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Brookline staff warn of $1.3M town gap, about $6M school shortfall in preliminary 2026 forecast
Summary
Town staff outlined a preliminary fiscal 2026 forecast that shows roughly a $1.3 million operating gap on the town side and about a $6 million shortfall for the schools, and urged caution about using one-time interest and ARPA-related revenues for recurring costs.
Town of Brookline finance staff presented a preliminary multi-year forecast Tuesday that showed mounting cost pressures and a material operating gap for fiscal 2026.
The forecast identifies about a $1.3 million deficit on the town side and an approximately $6 million shortfall for the school system. Staff told the Select Board that major drivers include rising employee benefits and health-care costs, collective-bargaining obligations and special-education spending, while the federal ARPA dollars that helped in recent years are declining.
Presenters described conservative revenue assumptions: level-funded state aid in the near term, modest local receipts growth and a cautious new-growth estimate. Staff also highlighted one-time interest earnings tied to large ARPA balances and recent market rates; those gains produced an outsized interest-income windfall in the prior year but were described as unreliable for recurring operating commitments.
To close the gap, the board and staff discussed several levers: increasing contributions to the stabilization fund (staff recommended a larger transfer to meet rating-agency guidance), delaying or reprioritizing capital projects, potential fee adjustments (including sanitation and parking), and the option of reallocating recurring tax levy capacity that currently funds CIP projects. Staff repeatedly cautioned against relying on one-time revenues to underwrite ongoing expenses.
Board members asked for more detail on several items, including the composition of free cash used in the forecast, how new-growth benchmarks were set, the expected trajectory for health insurance premiums and the timing and scale of debt-exclusion projects. Staff said they will post slides and backup materials online and provide additional breakdowns in the next packet.
The Select Board also discussed creating a public revenue-and-expenditure study committee to examine structural budget drivers and, if needed, shape any future override proposal with a clear timeline for FY27 planning.
Next steps: staff will supply more granular backup on assumptions (new-growth estimates, one-time vs. recurring revenues, and detailed free-cash components) and return with follow-up analyses to inform board choices about CIP timing, fee changes and reserve policies.
