On April 16, Mayor Ruthanne Fuller presented the City’s FY2025 budget to the City Council (see text of her speech and NewTV video). She told the City Council, “Tonight I present to you a stable, strong, sustainable — and hefty budget — for the City of Newton’s next fiscal year, beginning July 1st.”
The FY2025 Operating Budget of $525.4 million represents a 5.1% increase ($25.7 million) over the current year. Additional funds ($68.5 million in enterprise funds for water, sewer and stormwater services, and $5.1 million in Community Preservation Funds) bring the total available funding for the City to $599 million.
Schools
Funding for Newton Public Schools (NPS) — the largest portion of the budget — will increase by 5.2% to $282.6 million, which is $14 million more than the current year.
In the next few years, part of the FY2025 NPS budget will be funded by the new NPS Educational Stabilization Fund, a financial vehicle that transforms $22 million of one-time funds available this year into a stream of funding in future years ($4.1 million for NPS in FY2025). As explained below, this fund is now expected to be drawn down earlier than originally planned, leading to a potential funding gap after FY2029 that must be addressed.
NPS will be adding 46.2 full-time-equivalent positions in order to reduce class sizes, increase mental-health services in elementary schools, and improve curriculum and pedagogy. Beyond the NPS budget, an additional $44 million in the municipal budget pays for school-related services such as nurses, crossing guards, and debt service, utilities, and insurance for school properties.
Capital projects
Debt service will increase by 5.1% in the FY2025 budget to fund capital projects such as Lincoln-Eliot, Countryside, Franklin Schools, and Horace Mann Schools; Cooper Center for Active Living (NewCAL), Gath Pool, improvements to athletic fields, reconstruction of Pettee Square, the Washington Street Pilot, renovations at Police Headquarters, a fire ladder truck, renovation of Pelligrini Field House, new HVAC for the library, Spears garden, water-meter replacements, improvements to Bullough’s Pond dam, reconstructed water/sewer pump stations, and a drainage upgrade on Union Street.
Financial strengths
The Mayor asked, “How can we do so much and keep our bonding costs manageable?” Healthy residential and business real estate taxes have contributed. One-time funds from the settlement with Eversource last summer and the American Rescue Plan Act (ARPA) have allowed the City to embark on a number of projects.
The Mayor also attributed the City’s “solid ground” in finances to previous override funding for Countryside and Franklin Schools and a restructuring of payments to fund pensions. She noted that without these factors, City revenues can be typically expected to grow by about 3.5% annually or “a bit more.” She also noted that interest income is budgeted to increase by $4.2 million as interest rates remain strong, and the City expects to receive about $700,000 in state aid.
Noting that personnel costs are significant (87% of NPS costs and 70% on the City side), the Mayor said that the City has signed union contracts that align with City revenues and while other municipalities may be laying off employees, Newton is hiring.
Financial challenges
The Mayor cautioned that some costs are growing more quickly than revenues, including health insurance (7.5%), pension funding (6.6%), and electricity (13%). Also, some revenues are growing more slowly: Chapter 70 state aid for schools (1.8%), cannabis revenues (cut in half), hotel taxes and auto excise taxes (flat). She said, however, “While our village centers do have some empty storefronts and our office buildings do have some vacancies, we are not facing significant potential lost tax revenue.”
Potential funding gap after FY2029
Regarding upcoming financial challenges, the Mayor said that NPS plans to draw down the NPS Educational Stabilization Fund over five years, which is three years shorter than the originally planned eight-year life of the fund. This would leave a three-year funding gap until the City’s $694 million of unfunded pensions and retiree health care liabilities are fully funded (at which time the money allocated to funding these liabilities could be reallocated to NPS or other purposes). The Mayor said that Superintendent Anna Nolin has “begun to find ways to increase revenues or efficiencies totaling $5 million in the next 5 years so NPS doesn’t face an insurmountable fiscal cliff when the Stabilization Fund is fully expended at the end of FY2029.”
Noting that the Superintendent and Mayor share a vision “to do more for our students beyond what the typical 3.5% annual increase in the NPS budget allocation allows,” the Mayor said that Newton will “have to make decisions in the years ahead about supporting our students and our schools.”
Honoring Commissioner Linda Walsh
The Mayor closed her presentation by expressing gratitude to many, especially to Health and Human Services Commissioner Linda Walsh, who will retire in June after 37 years serving Newton with “exceptional smarts, emotional intelligence, dedication, compassion, and composure.”