Finance Committee Begins Discussion of Excess Revenue in FY25 Budget

Report on the Meeting of the Amherst Finance Committee, July 1, 2025

By Maura Keene

This meeting was held over Zoom and was recorded.

Present
Cathy Schoen (Chair, District 1), Bob Hegner (District 5), Andy Steinberg, Mandi Jo Hanneke, and Ellisha Walker (at large). Bernie Kubiak and Tom Porter (non-voting members)

Staff: Paul Bockelman (town manager), Holly Drake (comptroller), Melissa Zawadzki (former finance director), and Athena O’Keeffe (clerk of council)

Town Budget on Track at End of Third Quarter
The Finance Department released its report on the town’s finances through the third quarter of FY25. As of the end of the quarter on March 31, the total revenues and expenses are running close to budget with the exception of the sewer fund, which has experienced higher expenses for electricity and sludge removal. Snow and ice removal costs were also 50% over budget due to multiple storms last winter. Comptroller Holly Drake said that this is the first time in several years that snow and ice removal has run over budget.

Multiple revenue sources were above budget, especially investment income, largely due to “stalled capital project spending.” With the elementary school under construction and the Jones library expansion ready to begin, the town will not have as much to invest in FY26. Revenues from motor vehicle excise tax and permitting also came in above budget. The town had received 75% of its expected state aid as of the end of March.

Former Finance Director Melissa Zawadzki noted that the town used about $3.8 million of ARPA funds to pay employee benefits, because the money had to be allocated by December 31 or it would be lost. That money is being repaid to the town through payroll deductions and will be added to  free cash at the end of the year. About $2.5 million of that amount has been earmarked for improvements to the Bangs Community Center.

Drake estimated that the town saved about $200,000 in salaries and benefits due to unfilled positions over the past year.  Councilor Mandi Jo Hanneke noted that several lines in the DPW were over budget, and the amount budgeted for FY26 was not increased. She was concerned about increased deficits for DPW in the coming year. Drake explained that some lines of DPW are over budget and some are under, so she expects the final numbers to be on target. She explained that the DPW has shifted some of the money saved from vacant positions to its operating budget to cover expenses.

Councilor Bob Hegner asked why the elementary schools had only spent 67% of their budget as of March 31. Drake explained that there was about $896,000 of expenses encumbered, but not yet paid for by the schools. Also, some teachers get paid over 10 months, and others are paid over 12 months, so there is a balloon payment for salaries expected at the end of June to cover those who are not paid over the summer. 

Finance Committee Begins Planning for Use of Surplus Revenue
Unspent budgeted funds or surplus revenue is certified as free cash in the fall, after a full accounting of the previous fiscal year is complete. The last few years, this amount has totaled between $5 and $10 million. Some of the free cash is allocated to the capital stabilization fund to pay for the major building projects. The capital stabilization fund currently stands at $11 million, and Cathy Schoen wondered if that money should be used to begin planning for a new DPW building. Previous financial models had proposed letting the fund accumulate until there was enough to fully finance a new fire/EMS station, but Schoen noted that there still is no site for the fire/EMS, while the DPW building is in dire need of repair. Although the $11 million is not enough to fully replace the DPW, meaning that borrowing would be needed, Schoen stated, “We’re carrying a lot of reserves, and people are paying attention to it, and we keep saying we’re saving it for buildings.”  She continued, “What we budgeted in the five-year capital plan would be less, because some of it would be paid from the capital reserve.” Mandi Jo Hanneke suggested that the capital stabilization fund could be renamed the DPW and fire station fund. 

In addition to the amount of the budget surplus put into the Capital Stabilization Fund, Schoen noted that the Joint Capital Planning Committee (JCPC) recommended that funds go to the roads, replacing the middle school roof, and purchasing new vehicles, which has been delayed in past budgets. The other members of the Finance Committee were enthusiastic about devoting more money for road repair, since they are hearing multiple complaints from constituents about the condition of the town’s roads. Hegner said that Town Engineer estimated that it would take $3 million per year in addition to the Chapter 90 funds from the state to maintain the roads. Town Manager Paul Bockelman stated that he is hearing that the roads are a high priority for the council, and that the town has a $3 million contract for roadwork to be done this summer.

Andy Steinberg asked about the status of the federal reimbursement for the sustainability features of the new elementary school. The council had allocated $5 million from the reserves in order to reduce the debt exclusion override for the school, anticipating that the reserves would be replenished by federal rebates for the geothermal and solar energy systems. Schoen said that, as of now, reductions for energy conservation measures do not go into effect until FY 27, so the town should be reimbursed for the geothermal system, which is the major expense, but the canopy solar may not be complete until the following fiscal year. 

Hanneke noted that the decreased federal reimbursements would not affect property taxes, only the replenishment of the reserve funds. She stated that her priority was to maintain the reserves at 5% of the annual budget and added that she would not be willing to spend free cash on the middle school roof until there was more clarity on the use and ownership of the building, [There has been talk of merging the middle school and high school due to declining enrollment. Amherst’s sixth graders are due to be relocated to the middle school in the fall of 2026. 

The Finance Committee will continue its discussion of the issues raised when more is clarified regarding FY25. The committee will next meet on Tuesday, August 5 at 2 p.m.

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