Holyoke schools warn rising McKinney‑Vento and local contribution costs widen FY26 budget gap

The Holyoke School Committee heard on Feb. 24 that Holyoke Public Schools faces growing local budget pressures driven by increased required local contributions under the Student Opportunity Act and sharply higher transportation costs for students covered by the McKinney‑Vento law.

Superintendent (presenter) told the committee that “right now, we're looking at about a $6,630,000 or 5 and a half percent increase in our net school spending requirement,” and that a large new local contribution committed when the middle school was built raises the district’s required local share by roughly $547,000 this year.

Why it matters: The rise in the local share, higher contracted transportation rates and expected health‑insurance increases are the principal drivers of an estimated $2 million preliminary deficit for FY26, the superintendent and budget staff said. That shortfall will be the focus of the finance and operations subcommittee as the district develops a balanced budget to present to the city council.

Committee members and staff singled out McKinney‑Vento transportation — which provides travel for students experiencing homelessness to stay in their school of origin — as a major cost driver. The presenter said one town’s bid for routes that serve Holyoke students doubled in price, and described the local share arrangement: “that rate went up to 2.50, and we're paying half of that,” referring to the per‑route, per‑day contracted rate and the district’s cost‑share arrangement.

School Committee member Mister Sheehan pressed other options for reducing charter transportation costs, recommending the district consider “taking over that transportation and include them in our bid and have a more competitive” procurement rather than paying a pass‑through assessment. The presenter said the district will investigate how charter transportation assessments are calculated and whether consolidating routes could save money.

Committee members also discussed the composition and size of routes, how runs are counted, and reimbursements. The presenter said McKinney‑Vento transport is largely reimbursed to the district and that, while some revenue will rise with higher rates, the net local impact still requires careful budgeting: “we do anticipate, like, it being at least 5% because the rates that we negotiated in our contract… had a schedule to go up 5% per year.”

Other budget drivers noted in the presentation included a projected 42% increase in out‑of‑district tuition largely driven by the prior year’s use of carryover funds, and a placeholder in salaries to reflect unsettled contract negotiations. Staff said they will present more detailed numbers as the governor’s budget and other state figures firm up later in the spring.

Actions taken: The School Committee voted unanimously to forward the budget presentation/document to the city council finance committee for further consideration. The committee also approved forming a budget advisory group that will include a school committee member, a city councilor, union representatives and principals; Mister Wallahan was appointed to that advisory group by a separate unanimous vote.

What’s next: Budget hearings will proceed through the finance and operations subcommittee, and the superintendent said the district hopes to balance the FY26 budget by May, pending final state numbers and further work with the advisory group and city council.

Ending: Committee members said they expect the district to keep seeking cost savings in transportation and other line items while defending the budget publicly as it goes before the city council.