If the Claremont School District had any other choices, attorney James O’Shaughnessy wouldn’t have sat before state lawmakers on Tuesday asking them to set up a financial safety net.
“The district doesn’t have other options,” O’Shaughnessy said. “Without this in place, the district is really at risk, and I don’t think that’s good for the community, the region or the state of New Hampshire.”
Claremont is operating on a roughly $5 million budget deficit due to “gross financial mismanagement,” according to state Sen. Ruth Ward, whose district includes the city.
Claremont administrators overspent in several areas and failed to inform the school board of the district’s true financial position. After a leadership shakeup, new administrators and the school board are now using loans to keep the doors open, and they’re looking to eliminate a large chunk of the district’s deficit through cuts to the current budget.
Ward drafted a legislative proposal to set up a temporary revolving loan fund for the school district to help stabilize its finances and ensure that students there can stay in school. The fund would allow Claremont to access most of its already allotted state aid early, roughly $18M, then repay that aid with interest. It would not expend any new or additional taxpayer funds.
The revolving loan fund, which Ward’s proposal says the Claremont School District would repay by mid-2030, would come with strings attached. Any use of the fund would require a majority vote from the school board and disclosures to the state Department of Education.
“Claremont is not asking for a bailout,” O’Shaughnessy said. “These are funds that the district is already entitled to receive under current state law.”
An alternate pitch from Haverhill Republican Rick Ladd, who chairs the House Education Funding Committee, would build in more accountability measures. The school district would have to report a myriad of information to the state, including its monthly deficit, status, cashflows and audits. If it failed to do so, the state could withhold that money until the school district complied.
Ladd’s proposal would also have Claremont repay the loan a year earlier, by mid-2029. Claremont officials said they could make that timeline work — they plan to have the budget crisis solved by the end of next year.
The headlines of Claremont’s budget crisis have drawn ire from state Republicans in recent weeks, who sought accountability for those responsible and questioned on Tuesday how the school board was not made aware of their precarious financial position and whether the accounting errors were mistakes or intentional.
“There’s certain things that may have been errors that were systematically done over and over again,” said Rep. Jim Kofalt, a Republican from Wilton, “but it seems to me that if general ledger balances were not brought forward, then even the most basic accounting functions simply were not being performed, like balancing the checkbook — ‘how much cash do we have, and how many checks do we have outstanding?'”
Legislators from both parties appeared supportive of establishing the loan fund for Claremont, but not everyone thought it was a good idea.
Rep. Ralph Boehm, a Republican from Litchfield, urged fellow lawmakers to shoot down the proposal, saying it could become a common mechanism. Concord and Pittsfield are both navigating budget deficits in the millions of dollars, as are other school districts across the state.
“This will set a precedent,” Boehm said. “If we create a way for the state making loans for this, then how many loans can we do?”
The Claremont School District, a plaintiff in the landmark school funding lawsuit where the state Supreme Court found students are constitutionally guaranteed the right to an adequate education, still draws from one of the smallest per-student tax bases in New Hampshire.
The Senate Education Committee has not yet decided whether it’ll recommend the proposal to the rest of the legislature or when the fund might be established. Some lawmakers wanted to take a beat and let the chips fall where they may in Claremont before stepping in, while others felt the need was too urgent to delay.