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The Winchester Select Board discussed a projected $2.9 million budget deficit for fiscal year 2026 during its Jan. 27 meeting, with members divided over school levels and potential cuts to municipal services.
Town Manager Beth Rudolph presented updated budget figures showing the deficit had grown since initial projections earlier this month, driven by higher School Department costs and an anticipated 12.7% increase in employee health insurance expenses, pushing that cost from $13.9 million to $15.7 million.
“We’ve had a really good run for the past few years in terms of health insurance, and our luck is definitely running out this year,” Rudolph told the board.
She noted insurance rate increases could range from 9.9% to 19.9%, with final rates not expected until Feb. 15.
The town’s total projected expenses for FY26 stand at $160.3 million against revenues of $157.4 million, creating the deficit. Major budget components include $70 million for the School Department, $35.4 million for municipal departments, $15.7 million for health insurance and $7.5 million for contributory retirement.
Municipal departments will see overall growth of 2.9% compared to fiscal year 2025, while the school budget's proposed 5.84% increase represents one of the larger year-over-year changes.
School funding sparks debate
The School Department is seeking a 5.84% budget increase, up from an earlier 4.92% projection. This sparked debate among board members over funding priorities and fiscal constraints.
“I strongly disagree that a level services budget for the schools is good enough,” said Select Board member Bill McGonigle. “The longer we ignore them, the longer we do not give them the necessary funding, the more expensive it's going to be to fix those problems.”
Other board members emphasized the need to balance educational needs with taxpayer impacts.
“We serve all constituencies, not just people with kids in school,” noted board member John Fallon, stressing the importance of considering impacts on fixed-income residents facing increasing property tax burdens. “We have a whole bunch of folks who are on fixed income that we need to be considerate of, and we don’t mention that enough in the budget process.”
Board Chair Michelle Prior suggested reducing the school budget allocation by approximately $400,000, arguing that unsettled union contracts and potential state aid increases could provide flexibility later.
“I’d rather not budget for contracts you haven’t settled,” Prior said. “We can deal with it at Spring Town Meeting or Fall Town Meeting, depending on when those contracts settle.”
To address the deficit, Rudolph outlined several municipal cost-saving measures, including:
• Removing a planned Planning Board intern position ($15,000)
• Eliminating a proposed part-time community health project manager ($38,863)
• Reducing police cruiser replacements from two to one ($59,000)
• Canceling plans for an additional custodian at Lynch School ($51,984)
Health care costs major budget pressure
Rising healthcare costs are emerging as a major budget pressure, with the town potentially facing its largest insurance rate increase in years.
Rudolph reported that while initial projections assumed a 12.7% increase, pushing costs from $13.9 million to $15.7 million, the town's insurance provider MIIA recently indicated rates could rise anywhere from 9.9% to 19.9%.
The town has exhausted most immediate options for containing costs. In recent years, Winchester achieved savings through measures like changing providers from Harvard Pilgrim to MIIA Blue Cross, implementing Medicare buy-in programs, and adjusting dental insurance.
“This is the first year where we’re seeing this very high increase given to us by Blue Cross, and we don’t have any of those tricks up our sleeve,” Rudolph explained.
To help offset rising costs, the board discussed removing a $350,000 contribution to the town’s Other Post-Employment Benefits (OPEB) trust fund. This could provide temporary relief since the town expects to receive pension payment reductions starting in fiscal year 2027 that could be redirected to OPEB funding.
Board member Michael Bettencourt noted the town’s health insurance stabilization fund was specifically created to avoid major plan changes during difficult budget years.
“When we created the healthcare stabilization fund, we were rolling at a couple years of 0% increases and thought we were geniuses,” Bettencourt said. “But they catch you at some point.”
While plan design changes could potentially reduce costs, officials indicated it’s too late to implement such changes before the May open enrollment period. The board also expressed reluctance to disrupt employee benefits, with Bettencourt noting that stable health plans help retain town employees.
Any additional rate increases above the projected 12.7% would further strain the already challenged FY26 budget. Officials indicated they will continue working with their healthcare consultant to analyze claims data and explore any possible cost containment strategies before rates are finalized next month.
Forest Street housing development advances
In a significant development for affordable housing, the board reviewed a detailed regulatory agreement for 160 Forest St.
Town Counsel Jay Talerman presented a draft covenant that would govern the property’s development while maintaining flexibility for future use, whether as rental or ownership units.
“This agreement is unique because we don’t know yet what the end user is,” Talerman explained. “Normally, we convey a restriction or accept a restriction. Here, we’re conveying one, and we’re in the shoes of the developer, but then we’re passing on the responsibilities to someone else.”
The regulatory agreement is designed to be broadly flexible, potentially accommodating various development scenarios from single units to multiple units, rehabilitation of existing structures or new construction. All units will be reserved for households earning at or below 80% of the area median income.
Key features include:
• Minimum size requirements for units (700-1,400 square feet based on number of bedrooms)
• Marketing plan requirements for fair housing compliance
•Provisions for local preference in tenant selection
• Long-term affordability restrictions
• Requirements for maintaining affordability regardless of whether units are rental or ownership
The agreement will serve as an affordable housing restriction while future development plans are determined through a request for proposals process.
Town officials emphasized that specific decisions about rehabilitation versus new construction and the number of units will be addressed in future RFP processes rather than in the current agreement.
“This document is intended to cover any possibility whatever ends up on that site from an affordable housing perspective, rental, one unit, two unit, whatever it may be,” Talerman said.
The town intends to maintain oversight of the marketing and tenant selection process, with provisions in the agreement allowing the municipality to take an active role in monitoring and enforcement.
The agreement must still receive approval from state housing officials at EOHLC, who have been reviewing similar agreements while also working on new ADU and 40B regulations.
Wedge Pond improvements planned
Friends of Wedge Pond presented plans to donate $9,000 to expand the town’s invasive algae treatment program. The group’s president, Matt Gordon, detailed efforts to improve water quality and restore public spaces around the pond.
“We really want to do whatever is going to get more people using the pond,” Gordon said, outlining proposals including a potential “Wedgetoberfest” fundraiser at Boregard Park.
The organization has contributed 260 volunteer hours in 2023 and plans to increase that commitment in 2024.
Looking ahead
Rudolph noted key budget dates, including the March 14 closure of the Spring Town Meeting warrant and an April 7 Select Board vote on the final budget warrant.
The next Select Board meeting is scheduled for Feb. 10, where budget discussions are expected to continue as the town works to finalize spending plans for the upcoming fiscal year.
