It’s school deficit déjà vu all over again.
Just weeks after Claremont public schools shocked families with news of a $5 million deficit, the city of Concord has announced it is dealing with an unexpected $5 million deficit, too.
The news from Concord comes at an inconvenient time, as some state lawmakers are proposing a plan to help Claremont schools keep their doors open despite their fiscal mismanagement.
On Tuesday, the Senate Education Committee is scheduled to deliberate on a plan from Sen. Ruth Ward (R-Stoddard) to create a state-backed revolving loan fund to assist Claremont over the next five years as it gets its financial house in order. House Republicans, some of whom have already expressed concerns about the proposal, have also been invited to attend.
Ward’s plan, backed by Claremont officials, does not ask for additional taxpayer money to cover a bailout, advocates say, but instead allows Claremont to take out a loan based on state aid revenue to smooth its cash-flow issues.
“It’s a loan — not a gift — based on existing funding, and it must be repaid in full. There is no provision allowing Claremont to keep the money indefinitely,” Ward wrote in an op-ed for NHJournal. “The sole purpose of the amendment is to provide the district with short-term cash flow so students aren’t shortchanged in their education. I believe this is an innovative, fiscally responsible solution that deserves broad support from my colleagues in Concord.”
Claremont was forced to make drastic cuts to keep schools open after discovering a deficit caused by years of poor management in the SAU offices. The state of Claremont’s financial records was so chaotic that district officials didn’t know the exact dollar figure for months.
In contrast, Concord’s board discovered the unexpected deficit late last month and is now attempting to close the gap without state intervention. Concord’s administrative team was able to quickly pinpoint the problem, including an unexpected $2 million SchoolCare insurance bill, lower-than-anticipated state aid, a lower-than-anticipated city revaluation, and higher-than-anticipated special education costs.
Concord is now facing a manageable net $700,000 gap after making its own adjustments and cuts. The Concord School Board will hold a public hearing on Oct. 22 to present the plan to eliminate the deficit with a tax increase for city property owners.
Concord School Board Chair Pamela Walsh told WMUR on Monday that the board is trying to limit the financial pain for taxpayers. She hopes that by correcting the finances this year, the district can avoid big tax increases in later years.
“We are trying to minimize it, but this year the tax rate is probably going to go up more than any of us would like,” Walsh said. “I’m a taxpayer in the city, too. We try to avoid that. But if we don’t start addressing the student services costs and these other additional costs, then there’ll be bigger hikes in the future.”
Still, another school suddenly announcing a surprise budget problem adds weight to the argument that the state needs to address the broader issue of mismanagement rather than crafting specific language for a specific district.
“Sure, there’s Claremont and Concord in the headlines, but there’s also Rochester and Pittsfield — and I’m sure others, too,” House Majority Leader Jason Osborne (R-Auburn) told NHJournal on Monday.
“This isn’t the first story of a bad-acting school business manager who bounces from district to district, leaving paths of destruction in their wake. Why aren’t there consequences for these people and those who knowingly hired them?”
The differences between Claremont and Concord could not be more stark as school boards in each city deal with serious budget problems.
The state capital, Concord, is within driving distance of Boston and has a robust local economy. The city’s roughly 45,000 residents and property owners support a school district budget greater than $111 million. The city’s median income is around $82,000.
Claremont, the former mill town perpetually looking for a comeback, struggles to provide services for its 13,000 residents. The city’s approximately $40 million school budget keeps property taxes high relative to its $55,000 median income.
And in a state where local schools are funded largely by property taxes, the differences are unmistakable. According to the Department of Revenue Administration, Claremont’s most recent equalized property valuation was $1.4 billion, compared to Concord’s $7.3 billion.
At the same time, the district receives enough state and local revenue to spend more than $23,000 per pupil.
House Republicans don’t sound interested in backing Ward’s plan.
“The core reason that we don’t want to bail out districts is that it creates a reward incentive for mismanagement,” Rep. Ross Berry (R-Weare) posted on social media.
“The fact that the first district asking happens to be the lawsuit-happy district certainly did not help their case,” Berry added, referring to Claremont. “Concord won’t be getting a dime, either.”
Osborne is less adamant, arguing that there is time for the legislature to thoughtfully consider the issue.
“Since there is no urgency to address this issue before next year, hopefully the House and Senate members will find common ground to come back in January with policy solutions that can apply to every school district.”
