CLAREMONT — The School District’s interim business administrator presented a plan this week to reduce the district’s deficit by more than half by the end of the fiscal year next summer.
“I am trying to work this $5 million (deficit) down to $1.9 million by the end of the year,” interim Business Administrator Matt Angell said.
In the meantime, to shore up the district’s precarious cash position, Angell asked the School Board to support legislation before the end of the year that would allow the school district to borrow against its anticipated adequacy aid for next year.
“The concern is not having enough cash,” the district’s attorney James O’Shaughnessy said. “We don’t want to be having the same conversation next Aug. 15 whether we can open the schools. This is to prevent that from happening.”
The board voted 6-0 to pass a resolution titled “Claremont School District Adequacy Revolving Loan Fund” at Wednesday’s School Board meeting.
Angell, who replaced Mary Henry when she was put on administrative leave, said the deficit was caused in part by the last year’s budget being overspent by $1.6 million and the failure to record health insurance for retired teachers.
Adding to the problem is a $868,000 bill the district just received from SchoolCare, the district’s health insurance provider. Claremont is among districts that are facing an extra payment so SchoolCare, which is facing its own $4.5 million deficit, can replenish its reserves.
“I am trying to pay it this (fiscal) year, but I think I can put it into next year’s budget,” Angell said of the SchoolCare bill. “We have a month to make that decision.”
In his presentation, Angell said the district has available $5.8 million in appropriations and then listed the deficit, SchoolCare payment and several other costs including supplies, contracted services, substitute teachers and unforeseen expenses to arrive at the $1.9 million figure.
His current plan to ensure adequate cash flow will include using $1.6 million remaining of a $4 million loan from Claremont Saving Bank, leaving the district with about $180,000 in cash.
By the end of March, Angell projects only about $60,000 in cash.
“You have to understand (for) a school district this size I would expect to see a cash balance of between $3 million and $6 million in any given month,” Angell said.
State aid will be received in November, January and March and
Angell then asked the board to approve the resolution asking the Legislature to authorize the district to borrow against next year’s adequacy aid.
“It is designed to be a temporary fiscal stabilization mechanism,” O’Shaughnessy said. “It is there if you need it.”
The plan is to attach the resolution to an existing bill that will be up for discussion on the Legislature’s Veto Day, O’Shaughnessy said.
An amendment with the language establishing the revolving loan fund for Claremont will be attached to a bill that was retained in the Senate Education Committee, state Rep. Hope Damon, D-Croydon, whose district includes Claremont, said Thursday morning. Retained bills can be considered on Veto Day, if the Senate votes to bring it out of committee, Damon said.
“The resolution is the board’s ask to the state, yes, please do this,” Damon said. “But the state does already have it in process.”
If approved, the fund would be administered through the Department of Education to assist the school district with its cash flow. The revolving loan fund would sunset after three years.
It is similar to the $4 million loan from the Claremont Savings Bank last month to help the district with its cash flow crisis, O’Shaughnessy said. That loan will come due in the spring and will be paid with adequacy aid.
“It will make cash available to the district in anticipation of state aid,” O’Shaughnessy said.
If the Senate passes the bill with the amendment on Oct. 23 it would go to the House for a vote on Veto Day, Dec. 17, Damon said. A simple majority is needed in both chambers.
“People should understand this is not new money,” Damon said. “We would be borrowing money we are certain of receiving from future payments to be able to address its current fiscal issue.”
CORRECTION: The chair of the Claremont School Board is Heather Whitney. Whitney was misidentified in a photo caption in a previous version of this story.