By Kate Schmeckpeper
The School Committee just approved an additional $1.5 million reduction to the Marblehead Public Schools FY27 budget without any staffing or programmatic reductions. Smoke and mirrors? No. This was achieved through a deliberate shift in how the district will manage out-of-district special education costs. It is not the result of a windfall or a shortcut nor a sign that MPS suddenly has money to spare. Rather, it is a thoughtful revision of a strategy that protected Marblehead during the pandemic’s period of deep uncertainty, now adapted to meet the town’s fiscal reality.
Federal and state law requires Marblehead to provide students with disabilities a free and appropriate public education that meets the unique needs of each child. Sometimes this can be done through specially designed instruction, services and accommodations that are provided in Marblehead’s public schools. When a student’s needs cannot be met in the district, Marblehead pays the tuition and transportation costs for the student to attend an out-of-district program that can meet their needs.
Budgeting for these costs is challenging for districts across Massachusetts, including Marblehead.
The tuition for out-of-district placements can vary significantly from program to program, making it difficult to project the costs for hypothetical future placements.
In the past several years, there have been steep increases in tuition and transportation costs. For example, in FY24, the state approved a 14% increase in tuition for out-of-district placements, citing rising costs; the approved increase was 5% in FY25.
A percentage of out-of-district expenses are reimbursable through a state program called Circuit Breaker. However, reimbursement occurs in the subsequent fiscal year and is contingent upon the state legislature fully funding the Circuit Breaker program. Only 75% of incurred expenses over $52,000 per student are eligible for Circuit Breaker reimbursement in the subsequent fiscal year. For example, if Marblehead incurs a total of $100,000 in out-of-district costs for a student in FY26, the district may receive $36,000 in reimbursement in FY27 if the Circuit Breaker program is fully funded.
In addition to managing cost volatility, the district must be able to accommodate new placements during the school year. In F19, MPS experienced a significant budget crisis that stemmed from unexpected out-of-district placements and a lack of dedicated reserve funds. Since that time, three distinct steps have been taken to address this issue:
Special Education Stabilization Fund: Marblehead established and currently funds a $250,000 reserve fund to cover unexpected special education costs. Utilizing the fund requires a majority vote of both the School Committee and Town Meeting.
Circuit Breaker Reserves: The district has worked to build Marblehead’s Circuit Breaker reserves to a full year of reimbursement, which is considered best practice. This gives MPS considerable protection against unexpected out-of-district placements and fluctuations in the funding appropriated for the Circuit Breaker program.
Prepay Tuition: When prolonged school closures at the start of the COVID pandemic led to a surplus in the FY20 school budget, MPS used those funds to prepay eligible out-of-district tuition for FY21. That practice of prepayment has continued since 2020, with the effect of the surplus becoming embedded in the budget and carried forward year over year to prepay tuition expenses.
To reach a $47.6 million district budget for FY27 (before any override request), the School Committee worked with school administrators to make two rounds of budget reductions. First, the schools proposed $1.7 million in operational efficiencies and staff reductions. With those reductions, Marblehead will have reduced staffing by 19% since the 2016-17 school year; student enrollment has declined by 23% over the same period. The superintendent has been very clear that further staff reductions would impact class sizes, program offerings and safety.
To make a second round of reductions to the FY27 budget, the district is reducing the FY27 out-of-district budget line $1.5 million by prepaying this amount of tuition with a surplus from the
FY26 budget. However, this is not without impact.
MPS can operate with a budget of $47.6 for FY27 and does not need to ask for any override funds for FY27.
But, it’s critical to remember that as a result of the second round of reductions, the schools anticipate needing more funding for out-of-district tuition in FY28 because the surplus that has been used for prepayments has been removed from the school budget.
MPS has achieved the best practice of carrying a full year of Circuit Breaker reimbursement in reserves and has the added security of the Special Education Stabilization Fund. With these safeguards in place, a shift away from prepayment saves taxpayer money while maintaining appropriate staffing levels in the schools, which is vital for student success. No smoke and mirrors.
It’s essential to understand that this budget strategy is a one-time adjustment, not a permanent fix. The School Committee will continue to use every available tool to balance fiscal discipline with educational priorities, while maintaining transparency about the road ahead. This decision reflects careful stewardship today, but the future strength of our schools and our community as a whole, will depend on the choices we make together in the coming weeks.
Kate Schmeckpeper sits on the Marblehead School Committee.
