Council seeks public input on paying unexpected insurance bill for school district

LACONIA — Councilors must vote on an unexpected school expense, after gathering community input during a public hearing next week. The expense is a supplemental appropriation of $757,000, the cost of an insurance special assessment levied against the city’s school district. 

“There’s two ways that municipalities can purchase health insurance, and the school is the same way,” City Manager Kirk Beattie said during the council meeting Oct. 27. 

The city, and the school district, can either seek insurance from a local, third-party insurance salesperson or firm, or enter into a buying group consisting of numerous communities or school districts in order to achieve lower rates. 

“The school, for many, many years, has been with SchoolCare,” Beattie said. “The city side just switched to SchoolCare in the current fiscal year that we’re in now.”

Those insurance companies are mandated by the state to keep 12% of their contributions in the bank, and the only way to do that is to put assessments on member communities, based on what they currently pay, Beattie said. The city’s school department was assessed to the tune of almost $900,000. 

“The school department had some leftover insurance money that they’re going to use, and then part of their fund balance from the end of [fiscal year 2025], which came out at $1.157 million. They’re going to use a portion of that towards paying off this assessment,” Beattie said. “We’re certainly fortunate that we’re in that position, and not trying to figure out where to come up with $900,000.” 

The question must go through a public hearing before councilors can make a decision. The hearing is scheduled for 7 p.m. at the council meeting on Monday, Nov. 10, downtown at City Hall. 

“Insurance pools sometimes work in your favor — if they have excess revenue, you get money back,” school district Business Administrator Diane Clary said. Over the past 25 years, the district has gotten some of those funds back, and rolled it into their employee premiums, allowing them to pay less for their insurance coverage.

About a year ago, school district leaders had a meeting with the insurance provider, and were assured its reserves were healthy. 

“We believed them,” Clary said. “Unfortunately, the claims that were during the ‘24-’25 fiscal year outweighed the revenue, so they had to go into their reserves. So they used all their reserves, plus a negative of $4.5 million.”

Those circumstances left SchoolCare with a need to make up $30 million in reserves. The school district’s portion of that figure was 2.9%, making for a $874,000 bill. Other communities — Londonderry, Concord, Hanover — saw larger bills. 

“Everybody had to pay,” Clary said.

“I’d love to say that I was clairvoyant in not spending our whole budget in revenues, so we would have this amount of money to put towards that assessment, but I was not,” Clary said. “I was watching the news and seeing these school districts that were short $1 million, short $4 million, short $5 million.”

Clary said she thought the district should keep the excess revenue, in case a special education bill came out of the blue, or another such unforeseen circumstance occurred, and never anticipated it would be an insurance assessment which would pack such a big punch. 

“I’d love to say that this would never happen again, but now that it has happened, I will, in my budget process, have a contingency in case this does happen again, because there’s no [guarantee] that they’re going to have claims high again,” Clary said. “We don’t know.”

The district plans to stay with SchoolCare next year. There are only two insurance pools in New Hampshire at present, the other being HealthTrust. HealthTrust operates under a slightly different business model, where they wouldn’t assess the school district, per se, but has much higher rates, Clary said. 

“We have to weigh out, do we want to go to HealthTrust and never have an assessment — or something coming back to us, because that has happened in the past, too, because they don’t give back or do assessments — but their rates are a good 6%, 7%, 8% more than SchoolCare is,” she said.