SOUTH HADLEY — Faced with a $3.5 million budget deficit for next fiscal year — and projected future recurring shortfalls of between $2 million and $3 million annually over the next several years — a 12-member task force is rolling out a series of recommendations that its members believe will help return the town to financial stability in both the short- and long-term.
Chief among the recommendations are putting an $11 million Proposition 2½ override to vote in an April election, as well as the launch of a payment in lieu of taxes (PILOT) program for tax-exempt properties, and the creation of an economic development plan to overcome the town’s structural budget deficit.
“This was done with the best interest of South Hadley [in mind],” Kevin Mcallister, who co-chairs the Budget Task Force with Nicholas Gingras, said in presenting the 12-person committee’s findings to the Select Board, School Committee, Appropriations Committee and Capital Planning Committee on Tuesday. “We want to make this community sustainable. These are not easy choices.”
After a three-hour discussion, the Select Board voted 4-1 to gather public feedback at a special Town Meeting on Feb. 25 regarding a potential override.
Formed after a midyear health insurance hike of 20%, the Budget Task Force spent the last seven months researching potential solutions to the growing fiscal deficit of the town. Based on numerous interviews and a comprehensive budget review, the advisory body drafted a 24-page report identifying different strategies to raise revenues within the next five years.
This year, a $3.5 million deficit could see the closure of Gaylord Memorial Library, cuts to personnel in all town departments and elimination of funding for school sports and extracurricular activities.
“You can see that the town has various issues it’s facing, and there’s no single solution today that’s going to truly address those,” Gingras said.
A long-term override
The override rose to the top of the Task Force’s solutions because residential properties make up 92% of the tax levy. The group voted to recommend an $11 million override to provide level services for the next four fiscal years, Mcallister said. The report also includes three other override options in the amounts of $3 million, $6 million and $9 million. Besides the $3 million option, the overrides would raise the tax levy by increments over three to five years.
“I think one of the most important things is understanding whatever gets up there, as we discussed, we need this,” he said. “We need an override to pass.”
Select Board member Andrea Miles noted that the town has never passed an override, and a survey conducted by the town found that 34% of the 2,290 respondents said they would not vote to increase their taxes beyond the limit allowed by state law.
“You’re talking about an aging population, and Social Security doesn’t go up that fast. Pensions don’t go up that way,” Appropriations Committee Member Julie Gentile said. “With that kind of increase, are we really going to be able to bring in those young families with students to fill our schools? Who can afford that?” she said.
Mcallister clarifies that an override buys time to implement other strategies. According to the report, the town should draft an economic development plan to drive taxable new growth. A potential PILOT program with Mount Holyoke College, South Hadley Electric Lighting Department and the Gaylord Memorial Library Trust will generate revenue from tax-exempt properties as soon as fiscal year 2028.
School choice snowball
In addition to last year’s 40% increase in health insurance, special education and school choice remain two of the highest budget drivers in South Hadley. The report said special education costs make up 38% of the school’s budget, up from 25% in 2017. Currently the net loss of school choice is $3.1 million, higher than Mcallister initially calculated.
“When you factor in the fact that as recently as probably three or four years ago, we were on the plus side of that…it’s really more like probably $4 million to $5 million,” Capital Planning Committee Member Ira Brezinsky said.
As these costs skyrocket, state aid has not kept up. In 2009, 32% of the town’s budget came from state aid. This past year, it made up 25% of the school’s budget, the report finds. Advocating for state-level changes in charter school funding formulas and unfunded special education mandates could close the gap in special education, the report suggests.
“It’s going to be really, really hard to convince those families that have the financial means to send their kids to a charter school to come back to public schools,” School Committee Chair Eric Freisner said. “If the state wants to incentivize charter schools, I’d like to see the state pick up that bill for the charter schools.”
According to a survey sent out to South Hadley parents who choiced out of the district, the top reasons families left include academic program offerings and class size. Superintendent Jennifer Voyik said without an override, class sizes would continue to grow and educational programs would shrink.
“It’s just going to be this domino effect,” she said
Next steps
Voyik is in the midst of a superintendent entry plan that will give town leadership more concrete figures on special education needs. In the meantime, the report suggests South Hadley schools review the school choice policy and develop new offerings to keep students in the district.
“It’s in everyone’s best interest to make sure that there’s significant expense control discipline throughout the next few years to help the town navigate this,” Gingras said.
Town Meeting members will vote on a possible override amount at the end of February. The Select Board will decide whether an override will be on the ballot by March 10. Residents will vote on a potential override question on the April 14 election.