Support our Schools (SOS) responds to the recent op-ed from Mayor Sciarra, “Northampton’s capital spending makes fiscal sense” in the Daily Hampshire Gazette on 1/14/25.
Dear Reader,
We believe Mayor Sciarra’s recent op-ed is missing crucial context and information. In the following analysis, SOS fills in the blanks.
Mayor Sciarra writes:
“On Jan. 2, I presented to the Northampton City Council the latest version of the city’s five-year Capital Improvement Program, including $23.2 million in investments for fiscal year 2026, including:
- $3 million for road safety at Northampton High School.
- $1 million for sidewalk repaving, a five-fold increase from FY23 and FY24.
- $2.75 million for road resurfacing, an 83% increase from FY24.
- $7.1 million for water, sewer, and stormwater infrastructure upgrades
SOS response:
SOS fully supports increasing funding for sidewalk repair. We wish the mayor would include the proper context for the increase in the CIP by explaining that nearly no capital funds previously appropriate for sidewalk repairs have been actually expended for the past 3 years. During this time plenty of money was already available.
Just because a project is included in the CIP does not mean it will happen.
In fact, review of the past 5 years of capital expenditure accounts shows numerous CIP projects are approved each year, with funds appropriated each year, but with no actual work done on the projects.
Tying up appropriations in projects that are not progressing seems to be an inefficient way to run a budget.
Sidewalk budget in FY23-FY25
The city’s own capital project expenditure accounts spreadsheet shows that in FY23 $507,487 was appropriated for sidewalks (with $422,127 unspent by the end of the year).
In FY24 that $422,127 remained unchanged with no expenditures. FY24 also saw an additional $250K appropriated for sidewalk repair, with no expenditures.
In FY25 the original FY23 sidewalks account still had $374,761 remaining unspent at the end of the year while the second FY24 sidewalks account still had all $250,000 available.
Although a “Five fold increase” makes a dramatic headline, $1,000,000 is not five times the amount of $624,761. This sidewalks and paving increase refers to what was earmarked in the CIP from those years, not to actual expenditures.
We question the urgency for appropriating funds for FY26 projects this early in the fiscal year. The CIP does not have to be approved until June 1st, 2025.
If there are specific CIP projects identified as key priorities that need to be bid out with urgency, those orders should be targeted for a vote. But there is no reason for any others to be voted on so quickly.
If the mayor does have a compelling reason for her push to fast track these expenditures without understanding the bigger financial picture, we hope she will provide it.
The bigger financial picture would be provided by both the mayor’s presentation of the city’s financial trends and projections (usually held in January) and the “First Look” budget for NPS provided by the superintendent.
In fact, our city’s Financial Policy says that there should be one public meeting where both the operating and capital expenditures are discussed. That public meeting could be held after we received these two critical elements of the city’s big picture mentioned above.
The CIP and most of the financial orders should not be approved until after those presentations have been given and decision makers have an adequate opportunity to discuss both the CIP and the potential FY26 budget.
Mayor Sciarra writes:
“On Jan 16, the City Council is expected to vote on several orders for funding FY26 capital projects from multiple funding sources. One [financial order] taps $7.4 million from the ‘free cash’ account for a range of projects, with about $2.6 million for school-related needs including the road safety project, Chromebooks for students, and ventilation for Smith Vocational’s Building B.”
SOS response:
Although this project is described as serving “School-related needs,” neither the School Committee nor the NPS administration has previously seen or been asked for their input into whether these projects are needed or if they will have any effect on learning.
The NHS Road Safety Project in particular is not a school project but rather a DPW safety project created in response to increased commuter traffic on N Elm and Elm. It’s designed to relieve traffic congestion and move people, bikes, and cars through the intersections and on Route 9 as quickly and safely as possible.
Director LaScaleia told the NHS PTO that this project will impact parking and drop off and pick up but that it will be up to the school community to figure out how to make that work better and mitigate the impacts of this redesign. Director LaScaleia has said that this project would not go out to bid until summer or possibly fall.
It appears that the project’s only impact on any “school-related needs” is to free up bus movement because buses cannot easily navigate the parking lot. But it certainly doesn’t impact learning or classroom experience.
Mayor Sciarra writes:
“The free cash account includes newly added funds from the previous fiscal year’s surplus, plus previously unspent free cash.”
SOS response:
The unspent free cash from FY23 was about $1.68 million, which is almost exactly how much recurring revenue from local receipts was shunted into free cash in each of FY23 and FY24 due to overly conservative revenue forecasting.
If these funds had been properly categorized, then the FY23 and FY24 surpluses would have been lower, but the city would not have needed to draw down on stabilization funds to fund operations.
As described in detail below, in FY23 and FY24, the city’s local receipts estimates were proportionately far lower than they had been in the past, which resulted in reliable, recurring revenue from local receipts being miscategorized as free cash.
Using recurring revenue to fund operations is following both the city’s financial policies and DOR best practices. And, in addition, free cash does get used for recurring expenses. (For example, in the NPS budget).
SOS believes that the city would be better off if recurring revenues were used to support recurring expenses rather than shunting recurring revenues into free cash & then siloing it into stabilization funds.
Mayor Sciarra writes:
“Currently, it [the free cash account] includes $3.15 million in federal American Rescue Plan Act aid, though the aforementioned order will authorize those funds for upgrades to Main Street’s infrastructure, which dates as far back as 1871.”
SOS response:
According to the US Treasury Department, ARPA loss revenue monies are appropriate to spend on government services since the very purpose of ARPA was to help replace lost recurring municipal revenue.
The $3M in ARPA loss revenue that was used to create the climate stabilization fund in 2022 could have been used to create a school budget stabilization fund, for example, with replenishments happening from free cash and Medicaid reimbursements. This usage would have gone a long way toward repairing the damage to NPS. Since the city generates multiple millions of free cash every year, the climate stabilization fund could have easily been created with other revenue.
Mayor Sciarra writes:
“According to the state’s budget experts, free cash is a “nonrecurring revenue source” — surpluses are never guaranteed to materialize — and “should be restricted to paying one-time expenditures, funding capital projects, or replenishing other reserves” — such as stabilization funds, which are interest-bearing accounts used to cover unexpected cost increases, revenue dips or other emergencies.
“The council is considering the capital proposals in the aftermath of a FY25 budget shortfall that led to a reduction of 20 Northampton Public School positions. “
SOS response:
While free cash itself may be non-recurring, a significant portion of Northampton’s free cash from the past 4 years is properly classified as recurring because it is derived from the underestimation of regularly recurring local receipts.
When we read the phrase, “FY25 budget shortfall that led to a reduction of 20 Northampton Public School positions” it really does make it sound like the “budget shortfall” was responsible for cutting positions.
But what “led” to the budget shortfall? It was the mayor choosing to not fully fund the budget. She and her predecessor created these cuts and offered no alternative ways to fill the shortfall. Increased accuracy would have resulted in a far smaller hole to fill.
Alternatively, she could have called for an override with the resulting funds going exclusively to NPS.
Given that she was prepared to call for an override in order to refill the fiscal stability fund, failing to call for an override to benefit schools indicates that the mayor made an active choice not to fund the schools.
Mayor Sciarra writes:
“In turn, some on Jan. 2 called for $2 million in free cash to be used to restore the positions.
Hiring, however, requires more than a one-time transfer. Recurring expenses need recurring revenues. Failure to follow this principle is exactly why we suffered a shortfall.”
SOS response:
It is worth noting for context that the current year cost to fund these positions would be well below $2M. SOS has not been calling for specific dollar amounts, just that the critical student facing positions be restored.
Neither the mayor nor her predecessor “followed this principle.” Starting in FY18, NPS was funded by the school choice funds reserve to cover the additional hiring necessitated by the inclusive WINS model.
Even with several years of lead time, neither Mayor Narkewicz nor Mayor Sciarra offered an alternative plan to meet NPS’s funding needs with recurring revenue.
In fact, in the previous two budgets the ARPA money that makes up such a large component of the current free cash could have been used to create a dedicated stabilization fund for NPS.
Mayor Sciarra writes:
“While I agree we can’t be content with the status quo, arguments in favor of this request, circulating online, have been premised on four misconceptions.
“The first is that the city generated an unusually high $11.66 million surplus in FY24.
“However, that’s the total in the free cash account, including the carryover of ARPA and previously unspent funds. The surplus was $6.83 million.
SOS response:
For context, that “status quo” already included years of school underfunding. The high school has lost up to a dozen positions over the years, and high-achieving high school students are being told that their applications to elite colleges are not likely to be competitive due to the erosion of the curriculum and advanced classes at the high school.
If the surplus was $6.83 million, then why was $2.836 million allocated to replenish stabilization funds? That amount suggests that the Mayor considers the leftover $1.68 million from FY23 to be part of the surplus as well.
If the FY23 remainder is not part of the surplus, then the aggregate allocation to stabilization funds should have been lower.
Mayor Sciarra writes:
“The second claim is that the city has been unnecessarily low-balling budget estimates to generate excessive free cash, depriving schools of upfront revenue. But cities across Massachusetts have produced unusually high amounts of free cash during the pandemic because economic uncertainty prompted extra cautious estimating. ARPA funds also inflated the numbers. We’ve already returned to using more aggressive estimates and free cash is returning to traditional levels. Savings from unspent budget lines in this free cash certification equaled only 1% of the FY24 general fund budget, while the 10-year average is 2.14%.”
SOS response:
It is unclear why the pandemic is a factor in FY23-FY25 estimates. Even a cursory look at local receipts from the last 2 years shows that receipts are back to a normal level and in some cases are at record highs. It’s also irrelevant that other municipalities have made the same errors.
Citizens of Northampton have made it clear that a higher standard is required, particularly when the result of fiscal austerity, whether partially inadvertent or not, leads to 33 lost positions in NPS.
For context, this is only one side of the coin. Local receipts have been consistently underestimated. The last two fiscal years of the Narkewicz administration saw an aggregate local receipt underestimate of approximately 90% (excluding cannabis excise, interest income, and other minor accounts that were eliminated for our analysis due to minimal impact on the percentages). The most recent two years of the Sciarra administration saw an aggregate local receipt underestimate of approximately 76% in each year (with the same exclusions).
If the Sciarra administration had forecast local receipts with the same accuracy as Mayor Narkewicz in his last 4-year term (88% underestimation), over $1.6M would have been available in each of FY23 and FY24 to cover operating expenses.
Mayor Narkewicz was clearly conservative enough in his budgeting to generate enough reserves to replenish the city’s stabilization funds and get the city back on stable financial footing.
Now that tens of millions of dollars are available in non-enterprise stabilization funds, it is unclear why local receipts estimates are even more conservative than they were before, even though the effects of the pandemic have long worn off.
The city seems likely to continue to cordon off recurring dollars from the operating budget in FY25. The city’s aggregate local receipts estimates (same exclusions as above) for FY25 are approximately 85% of the average aggregate local receipts (same exclusions as above) from FY23-24.
Conceding that this is an improvement from the 76% underestimation rate in FY23-24, given the crisis in the schools SOS would argue that it is appropriate to push revenue estimates further and strive for the 90% underestimation rate that was achieved under Mayor Narkewicz, which would add hundreds of thousands more recurring dollars to the operating budget while still leaving sufficient free cash available at the end of the fiscal year (all of this excluding cannabis and interest, as described above).
SOS can make the details of these calculations available to anyone who would like to discuss.
Mayor Sciarra writes:
“Buoying the $6.83 million surplus is a high amount of investment income: $2.4 million. Before FY23, the city earned an annual average of about $200,000. Then the city’s treasurer moved money into an investment vehicle tied to higher interest rates. With rates starting to come down, similar amounts in future years cannot be presumed. This exemplifies the volatile, nonrecurring nature of free cash.”
SOS response:
As noted in the analysis above, even disregarding interest income, the city misclassified over $3.3 million in recurring revenue as free cash assuming a 90% underestimation rate. Conceding that interest rates are subject to volatility, the other local receipt accounts used to calculate that amount are far more stable.
SOS’s demands to restore lost jobs from the free cash amount could have easily been met by using monies from the misclassified amount of $3.3 million. It would be appropriate for the city to provide its taxpayers a “true up” to restore services that were lost solely due to underestimation.
It is worth noting for context that even though interest rates are down from a year ago, they are still very high and are likely going to stay relatively stable, as forecasts from many reputable financial publications expect that the Fed will not cut rates as drastically in 2025. In any event, the city continues to underestimate what it will receive in interest income by an order of magnitude. The interest income estimate for FY25 is only $178,000 for the entire year. Meanwhile, in Q1 alone, the city earned almost $500,000 in interest. So for the third year in a row there will be a multi-million dollar interest income windfall solely created by unrealistic forecasting.
Mayor Sciarra writes:
“The third claim is that stabilization funds are not being made available to schools, even though $3.2 million from our Fiscal Stability Stabilization Fund has directly supported NPS operating costs in FY24 and FY25. Such one-time transfers can be fiscally sound if, according to the state’s budget experts, “provisions are made to replenish the reserves.” Per our “Fiscal Stability Plan,” we do that with portions of free cash and, with voter approval, periodic property tax overrides.
SOS response:
$3.3 million of recurring revenue could have been allocated to the schools, and the $3.2 million referred to by the mayor could have stayed in the fiscal stabilization fund. The taxpayers of Northampton should keep this in mind the next time an override to replenish the fiscal stabilization fund is called for.
Mayor Sciarra writes:
“The fourth misconception is that the city is hoarding money in stabilization funds. This argument is based on a table provided by the state that ostensibly allows people to compare what each municipality has in stabilization funds relative to its operating budget. For FY24, out of 207 municipalities with reported amounts, Northampton’s $35.8 million ranks sixth. As a percent of the operating budget, Northampton’s 27.3% ranks 12th. Few cities crack 20%.
“That appears excessive. But unclear in the table is that Northampton’s amount includes $16.5 million from enterprise stabilization funds. These support our Water, Sewer, Solid Waste, and Stormwater enterprise funds.
“Enterprise funds are closed systems maintained by utility fees, which cannot be redirected to schools. Furthermore, not every municipality has enterprise stabilization funds. Comparing Northampton’s total to other cities is not apples-to-apples.”
SOS response:
Just because enterprise stabilization funds cannot be used to fund other operations does not mean they exist outside of the broader context of the city’s unbalance between operations and capital/savings.
The fact that Northampton is able to maintain tens of millions of dollars in stabilization funds to support critical enterprise services means that it is well-positioned to take more aggressive positions on revenue forecasting since those critical enterprise services are so well-insulated from risk and Northampton’s general stabilization fund can be reserved for non-enterprise expenses.
Other municipalities are not as fortunate in this regard.
Mayor Sciarra writes:
“For example, Amherst and Easthampton do not have enterprise stabilization funds. If you remove Northampton’s enterprise stabilization funds and then compare each municipality’s FY24 percentages relative to their budgets, Northampton’s 14.74% is lower than Amherst’s 17.99% and Easthampton’s 15.25%.”
SOS response:
Focusing on the percentages elides the point that since Northampton’s budget is larger, there are more actual dollars available to use for operations. SOS’s focus has always been on the actual dollars, because percentages do not pay for essential services.
Mayor Sciarra writes:
“Thanks to sound fiscal management, Northampton has been able to invest more in education than ever before. The annual increase in the city’s direct contribution to NPS was 5.07% in FY23, 7.41% in FY24 and 8.99% in FY25. This is the only period in the last 30 years with three consecutive years of increases above 5%. For FY25, it is estimated that total spending for NPS will be 138% of the state-determined minimum for our district, which would be the second highest amount since FY1993, when we spent only 92% of the minimum.”
SOS response:
This is a non-sequitur. Despite these increases in direct contributions, the School Committee, educators, students, and parents have made clear that it is not enough.
Understaffing at NPS has reached the level of crisis, as any review of recent testimony by educators at School Committee or City Council makes clear.
Touting increased city contributions on one hand, while refusing to acknowledge the crisis in any public commentary, or acknowledging the city government’s direct role in causing the crisis, suggests that the reason for continuing to tout the city’s contribution is to deflect from the fact that this and the previous mayor’s choices to use one-time funds in place of recurring revenue created the crisis in the first place.
Mayor Sciarra writes:
“This is despite a huge decline in state aid. Twenty years ago, one-third of the NPS budget was covered by the state. Now it’s one-sixth. Northampton taxpayers can have confidence that their public servants are managing their money carefully and doing everything possible to invest in education and infrastructure, while also spacing out overrides to not overburden taxpayers while we try to keep pace with rising costs.”
SOS response:
It should be clear from this response that Northampton’s public servants are not doing everything possible to invest in education and infrastructure. We have raised several alternative possibilities, ranging from pushing the margins on revenue estimation to repurposing the existing fiscal stabilization fund now that the city is on firm financial footing.
In her four years in office, the mayor has not presented any alternatives, not even to show what the consequences of an alternative choice would be.
Madam Mayor, you are dealing with a plugged in and angry electorate that is becoming increasingly sophisticated in its understanding of municipal finance. It’s time to show your work, not make references to DOR guidelines.
Mayor Sciarra writes:
“Still, challenges for schools persist. A community conversation about how to improve school finances, while practicing fiscal responsibility, is overdue. I hope we can work together to promote the amazing work by our teachers and support staff, and convince more families to choose NPS, keeping Northampton revenue in Northampton schools. I also hope the council will authorize the capital funding proposals at their next meeting.”
SOS response:
SOS would welcome the chance to work together with the mayor on these important questions (and more) in person at a town hall event. We have formally invited her and await her response.
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