EASTHAMPTON — The City Council has approved a $65.3 million budget for fiscal year 2027 that relies on a $6.9 million Proposition 2½ override approved by voters last month, but cuts will still need to be made including layoffs for a handful of school employees.

The budget approved at the council’s meeting Wednesday is the greater of two spending plans proposed by Mayor Salem Derby — one if the override failed, one if it passed — marking a roughly $3.3 million increase, or 5.3%, compared to the current, fiscal 2026 budget of $62 million. Derby said in an interview he is relieved that the budget has passed, but the city will need to be more conservative in its spending.

“We’re going to have to be as strategic as we can be in the future,” Derby said. “We’re 100% going to have to find cost savings to maintain stable footing.”

The City Council Finance Subcommittee held five public hearings prior to the budget approval, ultimately recommending a reduction of approximately $51,000 that is included. The reductions were made to spending for the city’s security camera contract with Flock Safety, which includes license plate readers, hours for the sustainability coordinator, which will be made up in grant funding, and professional development for certain employees.

“It’s a small share of the total budget,” Finance Committee Chair Thomas Peake said of the $51,000. “But I think that it sort of underscores … that while it is very expensive to run a city, there’s not a tremendous amount of expenditure within this budget that could be reduced without it leading to a substantial reduction in services.”

Derby said the sharp increase in spending needed to run the city is due to multiple factors, including increasing costs related to health insurance, special education and out-of-district costs, debt payments and contractual obligations to employees and retirees. Over the past three fiscal years, the city has transferred nearly $7 million from reserve and stabilization accounts, including $4.5 million in the current fiscal year alone, into its operating budget to maintain services and deal with the rising costs.

Education takes up the bulk of spending, with slightly more than $24 million allocated to Easthampton Public Schools next year. However, that is roughly $922,000 short of level services, a gap that Superintendent Michelle Balch said will require cutting at least five educators.

Still, Balch said the schools are in a “far better situation” than if the override failed, which would have led to approximately $2.7 million in cuts and laying off upwards of 40 school staff.

When the override was announced, school administration sent nonrenewal notices to roughly 40 school employees facing the loss of their jobs if the override failed. Balch said at the School Committee’s June 16 meeting that administrators are attempting to retain as many of those educators as possible, and cannot confidently say which positions will be lost.

“Unfortunately some of our educators, because they received those nonrenewal notices or reduction in force, they went and sought employment elsewhere,” Balch said at the meeting. “Staffing is changing hourly for us; it would be very premature of me to tell you which positions would be cut.”

As for other city services, Derby said no other full-time employees will be cut, but there will be less funding for certain services. For example, he said there are several vacant positions that the city will be “slow and “more intentional” about filling.

Public safety, including police and fire, will receive approximately $9.2 million, an approximately $200,000 increase from the current year. General government spending is set at $3.4 million, a slight decrease of less than $100,000.

Along with general government, the only other department seeing a spending decrease is human services, with a budget of about $788,000. The public works budget will see a slight increase with a budget of $2.5 million.

The “Unclassified” section of the budget includes health insurance and other contractual obligations for employees, which city officials say generally cannot be altered much. It increased from approximately $12.7 million to $14.5 million with the override.

Councilors acknowledged that this was a long and challenging budget season and Council President Koni Denham thanked city department heads for their work putting together multiple budgets with a short timeline when, historically, the city has only prepared one budget each year.

“I also want to take a moment to speak to our department heads. I know that this obviously has been incredibly challenging — the fact that you all put in the amount of time to put together three different budgets, I think is unheard of,” Denham said. “I also want to acknowledge the members of the community who participated. I think that given the nature of what has been going on nationally and certainly what’s been going on locally, I have appreciated the participation and certainly the questions and the encouragement of this council digging deeper into addressing some of these concerns.”

Denham also encouraged city leadership and the council to continue to work to find cost savings in the city.

“I also want to speak directly to the mayor,” Denham said. “We are not out of the woods at this particular time and it is incumbent upon you to work closely with your department heads to solve the problems that we’re in. I know that you have had limited department head meetings and I strongly encourage you to have more of those.”