Melrose Public Schools in FY24

Now that the election season is over, the interim superintendent has begun his one-year appointment, and the school year is well under way, it’s time to review the state of the Melrose Public Schools since my last writeup in June 2023.

Elections

The municipal election on November 7, 2023, had a large slate of local officials on the ballot, including all 11 City Council members, three school committee members, and the mayor. The school committee will have two new members, Seamus Kelley and Matt Hartman, as well as a new mayor, Jen Grigoraitis, who is a voting member of the school committee. All three will begin their term in January 2024.

Superintendent: Interim and New

John Macero was appointed Interim Superintendent in spring 2023, and is leading Melrose Public Schools for the 2023-2024 academic year. As a retired superintendent acting in an interim role for Melrose, Mr. Macero will serve for one year, and a Superintendent Search Committee was convened in October to find candidates for his replacement. Three finalists participated in an all-day school visit, followed by a Community Meet and Greet with the public, and a formal interview with the school committee.

On December 5, the School Committee selected Adam Deleidi as the new Melrose Superintendent and he stated he was “elated to be appointed” to this position. Mr. Deleidi lives in Wakefield and is currently the Deputy Superintendent of Chelsea Public Schools. He has worked in all levels of the public school system, including as a paraprofessional, a teacher, an instructional coach, an elementary school principal, and an assistant superintendent of student services. His term will begin on July 1, 2024, and the six-month transition period will provide him ample time to familiarize himself with the district and allow a smooth entrance in the next academic year.

School Budget and Revenue Sources

During the spring of 2023, the school committee created budget documents outlining the costs for running the education department. The final budget number was determined to be $48.5million, which reflected the school committee’s assessment for funding level services (the same level of services as the previous year), plus small mandated additions. The school committee offered an option for reducing the impact of this number on the city’s fiscal year budget by suggesting that certain fees for FY24 be pre-paid that spring, using available free cash from the FY23 city budget.

The school committee recommended that the mayor make a request to the city council to appropriate $869,000 of free cash to pay expenses, including the athletic transportation fee, high school graduation costs, certain subscriptions, and certain professional development fees, from the FY24 school budget. If this pre-payment option were to occur, it would reduce the school committee’s FY24 budget number to $47.6 million ($48.5 million - $869,000 = $47.6 million). The school committee then voted on and passed a $47.6 million budget number, with all members voting in favor and the mayor voting against this figure.

Recall that income for the public schools comes from three sources:

• The city

• State funding, called Chapter 70

• Revenue from other sources, called Offsets

Final amounts for each of the three revenue streams are unknown at the time of budgeting. The estimated Chapter 70 funding for Melrose in FY24 was $12.1 million, a $2.5 million increase from the previous year, while the estimated Offset amount was $5.8 million.

This meant that the city portion of the school budget would need to be $47.6 million - $12.1 million - $5.8 million = $29.7 million to fund the proposed budget for the schools.

The school committee’s budget amount was sent to the mayor, who then developed formal budget figures for each city department. His overall budget number for the city totaled $101 million, with $38.5 million allocated for the schools. These numbers were approved by the city council.

Confusingly, the mayor’s $38.5 million city budget number includes the Chapter 70 funding amount, so it combines two sources of revenue. In reality, $38.5 million - $12.1 million = $26.4 million that would be provided by the city. The mayor later included additional sources of revenue to increase the total number to approximately $39 million (~$39 million), meaning the city portion would now be ~$27 million. The additional funding came from existing city stabilization funds, however, and thus did not increase the school budget number, which remained at $38.5 million.

This ~$27 million amount is less than the $29.7 million needed to fully fund the $47.6 million budget passed by the school committee, and leaves a structural deficit for the city. This deficit is $29.7 million - ~$27 million = ~$2.6 - $2.7 million.

This was the state of budgeting and funding as we left in June at the end of FY23 and before the start of the 2023-2024 academic year.

Fiscal Year 23 Close and Free Cash Appropriation

In late June, the city council agreed to appropriate $500,000 of the requested $869,000 in free cash requested by the mayor to pre-pay some of the schools’ FY24 costs. This amount is lower than what was requested by the school committee ($869,000 - $500,000 = $369,000 lower), and means that the FY24 school budget number is now $48.5 million - $500,000 = $48 million (instead of the $47.6 million originally calculated).

The School Year So Far

How have these numbers held up for the first few months of the school year and the beginning of FY24?

The public school budget and expense information is now posted online and offers the public important insight into the financial state of the school department, and it closely resembles the budget booklet presented in school committee meetings over the spring. The information is located online.

Let’s take a look at some of the highlights of these spreadsheets, that include overall information, along with detailed expenses for each of Melrose’s 8 public schools, athletics and extra-curricular, special education, district-wide teaching and learning, administration, system-wide staff and expenses, and grant positions.

First, as documented in earlier budget writings, it is important to note at the outset that some school-specific costs are not included in the education budget, but are housed on the “city side” of the ledger and are covered by other city departments’ budgets. This includes items such as health care for school employees, school nurses salaries and health care, custodial salaries and health care, and some IT salaries. As such, these costs are not included in the school budget items, even though they are part of running the school system.

Second, and more importantly, this online spreadsheet is a living document. This means it is both a budget document and an accounting of actual expenses throughout the year. It will be regularly updated by Ken Kelley, Director of Finance for Melrose Public Schools, and reviewed at school committee meetings. The public will have available for viewing both what is being spent throughout the year and what is required to fund the public school system.

As Superintendent Macero and Ken Kelley noted, a budget is a best estimate of upcoming costs and anticipated revenue, and there are certain expenses that are both impossible to accurately estimate, and some that are just not foreseeable. Some examples of this include: Substitute teachers: Substitutes will surely be needed throughout the year, but it is simply a best guess as to how much it will cost over the year for substitute teaching; Unexpected long-term leave requests: Teachers may need to take long-term absences that arise without warning throughout the year; Unexpected out of district placements in the middle of the year: some students may transition to out-of-district schools, which are always more expensive than in-district placement; New students in the district: Families moving into Melrose during the academic year may enroll children that require additional resources.

As has been reported in many school committee meetings, certain transportation services from outside vendors are extremely expensive. The budgeted amount of $1.8 million, while very high, may not match what private transportation companies charge throughout the year.

Let’s take a look at the spreadsheet so far.

The first page, called Overall Budget, is reflecting overall actual expenses, or the overall costs, and what has been paid or allocated to be paid (called encumbered), by the school system. The tables on this tab include a summary of each of the subsequent tabs that detail specific expenses for each school and district-wide departments.

The Total Budget column on the first table indicates a TOTAL number of $45.9 million. This number is the current, up-to-date yearly expenses for Melrose Public Schools. It is the total amount of money the school department will need, from it’s three funding sources (Offsets, State Chapter 70 funding, and the city of Melrose), to cover the costs, assuming no additional expenses are added (or removed) from the spreadsheet throughout the fiscal year.

Why isn’t this number $48 million, the budgeted number for the schools?

Comparing the online document to the $48 million school committee budget from the spring, we see that while many figures are consistent with the currently-listed expenses, two are significantly decreased.

The first is that, in the spring budget spreadsheets, the estimated total cost for special education was reported to be $8.3 million. In the current budget, special education costs have decreased to $7.5 million. This difference is most notable in the line item “Special Education Tuition – collaborative,” which is the tuition cost for some out-of-district students, which was projected to be $1.732 million in the spring 2023 budget but has been reduced to $932,000. While these tuition amounts have remained the same, Melrose Public Schools was able to secure an $800,000 grant ($1.732 million - $800,000 = $932,000). This number is still a $200,000 increase from FY23 numbers due to rising tuition rates, but is much lower than anticipated.

The second is that the Franklin School is both an expense and a funding source. It costs $2.99 million to run the Franklin School, but $1.27 million of that cost can now come from the tuition charged for attending this school. This tuition is known as the Franklin revolving fund and it means that the overall Franklin School funding requirement is $2.99 million - $1.27 million = $1.72 million.

Subtracting both the special education grant and the Franklin revolving fund from the total cost for schools, we see $48 million - $800,000 - $1.27 million = $45.9 million, the number listed above.

So, as of now, the total funds needed for the Melrose Public Schools is $45.9 million.

Back to the Revenue Sources

Returning to the three categories of revenue that fund the schools: Offsets are anticipated to be slightly lower, at $5.7 million, the city portion + Chapter 70 total is $38.5 million, so total revenue is now $5.7 million + $38.5 million = $44.2 million. If we add the originally anticipated $2.6 million (anticipated) free cash request to this number, $5.7 million +$38.5 million + $2.6 million = $46.8 million. This revenue total is well above the current budget number of $45.9 million.

That is, $46.8 million - $45.9 million = $900,000 (listed as $899,734).

The Remainder of the Year

Hopefully, if these expense numbers continue to hold throughout the year, the outcome may be that the school committee will not need to request that the mayor make a free cash request for the total $2.6 million during FY24. While there is still a need for free cash to cover the structural deficit, there is a chance (as of now) it won’t need to be as high as previously calculated. That is good news as we review the first months of the year.

As the budget documents will be updated throughout the year, we will see if these expense numbers hold or increase (or possibly decrease). If they change, we will see the figures in the appropriate expense category reflect current costs, and these changes will carry over to the Overall Budget table on the front page of the online spreadsheet.

We’ll all in this together, Melrose.