes hours and charges to the paraprofessional and student-services lines; staff said line accuracy and encumbrance cleanup are ongoing priorities.

Special education and reserves Committee members raised the district’s plan to use roughly $1 million from the special-education reserve to balance FY25, and asked how the reserve would respond if the district later experienced new, high-cost placements. Finance staff and committee members discussed residential placements—which can cost in the low hundreds of thousands per student per year—and urged clarification from the town’s finance committee (FinCom) about whether their expectation that district operating budgets carry more special-education costs has changed.

Federal and state funding context Finance staff noted the district receives federal IDEA funding (about the amount referenced in the meeting) and other federal grants (Title I–IV) that offset some special-education and student-services costs. They also referenced the state’s circuit-breaker reimbursement and the governor’s preliminary budget, which staff said shows circuit breaker “fully funded” at the state’s estimate but will require final reconciliation once local submissions and the legislative process are complete.

FY26 preview and schedule Finance staff described a “level service” objective for FY26—maintain current course offerings and FTE counts—while modeling salary and benefit changes tied to collective-bargaining outcomes. Staff said they are building FY26 scenarios by averaging recent actuals, adding anticipated FY25 spend and applying conservative assumptions; they described initial, high-end estimates as well above the district’s likely allocation and said the work will continue line-by-line to produce a refined proposed budget. Staff aimed to have more solid numbers by March 1 and planned an intensive vendor-invoice reconciliation and payroll cleanup effort during the February break week.

Committee action The committee voted on the Q2 financial report. Roll-call voting was held; Ms. Moran recorded a no vote and the final tally was 4–1 in favor of accepting the Q2 financial report.

Next steps Finance staff will continue encumbrance cleanup, vendor invoice follow-up and payroll line reconciliation; they will produce a refined FY26 proposal for the committee’s first read and will seek clarification from the town finance committee on reserve usage and expectations before finalizing the FY26 strategy.