Finance Committee Denies More Reparations Funding. Plans Cautionary Letter to School Committee Regarding FY26 Budget

Report on the Meeting of the Amherst Finance Committee, June 18, 2024

This meeting was held over Zoom and was recorded. It can be viewed here.

Present
Bob Hegner (Chair, District 5), Cathy Schoen, Andy Steinberg, Mandi Jo Hanneke, and Ellisha Walker (at large). Nonvoting members: Bernie Kubiak and Matt Holloway.

Staff: Athena O’Keeffe (Clerk of the Council) and Holly Drake (Comptroller)

Finance Committee Denies More Contributions Proposed for Reparations Fund
When the African Heritage Reparations Assembly (AHRA) released its final report last fall, it recommended that a successor committee be allowed to disperse funds for reparations prior to the Reparations Stabilization Fund reaching the $2 million goal set by the Town Council when it established the fund in 2022. Up until now, the fund has been supported by cannabis tax revenues, which have declined every year. Finance Committee Chair Bob Hegner speculated that the fund would not reach the desired  benchmark until 2036. The fund’s balance currently stands at $477,000. He proposed that some funds be allowed to be allocated to programs prior to the fund reaching $2 million, recognizing that it will take longer to reach that goal.

AHRA members Michele Miller and Irv Rhodes came before the committee to advocate for more funding to supplement the cannabis tax revenue. Miller pointed out that the cannabis revenue has been decreasing each year, and she proposed adding to the fund from free cash to make up the difference. Comptroller Holly Drake said that the cannabis revenue added to the fund was $210,000 in FY 2022, $134,000 in FY 2023, and $105,000 in FY 2024. She said that through three quarters of this fiscal year, only $58,000 has been collected. The total is transferred to the reparations fund by a council vote after free cash is certified in the fall, so the next disbursement will be part of FY2025.

To enable the funds to be used sooner, Hegner proposed that the successor committee use four percent of the fund’s balance per year for reparations programs or, alternatively, add $50,000 to the fund yearly and reserve $25,000 a year for programs. Cathy Schoen suggested that reserving $25,000 every other year for programs, rather than every year, would allow the fund to accumulate faster to reach its $2 million goal. 

Mandi Jo Hanneke noted that a memo from KP Law on May 10 (not included in the meeting packet) listed several other options for growing the reparations fund, including a limited tax override that could garner the needed funds in one to three years, after which taxes would revert back to base level. No other committee member expressed support for an override. 

Ellisha Walker said, “It is counterintuitive, considering the purpose of reparations and the pursuit of equity, to then ask people to raise their taxes more than we absolutely need to.”

Hanneke also pointed out that the uses of the funds proposed in the AHRA report were social service focused, not traditional reparations payments to individuals who are descendants of enslaved people. In fact, she stated that municipal money cannot be distributed to individuals without special legislation on the state level. As it stands, she said, reparations funds can only be allocated by a council vote. 

Walker said, “The successor committee needs an idea of their funding source, and how we will be contributing to it, in order for them to make decisions.” She did note that the successor committee does not currently exist, but she is hoping the Town Manager will create it as soon as possible. She suggested supplementing the cannabis tax revenue with free cash; Miller and Rhodes advocated for contributing 10% of each year’s free cash to reparations in addition to the cannabis revenue.

This proposal drew strenuous objections from Hanneke and the rest of the Finance Committee. Hanneke said, “We have been using that free cash to build up our capital stabilization funds in order to build a fire station and a DPW building. And frankly, I believe the fire station and DPW building are more important to the residents in this town than the reparations fund.”

Andy Steinberg and Cathy Schoen thought that 10% is “way too much.” Steinberg pointed out that free cash “was neither free nor cash,”that it is money that was budgeted but not spent during the year, and fluctuates greatly with economic circumstances. Free cash, he said, is used as an emergency fund and also to grow the capital stabilization fund, and  “as much as I’ve supported reparations, I have real trouble with that proposal.” 

Miller urged the committee to think about increasing funding as “an opportunity — and go back to the original spirit of the commitment that the council made. I hope that over time, as benefits are distributed and folks can see how that is positively impacting members of our community and the community at large, that each year there will be a little more motivation from the council to wanting to find the money to get to that commitment more quickly.” Rhodes stated that as it stands now, there is no immediate impact of the reparations fund. He hopes that increasing the size of the fund will allow funds to be distributed for an immediate impact.

Schoen suggested that there be a fund to accept private donations that can be used for reparations. Miller agreed, but wanted that fund to be managed outside of the municipality to avoid some restrictions on municipal funds.

The Finance Committee was in agreement regarding a provision in state law that would automatically allocate the cannabis tax revenue to reparations for three years without a council vote. However they did not advocate for additional funds. No vote was taken.

Cautionary Budget Letter Proposed for School Committee
After the Finance Committee approved increasing the regional school budget by six percentf over FY 2024 values and using ARPA funds to do so.) Hanneke, with assistance from Schoen, drafted a letter from the Town Council to the school committee urging them to work on a sustainable plan for future budgets. She said that it has to be made clear that the schools cannot expect a six percent or even four percent budget increase in future years, and urged the school committee to get an early start on future budgets. Following are excerpts from the draft letter:

“As you know, the Amherst Town Council has approved the Amherst-Pelham Regional School District’s proposed budget and modified assessment method for FY25, a budget and method that includes increases in assessments to all four towns 6% above their FY24 assessments. This was above the Town Council’s Financial Guidelines, in recognition of the actions taken by other towns and the budget stress faced by the region. Although the Town Council approved these budgetary motions, we have serious concerns about the sustainability of Regional School budgets going forward. We write this letter to share these concerns with you and in recognition that the challenge of the FY26 budget is just around the corner. 

“Regarding guardrails, whether or not we continue with the assessment method agreed to in recent years, the increase of the FY25 guardrail to 6% is unsustainable. Even 4% is likely unsustainable going forward.

“You have acknowledged that the Regional School budget has some significant ongoing structural issues that prevent it from being sustainable. Staffing has fluctuated over the past 25 years, while student enrollment has decreased over 25%. As a result, Amherst has among the highest per student expenditures in Massachusetts, and especially among communities in our region. We note that based on District reports, since 2010, Special Education staffing has increased 27% since 2010, while Regular Education staffing has decreased 18%. In that same time period, Students with Disabilities enrollment has decreased 3%.”

The draft also states that the council will advocate to improve the state formulas to fund public schools, especially Chapter 70 and the charter school funding formula. It ends:

“The Council strongly supports our schools and the education they provide to our children. Strong schools are essential and at the core of Amherst values. We stand ready to support efforts to secure a sustainable future.”

School Committee member Rhodes, who had opposed the RSC’s decision to request first an 8% increase and then a 6% increase said he “[loved] the letter” and agreed that the four towns need to get together as early as possible to understand the financial picture for next year and what the financial parameters are. Steinberg said he had some suggestions for the letter. Hanneke said that committee members should submit their suggestions to her, and she will work on a finalized draft to present to the town council.