MARBLEHEAD — The Finance Committee and Chief Financial Officer (CFO) discussed the upcoming financial forecast for fiscal year 2026 (FY26) including some good news about free cash.
Finances have been among the top discussions in Marblehead since the conclusion of the teachers’ strike due to the overwhelming awareness surrounding the need for an override.
Finance Committee Chair Alec Goolsby, Committee member Molly Teets, and CFO Aleesha Benjamin explained Marblehead’s finances, including revenues, expenditures, cost drivers, and free cash. The committee made an important note that the numbers presented are preliminary forecasts and not official numbers for FY26.
Benjamin presenting the largest cost drivers and largest sources of revenue for the general fund revenue. The largest cost driver, 53% of the budget, goes toward paying salaries of civil workers. The largest source of revenue for the town budget, at 80%, stems from property taxes.
While discussing specific revenue sources, Goolsby shared good news regarding the local receipts.
“We’ve had actually some good news in the most recent year, I think some of you all know this. Our estimate for interest income, the actual verse estimate closing June, 30, 2024 there was a $2 million gap there,” Goolsby said.
This gap created a large lump sum of money to be added to the free cash flow within the next years budget. This year’s budget will be starting off with $2.2 million in free cash, which is $1.2 million higher than the year before.
As explained by Benjamin, free cash is an undesignated general fund balance that is generated by the possibility of having revenues come in more than the estimated amount or spending less on expenses than predicted.
Teets added how the Massachusetts Department of Revenue (DOR) recommends free cash be used. Quoting the DOR, Teets said, “As a non-recurring revenue source, free cash should be restricted to paying one-time expenditures, funding capital projects, or replenishing other reserves.”
Goolsby said free cash is “not a long-term solution to a structural deficit.”
There were some speculations during the teachers’ strike about using the free cash to help fund the new salaries. As the DOR recommends and as Goolsby stated, free cash should not be used for any recurring expenses, which the salary contracts would fall under.
Board members emphasized the community of Marblehead is aware of how the free cash is used. The Finance Committee gives recommendations for how it should be distributed within the budget, but the community members ultimately vote on the usage at Town Meeting in May.
Other important topics discussed during the presentation were out-of-district tuition/transportation cost and trash collection/disposal.
The out-of-district tuition and transportation costs are some of the most challenging line items for schools. It is a challenge due to the multiple moving pieces that go into covering the cost, according to Goolsby.
As for trash collection and disposal, residents pay a low amount of about $127 per year for the collection of their trash and recycling. The contract the trash collectors have with the disposal company does not include disposal costs, which has been covered by the disposal company. The disposal company was losing out on approximately $300,000 per year by not charging trash collectors for disposal costs.
Next year, the cost per year for trash collection is expected to raise to approximately $203 per year. The 10-year contract between the collector and disposal companies expired on Wednesday and current disposal companies will not cover the disposal costs.
Near the end of the presentation, Goolsby said, “I hope everybody is taking away this is not a perfect science and its hard to do. [We] just want to be as transparent as possible.”
These financial projections will be fluctuating and these numbers are not official for FY26.