Each year, Massachusetts provides funding to cities and towns through what is commonly known as the “Cherry Sheet.” This includes major revenue sources like Chapter 70 education aid and Unrestricted General Government Aid (UGGA), along with various reimbursements and offsets.
For communities like South Hadley, this aid is essential. It supports both schools and municipal services and is intended to grow over time alongside the cost of providing those services. The South Hadley Budget Task Force identified state aid as a key part of the town’s long-term financial picture.
The problem: state aid isn’t keeping pace
The Budget Task Force Final Report found that in recent years, state aid to South Hadley has been effectively flat. In FY2026, core aid accounts were essentially level-funded, with little to no meaningful increase.
At the same time, the town is facing significant cost pressures:
- Health insurance increases approaching 40% in a single year
- Special education costs rising to 38% of the school budget
- Charter and school choice costs exceeding $3 million annually
When revenues remain flat and expenses rise quickly, the result is unavoidable: a growing gap between what the town takes in and what it must spend.
Why “flat” funding is really a cut
A flat state aid number might sound stable, but in reality, it functions as a reduction in purchasing power. If costs are increasing by 5%, 10%, or more, and aid increases by 0%, the town is effectively falling behind each year.
As highlighted in the Budget Task Force report, South Hadley’s revenues are not keeping pace with expenditures, and the gap compounds over time. What might seem manageable in one year becomes a much larger problem over several years.
Limited local control
Another challenge is that state aid is largely outside local control. South Hadley cannot set its own Chapter 70 funding level, adjust UGGA, or change reimbursement formulas. Those decisions are made at the state level.
At the same time, local revenue growth is constrained by Proposition 2½, which limits how much the town can increase property taxes each year. That means the town cannot simply make up the difference when state aid falls short.
A key driver of the structural deficit
The Budget Task Force concluded that South Hadley is facing a multi-million dollar structural deficit in the coming years. Flat state aid is a central part of that problem.
When you combine:
- Flat or minimal growth in state aid
- Limits on local revenue under Proposition 2½
- Rapidly rising fixed and mandated costs
…the math no longer works. Even significant cuts cannot fully close the gap because the underlying imbalance remains.
The bottom line
State aid is meant to help stabilize local budgets. But in South Hadley, it has not kept pace with the reality of rising costs. Flat funding in the face of inflation and growing obligations is one of the clearest reasons the town is now facing difficult financial decisions.
It is not the only factor—but without meaningful growth in state aid, the pressure on South Hadley’s budget will continue to build year after year.
Sources include the South Hadley Budget Task Force Final Report (February 2026) and Massachusetts Cherry Sheet state aid data.