A virtual roundtable with municipal leaders from throughout western Massachusetts last week dug deep into the financial instability towns are feeling crushed under, including hot topics like surging health insurance costs, difficulties adequately funding education, and now annual threats for overrides in an increasing number of Bay State communities.
Organized by South Hadley Town Administrator Lisa Wong, the multi-hour meeting on Friday featured people from communities including Amherst, Northampton, South Hadley, Stoneham, Longmeadow and beyond.
Northampton Mayor Gina-Louise Sciarra, who was present at the roundtable, said that the forum allowed people throughout the region to discuss the “pressing topics” not only impacting cities and towns, but problems and shortcomings plaguing the broader region.
“Every municipality is different, but we are of course grappling with many of the same issues and growing challenges in our communities,” she said, and thanked Wong for bringing the region together.
On the topic of funding education, South Hadley’s and Monson’s superintendents shared their experience wrestling with increased expenses.
While the Monson public school system has seen declining attendance in the past 15 years, a surge of special education students in the past five years has put an immense burden on the district’s budget, said School Superintendent Paul Foster.
With 64 more special education students in the district since 2019, Monson has seen a 30% increase in special education costs. This year, 36% of Monson’s education budget is spent on special education students, with a per student cost of $28,800 a year to offer additional layers of service demanded by individualized education programs, or IEP’s.
“If you take our budgets and put them on a pie chart, what you’re going to see is that the special education pie gets bigger and bigger every year,” Foster said. “And I want to be really clear when I talk about the rising level of student need, that is not to say we’re blaming children or we’re blaming families. What is beautiful about public education is we serve every student who comes in the door, but there is a reality that some students require more resources than others, and we are seeing significant increases in the number of those students without corresponding increases in revenue.”
Foster said that, “in theory” the 64 more students add $1.4 million of costs.
“We don’t have that money. Our budget hasn’t gone up by $1.4 million,” he said.
Foster has worked in urban education environments as well as rural settings like Monson. He said when it comes to mental health, the challenges in urban and rural schools are almost identical, and these mental health challenges are responsible for the surge in need since the pandemic.
“I think we’ve all seen that in the wake of the pandemic that mental health needs, wellness needs, the increasing number of students who are coming in with disabilities that require IEPs,” Foster said. “We are obligated by law to provide the services that are outlined in that IEP, and functionally what it does is squeezes every other area of the budget.”
South Hadley Superintendent Jennifer Voyik also is in a funding crunch as attendance in South Hadley School’s grow while the district’s budget gets smaller.
Crowded classrooms are sending parents shopping for other districts. South Hadley has had to cut down on how many school choice students they can accept because of a limited number of teachers and class space.
“We’re struggling with finding a way to market South Hadley and everything that we do and have to offer, while looking at a continued budget that can’t support what our students need,” Voyik said.
Another challenge is paying for vocational students, said Voyik. Districts are expected to not only pay for tuition, which on average is $20,000 per student, but also pay for transportation for students looking to go to a vocational school.
“Similar to special education costs, districts are also obligated to pay for any student that would like to explore vocational opportunities,” she said. “And so those numbers continue to rise every year as students are looking for different ways to access certain types of education.”
To be able to retain to more students with inclinations toward vocational fields, South Hadley has broadened its programs, Voyik said. South Hadley High offers four programs, including culinary, carpentry, criminal justice and design and visual arts.
“What we’ve done in South Hadley is we’re really building a comprehensive high school at this point, even though we aren’t called South Hadley Comprehensive,” Voyik said.
Voyik also touted how South Hadley got creative to cut down on transportation costs, which were chewing away at the district’s budgets.
Specialized transportation costs were climbing 5% and 10% annually, with total costs exceeding $2 million annually. To buck the trend the town allocated $1.2 million in free cash to purchase 15 vans for special education transportation, saving the district $600,000 annually.
“And we’re going to look at ways with athletics, if there’s a way we can incorporate some of our smaller teams to be able to transport some of those teams in the afternoon,” she said.
Given the financial stress on school systems, whether from increasing special education services, offering transportation, or other big budget items, Foster said that the state needs to have a “big conversation” about how to fund these services.
“The reality is the needs are the same relative to mental health, behavior and student wellness. And if we’re going to expect as a society, for our schools to be the social workers, the mental health providers, the providers of food, the providers of transportation, the providers of helping our students the right way to behave — all those things, we’re not funding schools to do that,” he said. “We’re funding schools to provide instruction, and we’re supposed to do all the other stuff for free.”
Foster added, “We have to have a big conversation as a state around this: is our expectation that schools are supposed to provide full service?”
Revenue and overrides
On the topic of increasing revenues, municipal leaders discussed the possibility of implementing payment in lieu of taxes, or pilot programs, which would request nonprofits contribute toward tax revenue. These programs are already in place in both Northampton and Holyoke.
They also discussed applying for community development grants to restore historic buildings and bolstering housing. But regionalizing education was also identified as a potential step for increasing revenue.
Amherst’s Finance Director Sean Mangano said that regionalizing education is time-consuming and complicated, but it can be beneficial for bringing in revenue. The biggest pool of revenue from the state for regionalizing is Regional Transportation Aid, which would cover the costs of 80% to 90% of transportation costs.
“If you’re a small school district and you’re struggling, it takes two willing partners or three willing partners to come together, but it can be successful, and it can generate more revenue,” said Mangano.
Mangano also said that it is easy for communities to focus on prioritizing new development and business growth for municipalities to receive more revenue. However, he and others warned that there is no “silver bullet” when it comes to development.
In Charlton, an Amazon center was supposed to bring in revenue, the same way marijuana in Northampton and MGM casino in Springfield was supposed to do. But none of these lived up to the hype when it comes to revenue.
Northampton’s Finance Director Charlene Nardi told the story of marijuana in Northampton, and said that initially the revenue “carried us,” allowing city to put off an override for a number of years.
However, she said that as more communities welcomed marijuana, Northampton’s revenues dropped and have been inconsistent over the past couple years.
“That revenue source is not as reliable as people hope,” Nardi said.
To bolster the tax base properly, Mangano recommended towns complete studies for the best places to develop.
Another option for increased revenue is allowing short-term rentals, but Mangano added that the potential for income is limited in western Massachusetts. Amherst receives short-term rental impact fees that total about $10,000 annually.
“I think that the communities that really see a lot of money are on the Cape, where there’s a lot of Airbnb’s and rentals,” he said.
Health insurance
In communities across the state, health insurance costs have ballooned some 40% over the past year, far outpacing overall budget growth.
South Hadley’s Assistant Town Administrator Chuck Romboletti laid out some data on the situation, collected from 23 municipalities in western Massachusetts as part of a municipal health insurance survey. Those 23 entities represent a total of 385,000 residents.
All but one of the respondents cited prescription drug costs, including specialty medications, as the primary driver of health insurance costs. Meanwhile, 19 communities said there was an increased use of high cost services.
Half of respondents cited demographic changes, including an aging workforce and retirees. A handful of respondents cited a lack of plan competition or limited carrier options and new medical technology and treatments.
The survey found that on average, health insurance now accounts for an added 0.86% of town budgets year after year, and said that price hikes are, “nearly universal” for communities, regardless of whether they have private or group insurance.
Health insurance makes up between 2.69% and 18% of operating budgets. The average is just below 10%.
Respondents overwhelmingly believe that the solution is to call for direct regulation of prescription drug costs to rein in medical cost inflation. Some also cited increasing provider and insurer competition to lower costs.
As for solutions at the federal level, forum attendees emphasized federal intervention, including subsidies with cost caps, and prescription drug pricing reform.