Money earmarked for the special education reserve fund was restored during the Finance Committee meeting on March 24.

By Harry Kane

Lawmakers approved a new special education reserve fund to set aside money for unexpected or high-cost special education expenses.

City Councilors overwhelmingly voted in favor of Mayor Jake Wilson’s request to adopt Massachusetts General Law, Part 1, Title VII, Chapter 40, Section 13E, during the March 26 City Council meeting.

“[This] legislation allows us to create a separate fund, like a stabilization fund, for the schools, that has a pool of money that can only be used with appropriation from the School Committee and City Council,” said Ward 2 City Councilor J.T. Scott.

The Finance Committee had already approved $430,965 during a March 24 meeting from the unreserved fund balance for the special education reserve fund.

Finance Director Edward Bean said the money will go toward funding special education, out-of-district tuition, and special education transportation costs.

The money had been earmarked for special education, but the funds were distributed late, explained Bean. “The Department of Revenue was late in distributing Q4 FY2024 special education circuit breaker funds to the city.

“This is the amount of money that should have gone to the school department had it been distributed timely by the Department of Revenue,” said Bean.

Prior to the Finance Committee meeting, the special education “rainy day account” was approved during a Legislative Matters Committee meeting on March 17. At that meeting, Interim Chief Financial Director Robert Berretta spoke about the rationale behind establishing the special education reserve fund.

“I want to start by saying I think this represents a really awesome partnership between the city and the schools,” said Berretta.  “What we’re really trying to do here is basically some risk management.”

Due to year-to-year fluctuations in special education costs like out-of-district tuition and transportation costs, the dedicated fund will help manage financial volatility.

Berretta said costs can range upwards of $130,000 per student for out-of-district tuition and explained it can be difficult to absorb the costs in an appropriated budget, hence the need for a reserve fund.

Funds can carry over and be used in future fiscal years, he said, allowing districts to manage unpredictable high-cost student placements without needing immediate new appropriations.

The reserve fund balance cannot exceed two percent of the annual net school spending of the school district, according to Section 13E.

“This is not a savings account,” said Berretta. “This is some very prudent long-term planning that we’ve engaged in, knowing that special education costs can change quickly from year-to-year.”

By establishing the dedicated reserve fund, the district will now have a safety net in place to cover high-cost, unexpected, or unbudgeted special education expenses.