Fincom School Liaison Subcommittee members and school administrators reviewed the FY24 closeout and focused on a sharp increase in out-of-district special-education costs that helped drive the district’s expense overrun.

The subcommittee heard that the school department returned a moderate balance to the town at year-end but that special-education tuition had risen to roughly $5,000,000 and was the primary driver of the spending gap. Speaker 3 (Staff member) said the office’s rough calculations showed about $382,000 returned to the town and described a pattern of higher-than-budgeted out-of-district placements that led to the variance.

Why it matters: Out-of-district tuition and related transportation are among the single largest and most volatile items in the Marblehead Public Schools budget. The committee said better tracking, clearer prepayment accounting and more robust circuit-breaker claims could reduce volatility and the likelihood of large year-end adjustments.

School staff presented a set of immediate and medium-term steps. Staff reported that Lisa Marie and another administrator assembled a roster showing every out-of-district student, the tuition charged, transportation costs and projected state rate increases. That roster, which subcommittee members said had been missing or inconsistently maintained in the recent past, is intended to give the business office and administrators a single source of truth for budgeting and claims.

Speaker 4 (Staff member) described a programmatic strategy to reduce out-of-district placements over time by strengthening in-district language-based and therapeutic programs. “My philosophy is always let’s educate our students with their life-age peers to the extent that's humanly possible,” Speaker 4 said, adding that the district will prefer bringing students back only when staff are confident in program quality.

Subcommittee members discussed prepayments as a smoothing tool. Speakers described the district’s practice, begun around 2020, of prepaying certain anticipated tuitions each year to reduce volatility at the end of the fiscal year. A participant said those prepayments in early years were roughly “between $200,000 and $300,000” and that the committee needs to include them as part of trend analyses when comparing what the district “owns” versus what was approved at Town Meeting.

Circuit breaker and extraordinary in-year relief came up repeatedly. Staff explained the state’s circuit-breaker reimbursement is a partial reimbursement for high-cost special-education cases and that an extraordinary in-year relief mechanism exists when district spending exceeds the previously claimed amount by 25 percent; amounts above the threshold are typically reimbursed at roughly 75 percent. Speaker 3 outlined the administrative burden of preparing claims and asked that program staff be closely involved in claim preparation: “Somebody that's very dialed in to the actual programs needs to do the calculation,” Speaker 3 said.

The subcommittee also discussed legal and procedural constraints on placements and settlements. Staff explained that placement decisions arise from team meetings and, where families enlist legal counsel, some cases settle before a state hearing. Participants noted that settlements can increase district liability because, if the district loses at a hearing, it may be required to pay legal and consultant fees.

What happens next: Members asked that administration return with a cleaned roster and trend analysis that combines prepayments and actual expenditures for FY23–FY25 so the committee can better project FY26 needs. Staff said they will continue using the roster to identify placements that could return to district programming and to ensure circuit-breaker claims are accurate and maximized when appropriate.

No formal motions or votes were recorded during the discussion. The subcommittee scheduled further budget conversations ahead of the Fincom warrant hearings.