As state mulls school district bailout fund, Claremont says no thank you

The Claremont School District offices on Broad Street in Claremont. (Photo by Allegra Boverman/New Hampshire Bulletin)

It took months, but state lawmakers appear close to offering the beleaguered Claremont School District a financial lifeline. 

But now, Claremont might not want the money after all. 

“I’m not sure I would want to ask the school board to accept those funds,” said Matt Angell, the interim business administrator of the district, speaking at a Jan. 7 school board meeting. “… I’m hopeful that we can make it through the end of the year without having to borrow money.”

Claremont descended into chaos last August after the discovery of a $5 million financial hole in its current budget, a shortfall caused by an improper assumption about federal funding by district officials. After securing a private loan from the Claremont Savings Bank to allow it operate through April 2026, the district had asked lawmakers in the fall to consider providing state financial assistance to help it into the 2026-27 school year. 

Those efforts are at the finish line. On Thursday, the House is set to vote on a bill that would allow the district — and any other state district — a means to access advanced state funding to escape fiscal hardship. If passed, the bill, House Bill 292, would head to Gov. Kelly Ayotte’s desk.

But Angell and other Claremont school board members have taken issue with a string of conditions added by Senate Republicans. They do not plan to pursue the option, they said, even if it is signed into law.

Under the latest version of the bill, the state would set up a revolving loan fund that would allow school districts to borrow money from the state beyond the amount normally allocated via the adequacy formula. 

A district that did so would need to pay back that loan with interest; payments on the loan would be taken out of future state adequacy payments. 

It would be required to report monthly deficits and cash flow to the state, the governor, and the Legislature. It would be required to submit to an audit carried out by the Legislative Budget Assistant, a nonpartisan branch of the Legislature. And any family living in a district that accepted a state loan would be added to a list of people with preferred status for the state’s education freedom account program.

Senate Republicans, who added many of those loan terms to the bill last month, say they are reasonable conditions to ensure the district is properly addressing its funding shortfall, and that it is not using the state funds as a crutch. The education freedom account expansion is intended to allow families alternatives to the district when a financial crisis occurs, they have said.

Democrats have criticized the additional requirements as burdensome and unnecessary, and argue any state assistance should be more straightforward; the amended bill passed the Senate 16-8, with all Democrats opposed.

In Claremont, some have also taken issue with the revolving loan conditions. 

“The state is coming up with a law that allows us to borrow funds,” Angell said at the Jan. 7 meeting. “I think some of the items that are tied to it make it unpalatable.”  

It is not clear which provisions Angell referred to; he did not reply to requests for comment.

In an interview, Candace Crawford, a board member, also raised concerns with the proposed state loan proposal. To start, the interest rate is too high, she said. The bill would peg the interest rate to the “effective federal funds rate” of the Federal Reserve Bank of New York, which on Monday was 3.64%. 

“Right now with the local bank, we have a loan … with them at 2%,” Crawford said in an interview. “So that’s obviously much more favorable.”

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Crawford said because the district would have to pay back the money out of its future state adequacy payments, she doesn’t consider it a loan. 

“It’s the same money. It’s just getting it earlier,” she said. “It just addresses cash flow. It doesn’t address the overall cost.”

Claremont School Board Chairwoman Heather Whitney did not respond to requests for comment.

The board is moving ahead with its own budget. At a Jan. 21 board meeting, the board presented a budget proposal that does not include any new loan funding for the 2026-27 school year. Instead, the budget attempts to shore up revenue by cutting positions and consolidating elementary school students into two schools. 

Claremont’s board still faces a fiscal challenge: The budget proposal approved Jan. 21 is still $865,000 short. For now, the board has taken that $865,000 out of its sports funding and recommended funding athletics, for now, at $1. Board members say administrators will need to find equivalent savings after the budget passes and transfer that funding back into the athletics program. 

But Angell and others have made clear their preference is to weather the coming budget year through cuts and efficiency, not aid.

The stance represents a shift in thinking since October, when Angell — newly appointed as interim administrator — appeared before House and Senate lawmakers and said the district might need state assistance after April.

It is not clear whether the declarations from Claremont will affect support for the revolving loan fund on the House floor Thursday. House Republican leaders declined to respond to requests for comment.

But conservative lawmakers have been opposed to providing any state assistance from the start. 

“Maybe Claremont should explain why taxpayers across the state should be forced to bail them out,” House Majority Leader Jason Osborne, an Auburn Republican, said in October. “House Republicans will not simply stand by and rubber stamp this district’s incompetence. We need accountability, not bailouts.”

Sen. Debra Altschiller, a Stratham Democrat who opposed Senate Republicans’ additions to the loan proposal, says the Legislature should have stuck with a simpler loan proposal last fall designed by Rep. Rick Ladd, a Haverhill Republican.

“It was terrible,” she said of the final version of HB 292. “It was set up to fail.” 

When Claremont first approached lawmakers, Altschiller said, “it was in the early stages of untangling the mess that they had and how it happened, and what the depth of the damage actually was.” Now, without interest from Claremont, Altschiller argues the latest version of the bill should be voted down. 

Senate Republicans did not respond to requests for comment Tuesday.

To Drew Cline, the president of the free-market Josiah Bartlett Center for Public Policy and the chairman of the State Board of Education, lawmakers should be wary of creating a loan fund that invites moral hazard — the temptation for administrators to make bad decisions because others will pay for them. 

Instead, he argued, school districts facing a crisis should respond the way Claremont did. 

“That’s kind of the New Hampshire way, right? Nobody really wants to raise taxes in a situation like this. You do look for efficiencies. I think it’s encouraging that the community has come together —  the school board, folks in charge — to say, ‘Let’s deal with this in a responsible way, and not just ask for a handout.’”