Following passage of the Prop 2½ override, board members acknowledged the significance of the vote and discussed the responsibilities it entails. Members referenced the MOU commitment to quarterly financial updates, with the first anticipated in early October after the close of the first quarter.

One member outlined the approved funding allocations:

• $6.5 million for municipal services
• $8.5 million for schools
• $2.3 million for trash collection

Members noted that roughly $7.7 million in restorations were understood by voters, with approximately $9.6 million in additional needs still requiring clearer public articulation. The board discussed developing an accountability plan, improving the communication cadence with residents, and pursuing GFOA budget module implementation to link departmental strategy to financial data.

Finance Director Alicia Benjamin was recognized for her role in the override effort and her work over three years implementing financial transparency tools. Members also praised the collaboration between the Select Board and School Committee during the override process and expressed interest in expanding that model to other boards.

Committee member Henry introduced a proclamation supporting the Tier 3 level of the proposed FY27–FY29 Prop 2½ override. The proclamation states:

• The district closed a $3.7 million FY27 gap by eliminating 18.25 FTE positions and making a one-time $1.5 million prepayment of special education out-of-district tuition.
• Those one-time measures cannot be repeated in FY28, creating a structural revenue need.
• Tier 1 ($6.2M school side) maintains existing staff and funds SPED obligations through FY29.
• Tier 2 ($7.2M school side) adds full-day kindergarten and a sustainable student technology lifecycle.
• Tier 3 ($8.5M school side) adds a recurring school building capital fund and an in-district 18–22 special education program.

The committee resolved to officially support Tier 3 as the designated funding level to ensure fiscal and operational stability through 2030. The vote was 4-0.

What Article 29 does: Appropriates supplemental FY2027 funds contingent on passage of a Prop 2½ override at the June 9 ballot. Tonight’s vote puts the tiers on the ballot; voters will choose a tier in June.

Three tiers (each builds on the prior):

Tier 1 restores (partial): 15 of 20.5 town FTEs cut, library accreditation-waiver staffing, COA nutritional coordinator, SRO, DPW heavy equipment operator/laborer, custodians, finance senior clerk, community development director. Schools: funds salary obligations for adjusted enrollment staffing in FY28–29 and returns revolving-fund positions to general fund.

Tier 2 adds: COA social worker, full library restoration, GIS position, $450K building maintenance, 1 police officer, 2 firefighters, town clerk special clerk, IT director, budget analyst, assistant planner, conservation agent; schools: $150K technology leases and free full-day kindergarten.

Tier 3 adds: specialized DPW equipment operator, foreman, 1 more police officer, 2 more firefighters, grant writer, $60K community mental health, $1.5M recurring capital (town + schools), $100K curriculum/PD, in-district 18–22 SPED program.

Ballot mechanics: Four separate questions (tiers 1–3 plus curbside trash). Voters may vote yes/no on each independently. Highest-dollar tier with >50% yes votes prevails.

MOU: Select Board, School Committee, and Finance Committee signed an MOU capping per-year tax increases and pledging not to seek another override for at least three years.

S&P context: Bond outlook revised to negative; town reserves at ~2% vs. 5% policy target.

Vote: 1,227 yes to 159 no.

The Finance Committee voted unanimously to authorize its chair to sign a Memorandum of Understanding with the Select Board and School Committee governing the use of override funds if the ballot measure passes.

Key MOU provisions:

• Annual draw amounts are fixed per tier for each of the three years
• Revenue split: approximately 62% to schools, 38% to town
• Health insurance growth assumed at 6% in FY28 and FY29; if actual growth is lower, the delta goes to stabilization rather than new spending
• If health insurance comes in above 6%, other budget lines must absorb the difference — no additional override draws
• Quarterly public meetings among the three boards are required
• Town administrator, superintendent, and select board chair have public reporting obligations

The MOU is not legally binding but constitutes a public commitment by elected and appointed officials. Town meeting retains appropriation authority each year as the ultimate enforcement mechanism.

The Finance Committee received a full presentation on the three-tier Proposition 2½ override structure before voting.

Balanced budget context: Available revenue for FY27 is $96.5M — $600,000 less than FY26 — against level-service budget requests of $104.2M, producing a $7.7M deficit. Key cost drivers include $1.7M in health insurance increases, $1M trash contract increase, $500K pension increase, $1.8M school wage increases, and $1.5M town wage increases. The town side cut 22 positions (18 layoffs, 4 vacancies); the school side cut 18.25 FTEs (9.5 active positions, 8.75 vacancies/attrition).

Override tier structure (town side):

Tier one restores 15 of 22 cut positions, brings back the police SRO, library accreditation waiver, DPW, Rec & Parks, COA, and partial community development. Tier two adds building maintenance ($450K), two firefighters, one police officer, IT director, budget analyst, part-time COA social worker, GIS position, and full library restoration. Tier three adds two more firefighters, one police officer, DPW foreman and HEO, grants writer, $60K mental health counseling, and $1M recurring capital.

School side draws:

• FY27: $0 (schools draw nothing from override)
• FY28: $4.4M (tier two) — driven by $1.5M SPED tuition prepayment unwinding plus contract escalation
• FY29: Additional draw for tier three

School Superintendent explained that without an override, the FY28 shortfall of $4.4M would require cutting approximately 60 positions (at average salary ~$72,500), or roughly 10–12% of the school workforce.

Ballot mechanics: At town meeting, voters authorize the Select Board to place the question on the ballot. Three separate yes/no questions appear on the ballot (one per tier). The highest tier achieving a majority yes vote is the amount that passes. Tiers are independent — a voter may vote yes on any combination.

Taxpayer impact (median assessed value $990,600):

These amounts are permanent additions to the levy, growing at 2.5%/year thereafter.

MOU: A Memorandum of Understanding between the Select Board, School Committee, and Finance Committee commits each board to draw only specified amounts per year, split approximately 62% schools / 38% town, with health insurance growth assumed at 6% in FY28–29. Quarterly public meetings are required. The FinCom voted unanimously to authorize the chair to sign.

Votes:

• Trash curbside override ($2,186,516): 7 in favor, 2 against
• General government and school override up to $4.3M year one: unanimous

The board reviewed a detailed presentation on a three-tier Prop 2½ override structure:

Tier 1 ($9M) restores 15 positions cut in the prior budget, including the police school resource officer, library accreditation waiver eligibility, DPW laborer, two COA positions, two public building custodians, and the community development director. It also restores long-term financial contributions: $250,000 to stabilization, OPEB funding, and workers’ compensation reserve.

Tier 2 ($12M) adds seven new positions (two firefighters, one police officer, one IT director, one budget analyst, one part-time social worker, one GIS/DPW position), a $450,000 maintenance budget, a full library restore including materials, and restores one special clerk and one assistant planner.

Tier 3 ($15M) adds six additional positions (two more firefighters for a total of four, one more police officer bringing the force to 33, one stormwater foreman, one specialized HEO, one grant writer), $60,000 annually for mental health counseling, and $1 million in recurring capital investments.

The board discussed how the tiered ballot works: voters choose the highest tier they support; the tier receiving a majority with the highest dollar amount is enacted. Town meeting votes only the appropriation for Year 1 at the highest tier level (~$4.3M for Tier 3 Year 1); future years require annual town meeting appropriation.

Board member Moses presented a budget-framework overview explaining that the school budget represents approximately 62% and the municipal budget approximately 38% of the ~$97M discretionary operating budget, which underpins the MOU revenue-sharing ratio.

The board voted 3-0 with one recusal to approve the three-tier override structure (Tier 1: $3M town / $6M schools; Tier 2: ~$4.8M town / ~$7.2M schools; Tier 3: ~$6.5M town / ~$8.5M schools).

The MOU commits the town and schools to: no new override before 2030; 62/38 revenue split based on fully allocated cost structure; quarterly joint financial reviews; and a plan to reduce reliance on free cash by building stabilization to 5% of the operating budget. The MOU was approved unanimously.

The same six-page Memorandum of Understanding previewed at the Select Board meeting on April 8. Vote here was 4-0 subject to the dollar figures being added to the override-structure exhibit (still being finalized when the draft circulated).

Key commitments

• No further general override until at least FY2030, regardless of which tier passes.
• Annual draw caps per body, school/municipal split broken out.
• Surplus revenue flows to stabilization fund first (target: 5% of operating budget), then capital, then OPEB/pension.
• Quarterly reporting from Town Administrator and Superintendent to all three board chairs.
• Commitments to publicize the new means-tested senior tax exemption (Town Meeting 2025; pending state-house approval).
• Two-thirds vote of all three boards required to deviate (“black swan” mechanism).

“It’s a recognition by town leaders that the budgetary limits imposed by the tier voters select are the ones we’re going to have to live with for the next three years.”

Committee endorsed the school-department piece of the tri-board override structure, three tiers over three years. Across all tiers, schools draw $0 from the override in FY27 – the cuts above are the FY27 plan regardless of the ballot outcome.

What each tier covers

The 18.25 FTE cut in FY27 is not recommended for restoration in any tier. The schools argued the headcount reduction is consistent with declining enrollment (down 3.8% since 2019; projected 23.49 fewer students next fall), and creates a new baseline rather than a one-year cut.

Procedural pushback

Jen (chair): “Without an override, these shortfalls compounded cannot be resolved within the levy limit – you’ve got school committee members involved in this when this was not the directive. It will be the will of this entire committee to decide how we want to go forward.”

Jen flagged the override slide deck for finance-law-adjacent value statements the committee cannot advocate, and pressed the superintendent to revise. Acknowledged. The deck was authored collaboratively (administration plus Kate and Melissa as members of the working group) but the messaging will be tightened before public release.

Jen left for a family obligation at 7:30 PM. Vote on the tier structure proceeded 4-0: Henry, Melissa, Kate, Al.

A resident (Sarah) asked during public comment afterward whether the agenda had clearly indicated a vote would be taken; the chair acknowledged the protocol concern and confirmed council had been consulted on Open Meeting Law compliance.

A six-page Memorandum of Understanding among the Select Board, School Committee, and Finance Committee, covering FY27–FY29. Not voted on this meeting; awaiting School Committee vote the following night.

Commitments

• No second override until at least FY2030, regardless of which tier passes.
• Annual draw caps, with school and municipal portions broken out separately.
• Any surplus flows to the stabilization fund first (target: 5% of operating budget), then capital, then OPEB and pension.
• Free-cash reliance steps down – $5M (FY26) → $4M (FY27) → $3M (FY28).
• Health-insurance growth assumed at 6% (deliberately conservative on revenue).
• New-growth split – 62% town, 38% schools.
• Quarterly reporting from Town Administrator and Superintendent to all three board chairs; State of the Town will publish year-to-date override budgeted vs. spent.

Deviation from the caps requires a two-thirds vote of all three boards – the “black swan” mechanism for extraordinary circumstances.

Sample ballot language: “Shall the Town of Marblehead be allowed to assess an additional $15M [or $12M, or $9M] in real estate and property taxes for purposes of operating the municipal government and public schools for the fiscal year beginning July 1, 2026?”

Two ballot questions. Q1 asks voters to set the operating-budget override at one of three tiers ($9M / $12M / $15M), drawn down over three years. Q2 is a separate $2.3M question to replace the new curbside trash fee with a tax increase.

Highest tier with a yes-majority wins. Votes are not cumulative – if Tier 3 fails but Tier 2 passes, the result is $12M.

Tax impact on a $1M home (three-year totals)

On the average single-family home ($1.291M), Tier 1 = $167, Tier 2 = $304, Tier 3 = $1,186 in year one. Board agreed to standardize on average or median going forward.

What each tier restores

• Tier 1 – School Resource Officer; DPW staffing (1 special labor, 1 temp clerk, 1 HEO); library accreditation ($311,183); Community Planning & Development director; recreation groundskeeper; OPEB transfer; reserve fund.
• Tier 2 adds – 1 police officer; 2 firefighters; 1 GIS position; IT director; budget analyst; assistant planner (sustainability coordinator); conservation agent; town-wide maintenance division ($450,000).
• Tier 3 adds – 2 more police; 4 more firefighters (6 total); grant writer; recurring $1M capital; $60K psychological counseling.

Schools draw nothing in FY27 across all tiers; roughly 14 school positions are still cut in Tier 1, reflecting a multi-year headcount reduction tied to declining enrollment.

Pushback from the public

Several residents (Kate, Christine Duchow, Susan Shannon, Nick Ward) challenged the “Restore / Stabilize / Invest” labels as misleading. Tier 1 is a partial restore, not a true restore.

Nick Ward (Rolleston Rd, online) flagged new growth as a third budgetary lever the board has not modeled, and noted DOR ranks Marblehead 20th of 351 Massachusetts communities by per-capita income.

Board members pressed staff for a clearer P&L-style year-over-year presentation and a named list of what is not restored at each tier. This is Marblehead’s first tiered override.

Articles 28 and 29, which are the Prop 2½ override articles for school expenses and municipal expenses respectively, were tabled for the evening. The committee will revisit them at the April 27 follow-up warrant hearing once the relevant boards have voted on the specific amounts and ballot question structure.

Town Administrator Kezer presented a proposed override framework titled “Providing Clear Choices for Our Community.” The framework consists of two major questions:

Question 1 — Three-tier service funding override:

• Tier 1A (Restore): Partially or fully restore cuts included in the balanced budget being built for town meeting, covering both town and school services (e.g., firefighter position, SRO officer, library, custodians, hot-top road funding).
• Tier 1B (Stabilize and Build): Everything in Tier 1A plus remaining restoration, building maintenance funding, salary study implementation, additional public safety and DPW staffing.
• Tier 1C (Invest and Improve): Everything above plus small capital investments — sea walls, fences, aging heavy equipment.

Each tier’s dollar value builds on the previous; the highest tier achieving a majority yes vote sets the levy increase.

Question 2 — Trash funding: A binary question asking voters whether to fund curbside trash/recycling through the existing Board of Health fee or instead to raise the tax levy by approximately $2 million to replace the fee. The new trash/recycling contract is a five-year contract, prompting discussion of whether the override should cover three or five years.

Key debate points:

• Board member Erin Zisson and chair Singer favored a multi-year approach to provide employee and budget stability.
• Member Moses Grady favored a full restoration of cuts, ultimately amended to simply “restore.”
• Member Jim Simpson presented an alternative “menu” approach grouping departments (public safety, infrastructure/DPW, culture/recreation, core government) as separate override questions, drawing on a hybrid of tiers and menu items. He noted this differs from the 2005 department-by-department approach that failed.
• Members Erin Zisson, Aaron Fox (remote), and chair Singer opposed a menu approach as operationally inconsistent with integrated budgeting and potentially misleading to voters; they cited the 2005 experience where a menu approach failed and a comprehensive override was needed a year later.
• Sarah Fox (public comment) had earlier warned that Essex Tech assessments were understated by $500,000–$700,000 per year, compounding to over $2 million, a figure not yet fully incorporated into projections.
• CFO Benjamin was reported to have used a 15% health-insurance cost escalation assumption; members noted that multi-year projections for health insurance and pension carry significant uncertainty.

Votes taken:

1. Amendment to change “partial restore” to simply “restore” — passed unanimously (5-0).
2. Main motion to direct town administrator to pursue a multi-tier, multi-year override framework modeled on the presentation — passed 4 to 1 (Grady opposed).
3. Motion to authorize town administrator to develop a standalone trash-funding override option at the request of the Board of Health, to be placed alongside the tiered override on the ballot — passed unanimously.
4. Motion to authorize town administrator to form a working group of select board members, school committee members, and finance committee to develop numbers and report back — passed unanimously.

The board asked that a working group convene the following week and present results at the April 8 meeting.

Following review of all departments, the town administrator read a comprehensive list of FY27 appropriations. The board voted 4-0 to approve the following department budgets:

The board noted the full budget vote reconciling operating versus non-operating components will occur at a subsequent meeting.

Override mechanics overview (Sasha, Town Administrator’s office)

The board received a detailed briefing on override types:

• General operating override: Permanently increases the levy; requires simple majority at town meeting to authorize the ballot question.
• Debt exclusion: Temporarily raises the levy to cover borrowing costs for capital projects; expires when debt is retired.
• Capital expenditure exclusion: Temporary levy increase for non-borrowed capital spending.
• Multi-tier/tiered override: Voters choose among tiers (e.g., restore, stabilize, invest); the highest tier receiving majority approval determines the levy increase. Melrose ($9.3M / $11.9M / $13.5M — all three passed; $13.5M approved), Stoneham ($9.3M / $12.5M — $12.5M prevailed), and Orleans (multi-question with per-year options) were cited as recent examples.
• Multi-year draw: An approved override authorizes a levy increase up to a ceiling; the board can choose to draw less in earlier years and phase in the full amount.

Budget gap summary

The town started with a ~$7 million townwide deficit ($5M municipal, $2M schools). Three scenarios were reviewed:

Key revenue drivers of the deficit: loss of ~$2M in free cash reliance, ~$1M decline in local receipts, ~$2M healthcare/pension cost increase, and ~$1.9M trash contract increase.

Trash fee analysis

Board of Health Director Andrew presented data: 10% of Massachusetts towns offer both curbside and transfer-station services (as Marblehead does); 46% have transfer-station only; 41% curbside only. Average annual household fee statewide is ~$238. The estimated cost of curbside collection and disposal for approximately 8,000 households is ~$2.037 million, yielding an estimated ~$250/year per household fee. Schools and municipal buildings are excluded from that calculation. New automated-cart contract (16,000 barrels at ~$904,000, financed over 5 years via waste revolving fund) is pending.

Board discussion

• Erin Noonan expressed strong support for Scenario B, arguing the fee is consistent with other town fees (kindergarten, sports) and that an 11% staff reduction is far preferable to 21% or 30%.
• Moses Grader preferred keeping trash in the general fund and presenting a clean restorative override to voters, expressing concern the trash fee would distract from the core override message; favored a one-year restorative override with menu options.
• Jim Falk said he could not support Scenario A given its impact on the library, Council on Aging, and parks, but expressed concern that the trash fee has not been fully studied; ultimately directed staff to plan with Scenario B.
• Alexa Ewing raised concerns about decimating the Community Development department given multi-million-dollar projects in the pipeline (shipyard, Five Corners, Green Communities, State Street landing, rail trail).
• Dan Zisson noted both municipal and school staffing have declined significantly since FY18 and argued the deficit stems from a convergence of one-time cost drivers.

The board did not take a formal recorded vote on Scenario A vs. B, but the chair summarized a consensus to direct Thatcher to proceed with Scenario B planning, subject to a forthcoming legal opinion from Town Counsel Lisa Meade on the Board of Health’s authority to impose the trash fee.

Override structure direction to staff

The board asked Thatcher to return on March 25 with a matrix of override options built around:

1. Tier 1 (Restore): One-year restorative override covering staffing cuts needed for a balanced budget, including a $250,000 stabilization fund contribution.
2. Tier 2 (Stabilize): Restore plus protect/sustain essential services through FY29; restore select prior-year cuts; fund annual vehicle/maintenance capital; review police and fire staffing levels toward 32 officers.
3. Tier 3 (Invest/Enhance): Stabilize plus fund $1M annual capital line, implement the compensation study, increase DPW road capacity, and address other department-identified community needs.

The board agreed that all tiers would be structured as a single town meeting article authorizing the select board to place questions on the ballot, with the actual question design to be determined at a future meeting.

Following the budget presentation, board members discussed override strategy:

• Aaron Newman outlined a preferred three-tier override menu:
  • Tier 1 (Restore): Return service levels to a baseline, addressing both FY27 cuts and attrition from prior years of level-funding
  • Tier 2 (Stabilize): Fund deferred maintenance on town assets and begin rebuilding the stabilization fund (currently approximately $250,000)
  • Tier 3 (Expand): Fund annual capital planning and service improvements
• Moses Grader emphasized the importance of establishing a formal policy for splitting revenue increases and deficits between the town and the schools to replace annual ad hoc negotiations.
• Dan Ziss expressed support for a combined town/school override, noting it would be unfair to ask the schools to take budget cuts and then run a separate override. He also emphasized that any health-insurance surplus should flow back to the schools proportionally.
• Moses Grader noted teacher contract negotiations for FY28 will likely create additional pressure, suggesting a multi-year override may be necessary.
• Board confirmed the budget vote is scheduled for March 19; override scenarios will be presented at the next meeting (March 12).
• Town Meeting moderator, present in the room, clarified that override ballot questions cannot be combined at town meeting — an article can be split but not merged — consistent with prior advisor guidance that the ballot must mirror what town meeting votes.

Following the budget timeline review, board members engaged in a substantive discussion about override strategy.

Points raised:

• One member strongly advocated for a multi-year (three-year) override to avoid returning annually, and for presenting voters with a ‘restorative’ option that would rebuild staffing lost over five years of level-funded budgets. Losses cited include: one full-time police officer, several firefighter positions, three DPW positions (heavy equipment operator, working foreman, general laborer)
• Another member cautioned that asking voters to approve a large lump-sum multi-year figure — with year-three projections potentially reaching $15 million — would be a difficult sell, and distinguished between presenting a three-year plan/outlook versus asking for a single vote on the full amount
• A third member said they needed to see the balanced budget numbers before taking a position on override structure
• The school committee was noted to have recently indicated it may not require an override
• One member proposed community ‘Municipal Bootcamp’ forums in March, where department heads would explain operations and staffing to residents
• General consensus: the February 25 meeting should present a balanced budget; override options and scenarios would follow from that

No formal override vote or structure was decided at this meeting.

Article 50 was a citizen petition asking the Select Board, as a matter of advisory guidance, to present Prop 2½ override questions to voters as single ballot questions corresponding to how they were presented at town meeting — rather than bundling unrelated articles together.

The moderator clarified the motion is advisory only; town meeting does not have authority to direct the Select Board in this operational matter. Supporters argued it increases transparency and voter choice. One opponent worried it could create a “cafeteria” approach where voters fund only preferred services. Select Board Chair Nunan said the board had not discussed the matter but was not opposing it, and noted bundling unrelated items has happened only once in Marblehead’s history. The article passed 335–102.

Committee member Jen Schaffner reported that the Finance Committee (FinCom) voted unanimously at the warrant hearing to recommend the town operating budget (which includes the school budget), the Proposition 2½ override article to fund the HVAC addition to the roof project, and capital articles for Glover School playground equipment and restoration of seating at the PACK. The superintendent is prepared to speak at town meeting in support of the relevant articles.

The committee acted on three warrant article motions ahead of the January 31 Select Board warrant deadline.

1. Coffin School surplus transfer (5-0) Motion: To transfer the care, custody, management and control of the Coffin School building and grounds to the Select Board, it being no longer needed for school purposes.

Discussion included:

• A member noted that the 3A zoning law — following the state court ruling establishing that the state can sue municipalities to compel compliance — may revive development pressure, and the Coffin School lot is the only school-usable land on the north side of town.
• The proceeds from any future sale would go to the town general fund, not the school department, consistent with the precedent set by the former Gary School sale (which sold for approximately $880,000).
• Town meeting, not the Select Board, will ultimately decide the property’s disposition.

2. Prop 2½ operating override placeholder (5-0) Motion: To see if the town will vote to raise and appropriate or transfer from available funds a sum of money to supplement the school department’s operating budget beginning in FY2026, contingent upon the passage of a Proposition 2½ ballot question.

This is a placeholder only. No dollar amount has been set. The committee noted the override money, if approved, would flow to the schools in year one; in subsequent years the levy simply grows at the standard rate and appropriation is subject to town meeting.

3. Debt-exclusion capital placeholder (5-0) Motion: To see if the town will vote to raise and appropriate a sum of money for remodeling, reconstructing, and making extraordinary repairs to existing school buildings, infrastructure, and purchase of necessary equipment including computer hardware and software.

Described as a routine placeholder used for capital items (smart boards, security cameras, etc.) in prior years; whether it will be used depends on finance department projections.

Finance Committee Chair Alec Sby and Finance Director Alicia Benjamin joined the Select Board for a financial planning update, with Finance Committee Vice Chair Molly Teets participating via Zoom.

Key dates

| Milestone | Approximate date | |—|—| | Preliminary revenue & expense forecast presented | ~December 11, 2024 | | State of the Town / updated forecast | Late January 2025 | | Detailed liaison budget meetings | February–March 2025 | | FinCom votes balanced budget | Late March–early April 2025 | | Warrant hearing (FinCom approves full budget) | April 7, 2025 | | Annual Town Meeting | May 5, 2025 |

Revenue outlook

• Levy growth at 2.5% plus approximately $350,000 average new growth produces an estimated $2.1–$2.3 million annual revenue increase.
• Hotels and meals tax revenue was approved at town meeting and is now being tracked; local receipts expected to increase modestly.
• Investment income expected to decline as interest rates fall (two additional cuts projected in 2025).
• Free cash certified at $8.7 million most recently (down from $13.4 million when the Finance Committee chair joined); the town used $5.5 million of free cash to balance last year’s budget, and $10.2 million in FY23.

Expense pressures

• Health insurance: ~6% annual increase assumed, approximately $1 million per year.
• Pension: Actuarial report shows ~8.6% annual growth, approximately $500,000 per year.
• Combined fixed cost increases: approximately $1.5 million per year before wages, utilities, or inflation.
• New trash and recycling contract expected to add pressure.
• Energy and utility costs growing significantly.

School staffing context

The Finance Committee chair noted that school enrollment has declined from approximately 2,293 to 2,617 students — roughly a 20% decline — over roughly the past decade, while the school budget has increased approximately 45% in aggregate and FTE count has remained essentially flat (245 to 245.8 FTEs). He described this as germane to mediation discussions. Other participants noted that fixed costs in schools are difficult to reduce proportionally with enrollment and that the new interim superintendent and school finance director are reviewing FTE-to-student ratios against peer communities.

Free cash and stabilization fund

• Financial policy target: free cash at 5% of operating budget; stabilization fund at 3–5%.
• Current combined free cash and stabilization is approximately 8.5% of budget, at the lower end of the DOR-recommended 8–12% range.
• Stabilization fund currently at approximately $500,000 (about 0.5% of budget).
• Strategy: reduce reliance on free cash for operating expenses and direct more toward capital.

Override conclusion

Both the Finance Committee chair and vice chair stated that an override should be considered this year. The Finance Director said the town “truly does need an override” to maintain service levels. The Finance Committee chair said any override request should be reasonable, detailed, and include some restructuring on both the town and school sides to share the burden with taxpayers.

Town Administrator Thatcher Kezer presented the FY25 State of the Town, concerning the projected financial status of the town for FY25.

Headline framing

• The town is facing increased financial difficulties as FY24 progresses and planning for FY25 begins
• The town is currently in good financial health
• Difficult decisions will need to be made for FY25 and beyond to ensure continued fiscal stability
• The town will continue to take proactive steps to ensure future fiscal stability

Specific work already underway (as reported by the Chair)

The Board held a retreat in early fall 2023 to address questions and resident concerns and to explore options for increasing the town’s revenue. Since then, the Board has:

• Adopted financial policies enacting best practices and advice from the Massachusetts Department of Revenue
• Implemented cost-sharing collaboratives (referenced from /what-can-we-do.html as evidence the path exists; this meeting is the citation for that)
• Pursuing organization and operational reviews
• Exploring a town charter

Where this sits in the broader story

This meeting comes after the failed FY24 override in mid-2023 (referenced by a resident in public comment). The State of the Town is the early-cycle framing the Board uses to set expectations for the upcoming budget. The Jan 2024 framing – “good financial health today, hard decisions coming” – predates the more acute language used in the FY27 cycle by two years.

No formal vote; presentation followed by Board discussion.

Chair Fox said she is considering asking the Select Board to invite State Auditor Diana DiLay to conduct a program and practices audit of the school district, citing transparency concerns raised by voters during two consecutive override attempts. She expressed confidence the audit would reflect positively on the district.

Committee member Allison Taylor raised concerns about ARPA funding distribution to the schools, describing a lack of transparency from the ARPA committee and self-imposed additional rules that limited school allocations. The committee agreed Taylor would draft a letter for the school committee to review at a future meeting before submitting it to the Select Board. Fox noted she would also request a detailed ARPA spending list from the Select Board and confirmed that the committee could request time on the Select Board’s formal agenda rather than speaking only during public comment.

Board members discussed creating a public-facing informational resource about the upcoming Proposition 2½ override:

• Town administrator is finalizing an FAQ document developed with the finance director; plans to publish and update it as a live page.
• Board members requested a single landing page that co-locates:
  • The sample ballot (already posted)
  • The warrant night presentation
  • The state-of-the-town address
  • FinCom review materials
  • The budget book (already available online)
  • A simplified historical revenue/expenditure table showing the fiscal trajectory with and without the override
• MHTV video clips of relevant presentations were suggested as an additional resource.
• No vote taken; this was a planning discussion.

The Select Board opened and closed the warrant for the June 20, 2023 annual town election. By a series of unanimous votes, the board placed a Proposition 2½ override question on the ballot asking: Shall the Town of Marblehead be allowed to assess an additional $2,472,056 in real estate and personal property taxes for the purposes of the town’s general government operating budget for the fiscal year beginning July 1st, 2023? The warrant also listed all elected officer positions to be filled at the annual election, including five Select Board seats.

Town Administrator Patrick provided an extended briefing on the Prop 2½ override question, drawing on questions raised at a recent Council on Aging presentation.

Cost calculation Two figures have appeared in news coverage:

• $322: based on average assessed home value of approximately $1 million (skewed upward by high-value properties)
• $252: based on median home value of approximately $807,000, considered the more representative figure

The simplest calculation for any resident: multiply their assessed value (in thousands) by 31 cents. Example: a $600,000 home × 600 × $0.31 = approximately $186/year. The rate is not expected to rise significantly even if valuations increase, because under Prop 2½ the rate adjusts downward as the base grows.

General override vs. capital debt exclusion The administrator explained the structural difference: capital debt exclusion overrides (which Marblehead has used for projects) are temporary — taxes rise to service debt and then return to baseline when debt is paid off. A general override permanently raises the levy base. The proposed override adds approximately $2.4 million to the levy (currently approximately $74 million), and that increment then grows at 2.5% annually like the rest of the base.

Impact if override fails Municipal-side cuts under the reduced budget include:

• Elimination of funding for 3 firefighter positions
• Elimination of 2 police officer positions
• Elimination of 1 heavy equipment operator (DPW)
• Reductions to benefits line items

Board members and Finance Director Alicia noted: vacant public safety positions take roughly a year from hiring to full qualification through civil service lists and academy programs; delaying the override makes the structural deficit larger and more expensive to solve; the town has also taken parallel steps including department consolidations and technology investments to maximize efficiency.

Timing argument The administrator argued it is better to act this year: doing the override now and getting through next year without one is preferable to waiting, because delay compounds the deficit and makes the eventual ask larger.

Town Meeting logistics Staff are preparing the venue with an overflow room, the FinCom book is being finalized for print and online distribution, and both the Town Administrator and Finance Director will present at Town Meeting.

Article 29 – Free Cash to Reduce Tax Rate: The committee recommended appropriating $8,000,000 from certified free cash and $330,000 from the electric department payment-in-lieu-of-taxes, totaling $8,330,000, to offset the tax rate. Finance Director noted certified free cash entering FY24 is approximately $8.5 million; after the $8M appropriation roughly $500,000 remains unappropriated, plus $500,000 already in a free cash stabilization reserve. The town’s AAA bond rating is not expected to be affected. Voted unanimously.

Article 30 – FY24 Operating Budget ($112,524,622): Three late adjustments were voted before the main motion:

• Health department revised upward by ~$10,000 to $313,091
• Library revised upward by ~$5,000 to $1,323,456
• Fire department revised upward by $5,000 to $5,203,241 (fire academy bonuses previously omitted)

The Town Administrator described the process: all departments submitted level-service budgets; because revenues could not cover all requests, approximately $2.5 million in cuts were identified to balance the budget. Police, fire, Public Works, and the schools absorbed the largest reductions. Budget funded by $12,127,880 from available funds and $100,396,742 from taxation and other revenues. Voted unanimously.

Article 31 – Override Supplemental Appropriation ($2,472,056): Presents the itemized difference between the reduced-service Article 30 budget and level-service budgets by department:

Town side cuts total approximately $1,337,539; school side cuts approximately $1,134,517 — roughly 55%/45% split. The Finance Committee noted this is broadly proportional to the overall 50/50 budget split between town and school operations. Voted unanimously.

The Select Board opened the meeting with a single roll-call vote to approve $2,472,056 as the Prop 2½ general override amount. This figure represents the difference between the level-service budget requested by all town departments and the reduced-service balanced budget that fits within existing tax levy capacity. The vote was unanimous among all five members present (including one member on Zoom).

This is the first general override request since approximately 2005–2006. The override question will appear on the ballot at a town election to be set no sooner than 35 days after town meeting.

Town Administrator Patrick Bodkin provided a detailed budget update:

Revenue side:

• Local receipts recalculated using a 3-year actual average × 95%, yielding $6,307,231 (~$715K increase over FY23)
• Free cash estimate: $8 million (down from $10.2M last year)
• Total gross revenue: ~$105,328,000; net of debt exclusions: ~$94,545,000

Expenditure side:

• Major cost drivers: health insurance (+5.7% GIC increase), energy costs (+30–35%), and above-CPI vendor increases
• Reduced (no-override) budget: $1.523M increase from FY23 — stays within revenues via cuts
• Level-services budget: just over $4,046,000 increase from FY23
• Warren articles estimated at $1.688M (~$439K less than prior year)
• Proposed override amount: ~$2.522M (delta between reduced and level-services budgets)

Override allocation:

• Town side raw: ~$1.388M; School side raw: ~$1.134M
• After allocating ~$976K of school-related health insurance/Medicare costs that appear on the town ledger, the split is approximately even

New positions:

• HR Director: salary/benefits cost offset by a deduction from the health insurance budget line
• Sustainability Coordinator: salary/benefits cost offset by deductions from energy budget lines across departments
• Both positions are described as cost-neutral in the proposed budgets

The Select Board unanimously adopted its Statement of Intent for a FY24 Operating Override. Key provisions include:

• The town will present a reduced (no-override) budget that eliminates the structural deficit through service cuts.
• Simultaneously, a level-services budget will be prepared, with the delta between the two representing the proposed override amount.
• A single override is proposed for FY24; a separate stabilization fund override is deferred to allow the new finance team time to develop a longer-term strategy.
• The override would cover all town departments including the school department (made explicit in the document).
• The override must pass at Annual Town Meeting (May 1, 2023) and at the Annual Town Election (June 2023).

The statement also commits to completing a multi-year budget plan using the ClearGov platform, adopting GFOA best practices, and improving free cash management.

School committee members and the chair explained the two-step override process to the public:

1. Article 30 (Town Meeting, May 1–2): The reduced-services/baseline budget the town can fund without an override — includes an $855,000 increase for schools.
2. Article 31 (Town Meeting, May 1–2): A joint article covering the town and schools together; requires a two-thirds vote at Town Meeting. This article funds the level-services school budget alongside level-funding for public safety, DPW, and other town departments.
3. Ballot election June 20: If Article 31 passes Town Meeting, voters decide by simple majority whether to approve the override.

The chair emphasized that residents must be physically present at Town Meeting to vote (no absentee option under Massachusetts law), and that floor amendments are legally permissible if submitted in writing.

The school committee indicated it would take a formal vote on the budget at its Monday meeting before the Finance Committee hearing.

The Finance Committee chair summarized a draft override framework presented at a Select Board meeting the prior Friday. Key points discussed:

• Two objectives: (1) address the structural deficit for FY24; (2) begin funding the town stabilization fund to reduce future reliance on declining free cash.
• The override is designed as a one-year fix, not a multi-year solution, though the chair noted that a multi-year override was considered and rejected as the numbers were too large.
• Free cash has been declining each year and is being used as a direct revenue source (~$10.5M in the current year); the stabilization fund is intended to eventually replace that mechanism with a more disciplined, two-thirds-majority-protected reserve.
• Whether the override includes a stabilization fund component remains an open question dependent on final numbers.
• Committee members expressed a desire to receive a dedicated presentation on the Article 31 override numbers before or at the warrant hearing, in addition to reviewing department budgets at the upcoming hearings.
• Town Administrator confirmed that even if the balanced (no-override) budget were rejected at town meeting, town meeting is obligated to pass some budget; the moderator would ensure a vote occurs.

The Select Board convened for a single-agenda meeting to consider a formal Statement of Intent for a proposed FY24 operating override. Chair read the full three-page document, which identified two proposed overrides:

1. Override to address the FY24 structural deficit — defined as the gap between revenues (including available free cash) and expenditures. The document noted that FY24 is the first year since 2005 where available free cash is no longer sufficient to cover the full gap.

2. Override to fund a town stabilization fund — framed as a best-practice mechanism to reduce reliance on free cash, improve bond-rating optics, and create a transparent rainy-day reserve requiring two-thirds town meeting approval before any disbursement.

Key discussion points:

• Board member questioned calling the no-override scenario a “balanced budget” given ongoing reliance on free cash; the Town Administrator clarified that free cash is legally a recognized funding source and the budget would be balanced after proposed cuts equal to the structural deficit.
• One member argued the stabilization fund override could jeopardize passage of the more urgent structural-deficit override by confusing voters, and preferred deferring the stabilization fund to a future multi-year planning process.
• Other members and the Finance Director defended the stabilization fund as necessary to protect the town’s bond rating and to signal a transition away from free cash reliance.
• Members agreed to add language clarifying level-service funding applies to “all departments” and to incorporate financial-policy guardrails for the stabilization fund into the statement.
• A commitment to multi-year operational planning and GFOA best practices was noted as implicit but debated as to whether it should be made explicit in the document.

The board voted unanimously to table the motion until Wednesday to allow final edits to be incorporated.

Town Administrator Budget Update

Thatcher reported key findings as the FY24 budget process advances:

• New Finance Director Alicia Benjamin started Monday; on her second day she identified and secured $241,897 in outstanding FEMA COVID reimbursements.
• Work is underway to implement ClearGov budgeting software and to evaluate replacement of the town’s general ledger (SoftRight) with enterprise-level financial software.
• The Governor’s local aid numbers show a net increase of $85,145 to Marblehead: schools up $77,632 net; town side up $7,513 net. Final numbers will not be set until a House-Senate conference committee acts.
• Department budget requests for FY24 total approximately $2–2.25 million more than available revenues, requiring reductions in that range.
• The town currently relies on approximately $10.5 million in free cash to balance the operating budget, equal to roughly 10% of the budget. The DOR recommends municipalities generate free cash of 3–5% of budget as a reserve and use it only for one-time expenditures, not recurring operations.

Proposed Override Framework (Exploratory)

The chair outlined two possible override objectives discussed informally with board members and others:

1. Override to close the structural deficit — a short-term plug to avoid service cuts while the town builds institutional capacity (staff, financial software) for multi-year planning.
2. Override to seed/restore the stabilization fund — to signal a commitment to reducing free-cash reliance and to bring that reserve into public visibility at town meeting.

Board members discussed at length:

• Whether both objectives should appear on the same ballot or be sequenced.
• The difficulty of determining a reliable free-cash number to plug into the FY24 budget before certification.
• A plan to reduce free-cash reliance incrementally year over year rather than going to zero immediately.
• New growth revenue (noted as approximately $300,000 annually, described as “anemic”) as a longer-term lever to build levy capacity.
• The need to communicate service impacts concretely to voters — e.g., how many additional students per classroom, or permit-processing delays — not just position counts.

Public Comment

Frank (24 Pickwick Road): Asked the board to consider what they would wish they had done if the override fails, and urged far more community engagement than a single public forum.

Sarah Fox (School Committee Chair): Urged the board to use free cash only at the DOR-recommended percentage as a revenue plug, so that the override ask equals a truly balanced budget. She warned that anything less creates a structural deficit from day one. She also asked for clarity on whether the $800,000 allocation for school contractual obligations remains accurate given new insurance numbers.

Keyser presented FY2024 revenue estimates totaling approximately $105.26M, built from:

Three expenditure scenarios were modeled:

• 3% cost increase → ~$107M in spending → $1.77M deficit
• 4.5% cost increase → ~$108M → $3.13M deficit
• 6% cost increase → ~$109M → $4.4M deficit

Projecting the 4.5% scenario forward, deficits grow to $7.9M (FY2025), $10.6M (FY2026), $13.1M (FY2027), and $15.8M (FY2028).

Key drivers of the gap include: declining free cash (down ~$1.6M year-over-year), anticipated GIC health insurance rate increases of roughly 7–9% on a ~$15M line, expiration of all three collective bargaining agreements on June 30, recycling disposal fees at an all-time high of $95/ton, and the need for new financial software and a centralized HR function.

Keyser stated his intent is to develop a balanced budget assuming no override, while simultaneously developing override scenarios for public discussion. He outlined three possible override paths: no override (cuts only), a limited override to plug the structural deficit, or a broader override covering additional service enhancements. Questions of duration (one year vs. five years) and scope were identified as subjects for public deliberation.