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School districts look at savings and hiring freezes to cover a $30 million health care bill

The Somersworth School District is one of 65 in New Hampshire that received an unexpected bill from it's insurer for higher-than-expected health care costs. It owes $672,000.
Annmarie Timmins
/
NHPr
The Somersworth School District is one of 65 in New Hampshire that received an unexpected bill from its insurer for higher-than-expected health care costs. It owes $672,000.

Nearly 65 New Hampshire school districts plan to dig into savings, consider hiring freezes, or return less surplus to taxpayers to cover an unexpected $30 million bill from their health benefits provider. The bills range from $1,000 to $2 million.

SchoolCare, a nonprofit insurer, sent invoices to the school districts and about 25 other public employers or insurers on Wednesday, citing a shortfall due to an unanticipated spike in health care claims and pharmacy costs. The bill is in addition to monthly premiums, which went up this year.

The Claremont School District, which is trying to close a $5 million deficit, owes SchoolCare nearly $870,000. The district did not return a request for comment.

Somersworth School District’s $672,000 invoice follows a 14% increase in premiums this year, said Superintendent John Shea. Unlike some districts, he said his lower-income district doesn’t have savings to cover that. “We are down to the bone,” he said.

Shea has asked the city, which has provided the district financial assistance before, for help. If city officials agree, they could take money from the city’s savings or pass the cost onto taxpayers, something Shea doesn’t expect officials will consider.

Shea is also worried about the next big bill.

“This is not a one and done, ‘let's figure it out and move on,’” he said. “This national health care costs crisis is going to play out all over the country, in the private sector and in the public sector. I'm as concerned about next year and the year after, and five years from now if we don't get a handle on this bigger problem.”

Lisa Duquette, executive director of SchoolCare, said districts were charged based on their premiums.

Nine received invoices for more than $1 million dollars, including the Londonderry School District, whose $2 million bill was the highest. The Concord School District was a close second, at $1.9 million.

Concord School Board President Pamela Walsh said the district has savings available but may also have to consider a hiring freeze and budget cuts, though not layoffs. She called the invoice a “shock.”

“There will be things that people will feel, especially people working in our schools,” Walsh said. “We will do everything we can to limit that.”

Walsh said she wished the district had been told sooner.

“We are lucky that we are probably in a better position than other school districts to address this,” Walsh said.

The Shaker Regional School District, which covers Belmont and Canterbury, owes $622,000. Superintendent Michael Tursi said the district may use surplus that would have been returned to taxpayers or pull money from its emergency savings account.

“None of it's great,” Tursi said. “However, we're fortunate that we have a way to absorb this unanticipated cost through consistent and responsible budgeting.”

The Lebanon School District is similarly well positioned to pay its approximately $1 million bill, said Superintendent Amy Allen. The district plans to use money it budgeted — but did not spend — for health care costs, and money from its savings.

Allen said that will mean less money for things like building repairs and higher-than-planned special education costs. She said the district and board may also consider other health coverage, including insuring itself, as Manchester, Rochester, and Nashua do.

“I think we're going to look at every option to go forward, to make sure we put ourselves in the best position,” she said.

SchoolCare is looking to districts to make up the shortfall because it works differently than a for-profit insurance carrier, which absorbs the cost when premiums fall short of claims and keeps the profit when there is one.

SchoolCare is owned by the members and can use the premiums for limited purposes: to pay claims and administrative costs and maintain a reserves that equals about 12 percent of its premiums. Anything extra is returned to the members.

Between 2021 and 2023, SchoolCare returned nearly $90 million to the school districts and towns it insures, Duquette said. She said this is the first time the organization has gone back to members for money in its 30 years.

“So we do see this as a one-time correction,” she said.

Shea in Somersworth said he understands that SchoolCare had no other option but to come to its members for more money. He’s not sure there won’t be more unexpected costs and increasingly higher premiums due to what he called a national health care “crisis.”

“If we don't get a handle on this bigger problem in the short term, this is going to hurt, and we're going to have to figure out how we make do,” he said.

SchoolCare is not charging interest for bills that are paid by Jan. 1. After that, there will be a .05 percent monthly charge.

“It isn't easy. It's not only a difficult conversation, it's emotional when it's people's healthcare,” she said. “And we've been working very carefully to navigate this financial challenge together with our members.”

Employees will not lose benefits unless districts fail to pay their invoice by July 15. Duquette said that schedule was intended to give members some options.

I write about youth and education in New Hampshire. I believe the experts for a news story are the people living the issue you are writing about, so I’m eager to learn how students and their families are navigating challenges in their daily lives — including childcare, bullying, academic demands and more. I’m also interested in exploring how changes in technology and funding are affecting education in New Hampshire, as well as what young Granite Staters are thinking about their experiences in school and life after graduation.
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