Final FY24 School District Budget, Site Pulled From MAHT/MHA Plan


Some big items this week, with the ME Regional School District Committee approving a final FY24 district budget to present to voters and the Manchester Select Board agreeing with a recommendation by the Manchester Affordable Housing Trust to pull a key property from a joint plan with the Manchester Housing Authority to renovate and expand senior and affordable housing on existing sites in town.  

First up, on Tuesday, the Manchester Essex Regional School District Committee approved a $30,236,064 district budget at its meeting this week, ending months of planning, negotiation, and compromise.

The district’s operating budget represents a 4.53% (or $1.31 million) increase over last year and an $848,000 gap between a “level services” budget and the slightly larger “reinstatement” budget that was passed nearly unanimously.  Based on the contracted formula that includes enrollment figures, Manchester’s apportionment of the budget after state aid is $16.8 million, up 5.72% from last year.  Essex’s apportionment after state aid is $9.89 million, up 8.96%.  The average assessment increase between the two towns in the district is 6.90%.

“I was prepared to come here and argue down from the asks,” said Kate Koch-Sundquist, School Committee member from Essex.  “I am relieved that that’s not where we arrived.   … We’ve found common ground.” This year’s budget represents some fundamental shifts in how the School Committee approaches the district’s budget.  In the past years, the Committee has been asked to tap into district reserve funds to cushion increases, especially from Essex, which has seen dramatic, unexpected surges in its annual assessment due to dropping enrollment numbers from Manchester.  (In early years, about a third of district students were from Essex, while current predictions indicate that portion could go up as high as a half). 

Starting last year, however, that practice has been discouraged as the Finance Committees for each town look to increased borrowing costs for the Essex Elementary School building project if reserves are drawn down for operations and the district’s credit rating takes a hit.

This year, Manchester will not need to seek an operational override to absorb the district’s FY24 budget.  Last year, Essex was able to narrowly avoid a Proposition 2½ override.  But this year, that’s not the case, and Essex voters will be asked to support an operational override at Town Meeting in May.  

Ben Buttrick, chair of the Essex FinCom, whose board has actively worked with the School Committee and Select Boards in both towns, said Wednesday that the District has promised to keep increases to no more than 3.5% for the next three years.  With that promise, Buttrick said the FinCom is comfortable asking Essex voters to support one override in May that will cover the next three years of overages, which at this stage of planning translates to an additional $450 per year in real estate taxes per average home in Essex.  

But keeping the district’s budget increases within 3.5% is incredibly challenging, and the correction promises a budget reset.  

This is not unique to MERSD.  School district budgets have become unsustainable across the state, especially in recent years for districts across the state.  Inflation has hit hard, especially with transportation costs.  For MERSD, unavoidable capital expenses like a boiler replacement at Essex Elementary or new fields on the aging turf at the ME Middle High School have presented themselves.  And, one of the biggest budget challenges in recent years?  Healthcare insurance premiums for district employees, which have leaped up by double digits.

In the end, the items that brought discussion were small relative to the overall budget, but they were big with parents.  The committee chose to reinstate the late bus for students ($20,000); reinstate middle school world language ($28,000); and reinstate the facilities' small cap line ($50,000).  These were the difference between the final approved budget and the “level services” alternative ($30,138 million), which was just under $100,000 less than what passed in the final tally. 

ME District Superintendent Pamela Beaudoin was sanguine about the district’s finances once the correction is made, saying the challenges of the last several years are not at all unique in Massachusetts.  In a survey of similar districts to Manchester Essex, Beaudoin said, approximately 50 percent are looking at Proposition 2 ½ overrides this year.  

“We are all working on the same issues,” she said. 

Beaudoin said there could be good news before Town Meetings in Essex and Manchester.  She said there are signals from the state that aid formulas may enable some recapture of monies for the district in FY24.  She also said there may be good news when final healthcare insurance costs come in two weeks.  But if these offsets happen, they won’t solve the fundamental issue that school district financing has a structural challenge that is big and simply isn’t going away.

“We’re working on issues that cannot be solved at this table,” she said.  “It’s nothing we’re doing wrong here.  That doesn’t mean we can’t find creative solutions.  But we work in the context of a much bigger system.”

Moving on from the School District, on Monday, the Manchester Affordable Housing Trust and the Select Board agreed to remove the Pleasant Street DPW site from a comprehensive plan to expand and renovate a group of sites for affordable and senior housing.

This was a big departure for the MAFT’s two-years-in-the-making plan to update and add housing at three subsidized housing sites managed by the Manchester Housing Authority—Newport Park on Pine Street, The Plains, and on Loading Place Road—and develop the current DPW Pleasant Street site into residential housing.  The plan responded to Manchester’s housing production plan that concluded the town has too many single-family homes and lacks appropriate housing formats (rentals, small homes) for senior citizens, young couples starting out and empty nesters.

The original strategy would have renovated all 84 units at the three MHA properties and added about 90 additional units across the existing sites and the town-owned Pleasant Street property.  About 60-65 of the new units in the MAHT/MHA proof of concept would be subsidized, low-income and/or senior housing.  The remaining units were set to be market-rate units built on the Pleasant Street site, according to the draft “proof of concept” released to developers in a MAHT/MHA Request for Proposals last fall.

But on Monday, MAHT Chair John Feuerbach told Select Board members the RFP received no responses.  Feuerbach said the board was disappointed.  When they followed up with developers who expressed interest in the project, they learned the RFP asked for too much speculative investment of developers to respond.  Also, the uncertainty of the Pleasant Street site’s availability for development was an issue.

Now, said Feuerbach, the plan is to go with a less intense, “Request for Qualifications,” requiring developers to simply present bona fides.  Also, the MHA/MAHT decided to pull the Pleasant Street site from the mix.  

“We’re looking for the strength of the development team,” said Feuerbach.  “What type of work they’ve done in comparable development, their financing history and projects, to make a selection.”

Select Board members agreed.  Board member Brian Sollosy noted the uncertainty of Pleasant Street has probably held back progress on the existing affordable housing sites, both renovating them and adding needed units to them.  

SB member Ann Harrison agreed and said voters may have approved a non-binding referendum in 2021 to support the MAHT/MHA’s development plan, but that didn’t mean they approved the development of the DPW site into housing.  Residents, she said, may want to see that site used for something else, like a Public Safety building.  Either way, she said, the decision is for voters at Town Meeting.

But doesn’t the overall plan need Pleasant Street to work financially?

Not necessarily, said MAFT’s Chris Olney.  He told the Select Board that in the last 18 months, there has been a shift in federal and state incentives to expand support of senior and/or affordable housing.  And that, said Olney, might just be enough to make up for Pleasant Street being pulled.  Stay tuned.

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