The town’s proposed Fiscal Year 2026 budget adds no new positions, offers few new initiatives and reduces school staffing and services. Needham also possibly faces cuts should the Trump administration remain committed to stemming the flow of federal funds to states and localities.
“As you know, it’s my last budget,” said Town Manager Kate Fitzpatrick, who plans to depart in June, when she presented the plan to the Select Board at its Jan. 28 meeting.
“I wish it wasn’t as difficult a budget; I wish it was an easy budget. That would be nice.”
The words “easy” and “nice” were not repeated as Fitzpatrick and Deputy Town Manager Dave Davison offered details of the $257 million spending proposal. It will now be further reviewed by the Finance Committee, which finalizes the budget that is voted at Annual Town Meeting in May.
The $257 million represents an $8 million increase from FY25, or 3.2%. It follows a similarly lean 3.6% increase from last year — relatively low historical annual increases that have the town scuffling to maintain current service levels.
Fitzpatrick listed a few main “drivers” of the budget: the most significant being a nearly $2 million increase in the town’s expected group health insurance costs.
“We have enrollment growth, participation growth in health insurance, and we are looking at an estimated 10% increase in rates,” Fitzpatrick said of costs that are largely out of the town’s control.
In addition, the town increased the Municipal Information Technology department’s budget by more than $600,000. The 31.8% increase was deemed necessary due to cybersecurity and other concerns with the town’s overall IT infrastructure.
The town has struggled to fill IT positions for years and last year merged the town and school IT operations into one combined department that needs to upgrade long-outdated technology.
The single largest share of the overall budget is the $102 million allocation to the school department, an increase of $4.56 million over FY25. While that represents a 4.7% increase, it still led to the department reducing its budgeted staffing by 11.7 full-time equivalent positions.
“This is the first time in my 19 years that we’ve reduced the staff in a budget presentation,” Superintendent Dan Gutekanst said at the Jan. 27 School Committee meeting where the budget was unanimously passed.
“It’s been pretty sobering and has required a lot of thought and really a lot of consideration to make sure we’re landing in the right place.”
The school’s preliminary budget request in December had sought a $6.8 million increase, or 6.98%. Fitzpatrick requested the schools pare that back by $2.5 million when it became clear that maintaining other town departments at even a level-service budget amount would be a challenge.
Last week, in a budget discussion with the Finance Committee, Gutekanst had said, “In order to make a $2.5 million reduction, it is necessary to defer program improvements, reduce level service and cut proposed and existing staff.”
Since then, the schools introduced a Teacher Retirement Incentive program that could provide more than a quarter-million dollars in savings in FY26 and allow the schools to avoid additional reductions.
“I do believe that ultimately we have the resources we need to support our learners,” said Gutekanst, but he acknowledged there will be program cuts, fewer support services for students and some larger class sizes.
“There may be some increased class sizes in elective areas at Pollard and the high school,” Gutekanst told the School Committee. He said classroom sizes at the elementary level and for non-elective courses “will be within the schools’ guidelines.”
“The focus was trying to make reductions that were as far away from the classrooms as possible.”
On the revenue side, the town’s property tax receipts will be healthy and fund nearly 80% of the town’s spending. Revenue from the tax levy should increase by $9.8 million, or 5.1%, to $202 million. That will be augmented by $16.63 million in state aid, which increased by 3% over FY25.
State aid increases have been trending lower in recent years, having gone from 10.5% to 7% to 4.4% prior to this year’s 3%.
“If that trend keeps going, it just means that we either need new revenue sources to make that up, or we have to make cuts,” Fitzpatrick said.
“Nobody knows where the state is going to be for FY27 but we’re not expecting it to be a banner year for us.”
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