MERSD Begins Steep Trek To FY25 Budget


Last week was the first public hearing on the tentative FY25 budget of the Manchester Essex Regional School District, and it’s clear: this will be hard.

The proposed education budget for FY25 recommended by district officials stands at $30.258 million, marking a 3.42% increase from the previous year.  This figure, categorized as “level services,” maintains consistent staff and service levels from FY24.  Personnel costs constitute the largest portion at $18.861 million, reflecting a 3.41% rise from FY24.

Operating expenses, totaling $11.897 million, have increased by 4.21% ($480K) from FY24. Anticipated School Choice revenue of $500K is expected to offset the operating expense, based on the assumption of accepting 20 more out-of-district students in the 2024-2025 school year.

The tentative budget proposes a 3.45% ($878K) increase in assessments for Manchester and Essex, translating to a 5.31% ($501K) increase for Essex and a 2.35% ($377K) increase for Manchester. The funding disparity results from the difference in student enrollment, with Essex’s population remaining stable and Manchester experiencing a 3% decline in student numbers.

In addition to the recommended budget, two alternative scenarios were presented for FY25: a lower 2.5% increase, requiring program cuts as requested by Essex, and a higher 4% increase with program enhancements.  

Advocates for the recommended budget argue that it aligns with similar-sized districts in the state, despite not fully restoring previous cuts.  They emphasize the need for a financial reset, suggesting that school districts require a Proposition 2½ override every two decades.  The last time an override passed to reset the MERSD budget was 17 years ago.

Notably, Essex failed to pass a Proposition 2½ override last year to fund the gap in school funding, prompting the district to commit $350K of reserve funds this year to alleviate assessment spikes in Essex.  

This year, Essex has said it can’t support a budget exceeding a 2.5% increase.  And Manchester insists on backing at least a higher, “level services” budget.  

Work Ahead: Reconciling the Differences

Finalizing the school district budget will take several months, and significant blind spots like health insurance premium figures and special education service costs that won’t be finalized until next year could swing the final budget (and, correspondingly, each town’s district assessment) in either direction. For instance, the district is currently assuming a 14% increase in health insurance for FY25, and that could come in lower or higher before March.

Two recent developments add uncertainty to the situation.  The departure of Avi Urbas, the district’s finance director for 15 years, introduces a new variable, with his replacement expected to be announced early next year.  Additionally, the Massachusetts School Building Authority’s approval of the Essex Elementary School replacement project introduces both positive and challenging aspects, including potential matching funds and an eligibility period coinciding with the district’s financial and community readiness assessment.

A potential Super Town Meeting looms if a budget override is necessary and fails in Essex.  The larger population of Manchester could potentially force approval on the smaller town, a scenario Essex officials anticipate as potentially devastating.

The MERSD Recommended Tentative FY25 Budget highlights include flat personnel levels, a 2.5% cost-of-living adjustment, a 14.5% assumed increase in healthcare insurance and planned use of $150K from the retiree benefits trust account.  Out-of-district tuition and maintenance costs are projected to rise, while utility/energy costs have slightly decreased.

Ben Buttrick, who last week announced he would be stepping down as chair of the Essex Finance Committee, emphasized that his board’s stance hadn’t changed since last fall when it requested that the District come in with an FY25 budget of no more than 2.5% increase overall, which would mean an apportionment of 4.35% for Essex and 1.41% for Manchester.  He said the 2.5% scenario is the only one that may save Essex from a Proposition 2½ override.  The other two scenarios guarantee an override request.

Buttrick added that at a 2.5% overall budget increase, Essex may be able to “squeeze by” but not without making tough choices in other areas of the town budget.

“Our (town’s) estimated overall budget growth tax capacity for FY25 is $465,000. With that being said, at the 2.5% version of the MERSD tentative budget, an overall assessment for the district would come in at $410,000 of the $465,000,” he told the School Committee Wednesday.  “We still need $145,000 more for town departments, assuming just 2% COLA (cost of living) increase for town personnel and $10,000 for Essex Tech, roughly speaking, so it still leaves us about $90,000 in the hole.”

“Simply put, we have a math problem,” Buttrick concluded.  

Jody Harris of the Essex FinCom said forcing an override in Essex could negatively transform the future of her town.   She said Essex is a “blue collar town,” that depends on a volunteer on-call Fire Department.  Tax increases could force homeowners on the margins to leave town, forcing adoption of a paid department, costing an estimated $1 million per year, Harris said.

Everyone’s eyes are on health insurance premiums, which have the power to save at least part of the day.  The Essex FinCom estimates that for every 1% drop in premiums, the district gains $44K.  But SC Chair Theresa Whitman said the district can’t hope for lower premiums and must be conservative with its budgeting.  Buttrick agreed. 

“Hope is not a strategy,” he said.

Manchester Select Board Chair Ann Harrison said she appreciates that Manchester and Essex are different communities.  Several years ago, Manchester bore a disproportionate assessment due to enrollment.  Manchester, she said, understands Essex’s current position.

“On the other hand, I find it very hard to hear people say, yes, we want level services, but we don’t want to pay for it,” Harrison said.  “I just don’t see how we can solve this.”  

As for cuts to education to accommodate the lower 2.5% version of the FY25 MERSD budget?

“I don’t think Manchester to be happy with that,” she said. 

Rob Billsbury lives in Essex, is a parent of children in the public school system, and teaches at ME Regional High School.  He warned that going with the 2.5% overall increase every year would plunge the quality of education, and that would shirk a fundamental promise a community makes to its children.

“We live in a community, and it’s our job to educate the kids in our community,” Billsbury said.  

“We have to find a way to do that, even if it costs a little bit more money. That’s what has to happen because it’s our job,” he concluded.

Highlights in the MERSD Tentative FY25 Budget

Personnel levels are flat, with no added positions or reductions in staff.

A 2.5% cost‐of‐living adjustment (COLA) is included for employees not in the Manchester Essex Teachers Association (META), including Teaching Assistants, for whom an initial contract is incomplete. In the META category, a 2.25% COLA combined with the impact of step and anticipated column moves yields an estimated growth of 4.0%.  Stipends in the META contract are budgeted with 0% growth.  

Healthcare insurance is assumed at a 14.5% increase, with actuals expected in February or March.

MERSD plans to use $150K from its retiree benefits (OPEB) trust account, which totaled $4.8 million as of June 30, to offset retiree health insurance costs.

Based on an updated analysis of individual student placements, the out‐of‐district (OOD) tuition category is up 4.8% or $54K.

Cost of maintenance is up 4.6% or $40K due to aging buildings, particularly at the Essex Elementary School and the ME Middle High School.

Cost of utilities/energy has ebbed slightly by $20K or 2.5% in FY25.

The next MERSD FY25 budget public hearing is 6 p.m. Tuesday, January 23 at the Essex Elementary School.