An Open Letter to Beverly Financial Forecast Committee

Dear Members of the Financial Forecast Committee,

I am writing to respectfully urge the Committee to incorporate the Mayor’s stated four-year goal of bringing Beverly’s per-pupil spending to at least the statewide average directly into the FY27 financial forecast. If this goal is not explicitly modeled, we ensure that it cannot be achieved.

Our Current Forecasting Methodology Predetermines Underfunding
For more than a decade, the financial forecast has relied on conservative revenue assumptions paired with realistic expenditure projections. This combination reliably produces an artificial deficit on paper and positions each budget cycle to begin with the premise that Beverly “cannot afford” to fund schools or city departments at appropriate levels.

When actual revenues exceed the conservative projections (as they routinely do) the surplus is transferred to Free Cash, rather than used to address the core service needs that were constrained at the outset.

This is not neutral. It structurally suppresses operating budgets across schools, police, fire, DPW, and general government.

Reserve and Free Cash Levels Far Exceed Typical Municipal Practice
Across Massachusetts, the majority of communities maintain total reserves (Free Cash plus Stabilization Funds) in the range of 7–10% of their general fund operating budgets. This aligns with Massachusetts Division of Local Services guidance, which recommends moderate, well-defined reserve targets that protect fiscal stability without diverting excessive resources away from annual operations.

Within those totals, most municipalities hold Free Cash alone at roughly 3–5% of their operating budgets. Combined with Stabilization Funds, the typical overall reserve position statewide still remains well under 10%.

By contrast, Beverly’s financial policy targets a combined reserve level of 13–23%, and the Mayor’s 2024 State of the City reports that, as of June 30, our Stabilization Fund and cash reserves together totaled 18.4% of the FY25 general fund operating budget. This places Beverly at double the reserve levels maintained by most communities and significantly above what state guidance considers necessary.

Maintaining healthy reserves is important. But maintaining excess reserves of this magnitude is not fiscally neutral. Every dollar held in reserves above reasonable levels is a dollar not being used to support the teachers, instructional staff, police officers, firefighters, and DPW workers who deliver the essential services our residents rely upon. Going forward, I urge the Committee to adopt a more realistic reserve target aligned with standard Massachusetts practice. Still responsible and protective, but not so large that it crowds out the recurring funding required for staffing, classroom instruction, public safety, and core municipal operations.

Current State Data Confirms an Ongoing Pattern of Underinvestment
Using the most recent DESE and DOR data, Beverly lags significantly behind its peers and the statewide average:

School Per-Pupil Spending

• Beverly (in-district): $17,249
• Beverly (all funds including out-of-district): $18,529
• State average (in-district): $21,255
• State average (all funds): $21,885

Gap: Beverly is $3,356–$4,006 per pupil below the state average.
For 4,619 in-district students (4,800 including out-of-district), this represents an annual underinvestment of $16.1–$18.5 million.

Municipal Staffing & Service Levels

Across public safety, public works, and general government, Beverly ranks below the median of 25-30 similar communities.

• Police and Fire per-capita spending are in the bottom third
• Public Works is well below similarly sized cities
• Municipal government per-capita spending is below the median even when adjusting for population.

This aligns with what department heads consistently report: Beverly operates with leaner staffing than its peers.

Budget Growth Lags Cost Drivers
From FY18 to FY24, Beverly’s operating budget grew by roughly 3.0-3.4% annually.
Over the same period, cost drivers grew substantially faster:

• Health insurance (6-8%)
• Collective bargaining/steps/COLAs (3-5%)
• Special education tuition and transportation (5-12%)
• Utilities and contracted services (10% or more).

The City’s operating budget has not kept pace with the actual cost of running the City, which is the definition of structural underinvestment.

The Forecast Appears Structured to Prioritize Capital Over Core Services
Beverly has successfully funded major capital projects (the new police station and middle school, building purchases, land acquisitions, and multi-million-dollar renovations) while operational budgets have remained constrained. Capital projects are necessary, but they are meaningful only when the departments housed within them are adequately staffed.

Our police officers, firefighters, DPW workers, teachers, and support staff are the ones who deliver services, and I am confident that all department leaders would prioritize sustainable staffing levels over expanding reserve balances or pursuing capital without proportional investment in personnel. If our system consistently prioritizes cash reserves and buildings over the people who work in them, something is fundamentally misaligned.

Beverly Needs a Needs-Based Forecast: Not a Number for Schools to “Fit Into”
Under the current method, the school budget is forced to conform to a pre-determined funding level shaped by conservative forecasting. This backward model undermines the district’s ability to staff classrooms, meet special education requirements, and offer competitive compensation.

A responsible needs-based model should begin with actual student and departmental needs, compare spending to state and peer benchmarks, adjust for inflation and required services, and build a forecast that reflects what it truly costs to run Beverly schools. Previous administrations accepted the pre-determined number. I am confident our new Superintendent will not. But for a needs-based budget to become reality, the Finance Committee must provide a realistic pathway through the forecasting process.

To Honor the Mayor’s Commitment, the FY27 Forecast Must Include a Per-Pupil Benchmark Scenario
The Mayor committed to reaching the statewide per-pupil average within four years. That is achievable. But only if the forecast includes a needs-based spending scenario, the full range of available revenues (not only conservative assumptions), reserve targets aligned with Massachusetts norms, and acknowledgment of staffing needs across all departments. Without modeling the goal, we cannot achieve it.

We Have an Opportunity to Re-Align Our Priorities
Fiscal responsibility does not mean restricting operating budgets while accumulating excess reserves. True responsibility means meeting the service levels residents expect while maintaining reasonable, not excessive, reserves. This year is an opportunity to shift from a forecast that restricts services to one that reflects the needs of our city.

Beverly Should Adopt Dual (and Ideally Multi-Tiered) Financial Forecasts
Many fiscally disciplined Massachusetts communities use dual-scenario forecasting: one conservative, revenue-constrained scenario and one needs-based, service-level scenario. In fact, the most transparent communities go even further and use a three-tier model: an ideal scenario, an expected scenario, and a worst-case scenario. Beverly, by contrast, currently presents only the worst-case projection.

Providing multiple forecasting scenarios offers a clearer picture of what is truly possible. It allows policymakers and residents to see the full range between what we fund and what we actually need; and exposes any gaps that conservative assumptions may be masking. Beverly should adopt this best practice. Doing so would bring much-needed clarity, accountability, and honesty to the budgeting process.

Thank you for your careful consideration and for your service to Beverly. I hope the Committee will incorporate these concerns into its final FY27 report.

Sincerely,

Matt Ferreira

NOTE: The Financial Forecast Committee is scheduled to meet tomorrow, Tuesday, December 2nd at 6:00 PM in the Beverly City Hall Council Chambers. I encourage anyone interested in this topic to attend in person, watch the proceedings on BevCam, and share feedback with committee members.