Cambridge officials raised concerns about an economic downturn at a roundtable Monday of city councillors and School Committee members, with notice to the community that the school department is included in tightening budgets.
Education officials said they would coordinate with the city to protect classroom resources.
“Fiscal stewardship will have to play a larger role,” superintendent David Murphy said. “Our guiding pillars will be what has the greatest impact … and how do we keep whatever pain points there might be as far away from students as possible.”
Each city department will identify ways to tighten their budgets by 2.1 percent for the upcoming year, and future projects will be reevaluated and possibly postponed as the city works to pay for projects based on affordability rather than plans or deadlines set before the current crisis, said assistant city manager for fiscal affairs and public investments Claire Spinner.
“Instead of letting the capital plans drive how much we borrow, we will determine how much we can afford to borrow,” Spinner said.
Specific cuts for education awaits future meetings. The city manager’s team intends to set that budget before the end of the year with Murphy and Cambridge Public Schools’ chief financial officer Ivy Washington.
Here’s the situation
Instead of finding cuts or setting priorities, most of the meeting was spent reacquainting officials with the city’s financial position and discussing how tough decisions may be made.
Evaluating current programs to ensure effectiveness will come before new spending decisions, officials said. There are also five union contracts that need to be negotiated. If budget cuts are necessary, the district faces decisions about whether to fund more teachers or aides.
The current total budget is $991.2 million, up 3.7 percent from a year earlier, and schools are the single biggest chunk of that – 28 percent – at $280.3 million, up 5 percent from a year earlier. Pay and benefits make up the largest part of the education budget: $234.1 million of it, or 84 percent of the total.
After a decade of “robust growth,” the city faces what will likely be a “multiyear downturn,” Spinner said, leading to a search for $12 million in overall savings identified in October for the 2027 fiscal year.
How we got here
The city’s finances are being hit hard by a sharp drop in commercial property values – especially in labs and office buildings, which generate a big share of local tax revenue. Between January 2024 and January 2025, the value of commercial real estate fell 12.5 percent, to $29.4 billion from $33.6 billion. The city’s growth slowed, with new tax revenue down 40 percent. In the 2025 fiscal year, $24.2 million was added to the tax base, compared with just $13.8 million so far this year. All of this affects the city’s tax levy, the total amount of money collected from property taxes in a given year, which Spinner noted was “a very important component of our financial flexibility.”
“These negative trends really have serious implications for the city’s financial health,” Spinner said.
Cambridge relies heavily on property taxes to fund its budget, and that dependence has only grown over time, Spinner said. Nonproperty tax revenues, which are limited by state law and sensitive to economic shifts, have stagnated or declined in recent years. As a result, the city’s share of revenue from property taxes has risen to 68 percent this year from about 64 percent to 65 percent between the 2019 and 2025 fiscal years. Projections show that by the 2030 fiscal year, nearly three-quarters of the city’s budget will come from property taxes.
This growing reliance has weakened the city’s financial flexibility. Its excess property tax levy capacity – the buffer that helps fund priorities such as housing, public safety and education – has been shrinking. Without that cushion, the 2026 fiscal year’s property tax levy would have been capped at $657.9 million, far short of the $678.9 million needed to fully fund the budget. As a result, the city will have to tighten its budget for the 2027 fiscal year, aiming to keep budget growth under 5 percent, Spinner said.
What lies ahead
Officials warned that residents may see higher property taxes as a result of commercial property values dropping, with the tax burden likely shifting from businesses to homeowners starting in the 2028 fiscal year. In the worst case, residential taxes could rise by 17 percent.
“Residential taxpayers will have to begin to take on a higher share,” Spinner said. “We believe that our base case value is that there will be a shift beginning in FY28.”
Funding for some projects and initiatives may also be affected. The city’s new “resource-constrained” budget approach means it will fund only what it can afford rather than approving every desired project, Spinner said.
If economic conditions worsen, “we may get to a point where it’s not just about moderating growth, but it’s actually about cutting back on some things that we’re doing,” vice mayor Marc McGovern said.
Officials stressed that they’ll evaluate programs thoughtfully and try to minimize harm to residents.
Federal funding cuts remain a concern. Amid uncertainty around reductions to federal grants, the City Council established a $5 million Federal Stabilization Fund at the last budget cycle to help cushion the impact of sudden losses, such as cuts to food benefits or housing grants. The fund can’t cover everything, and the city and schools may need to make additional adjustments if federal aid continues to decline.
“The chaotic and at times incoherent messaging coming out of the federal government has made us concerned about all types of different funding streams,” Murphy said.
The roundtable is among one of several expected as the city budget continue to be developed.
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A $280 million dollar budget to educate around 7,000 students=$40,000/student. That’s a lot of money! It’s more than double what the average school district in the United States spends. True, costs in Cambridge are high, but plenty of other high cost areas–San Francisco for example–spend far less. Shouldn’t CPS be able to provide a high-quality education at this budget? I don’t favor budget cuts, but I also don’t want to hear CPS officials whine about their budget. If they feel they need to spend more for something, fine–just figure out somewhere else to cut.
They should be cutting the many useless administrators across the district. There are so many unneeded and highly paid jobs.