LONDONDERRY, N.H. — Members of the Londonderry School Board had barely begun their budgeting process last September when they received a jolt.
SchoolCare, the organization that provided the district’s health care, said it had underestimated the cost of claims, and Londonderry owed $2.1 million to fill the gap. If the district didn’t pay the surprise fee by January, SchoolCare would begin denying district employees’ insurance claims.
The problem was pervasive. Statewide, SchoolCare faced a $30 million deficit. In total, 65 school districts and 25 municipalities received similar letters with similar fees. And SchoolCare was not the only problem: New Hampshire Interlocal Trust, a risk pool serving 17 school districts, issued $2.5 million in surprise assessments to its members and then entered state receivership.
“This is holding school districts hostage,” Londonderry School Board Chairman Bob Slater complained at the board’s Oct. 8 meeting.
A year later, that initial shock has faded. The majority of affected school districts have paid their fees one way or another: Concord by raising its property taxes 1.5%; Somersworth by announcing staff layoffs; others via hiring freezes.
Londonderry, facing the biggest bill, adopted a multi-pronged approach to the problem (See related story).
The Secretary of State’s Office announced Wednesday that financial maneuvers during its receivership of New Hampshire Interlocal Trust will allow it to return $3 million to affected school districts and municipalities.
“We went through a rough patch, and we successfully maneuvered our way through it as best we could,” Secretary of State Dave Scanlan said Wednesday. “There are still ongoing issues … but I think we can see daylight.”
State agencies at odds
But bigger questions over how to prevent a future insurance crisis are mired in a state-led enforcement action, a district-led lawsuit, two vetoed bills, and a decades-long debate over how to manage taxpayer money.
On one side is the Secretary of State’s Office, which regulates the pools and has argued that they should not hold excessive reserves and charge assessment fees if costs rise.
On the other is HealthTrust, a risk pool that has argued pools should hold larger reserves to avoid the need for surprise fees. Entering the fray is the Dover School District, which says the surprise fees are unlawful and is suing to stop them in the first place.
With Gov. Kelly Ayotte, lawmakers, and two state agencies at odds, the disagreement is not likely to fade soon.
The near-collapse of multiple New Hampshire risk pools in 2025 has renewed the secretary of state’s efforts to assert more regulatory control over the organizations and kicked off a new round in the broader debate.
HealthTrust argues its approach was vindicated amid the chaos. While the state’s two other health risk pools, SchoolCare and the New Hampshire Interlocal Trust, issued surprise assessment fees last year, HealthTrust did not; its reserves were sufficient to absorb a spike in health care claim costs. That result suggests HealthTrust’s system worked, argues HealthTrust Executive Director Scott DeRoche.
The ‘non-assessable’ model
Key to HealthTrust’s approach is the “non-assessable” model, DeRoche says. The fund has vowed to never hit its members with surprise mid-year assessments to allow predictable municipal budgeting; but to do so, it needs to reserve more money, he argues.
The Secretary of State’s Office disagrees. Last September, the Bureau of Securities Regulation filed another administrative action against HealthTrust, arguing it was again improperly retaining surplus funds. And in its enforcement petition directly called out the organization’s approach of using reserves to absorb spikes in costs. The bureau argues HealthTrust amassed a war chest by retaining surplus funds, and used that war chest to artificially lower its premiums to compete with other pools and then to cover losses.
“HealthTrust uses what are supposed to be contingency reserves and net assets to subsidize insufficient contribution rates and to support HealthTrust’s deliberate rate stabilization for retention of membership and market share,” the petition, written by Eric Forcier, reads.
Instead, the bureau argues, the risk pool should have used better actuarial analyses to more accurately set its annual premiums, refunded any excess, and imposed assessments in the case of shortfalls.
A hearing for the enforcement action is set for mid-2026; former Republican House Speaker Bill O’Brien has been chosen to preside.
DeRoche says the state’s attempt is misguided. “Paradoxically, even though … HealthTrust is the only health risk pool in New Hampshire currently not experiencing immediate financial concerns, the Bureau has chosen to initiate an enforcement action against HealthTrust,” he wrote in October in a letter to member schools and municipalities.
Model called “flawed”
Scanlan disagrees. “When they closed out that fiscal year, they were down to 10 days of operating cash,” he said Wednesday, speaking of HealthTrust. “They were lucky … part of the reason that there’s an enforcement action going against them is that there are governance issues, and they are not forthcoming in terms of being regulated.”
To Scanlan, HealthTrust’s entire operational model is flawed. On Wednesday, he argued against the possibility of “non-assessable” pools. All risk pools must issue assessments if they run out of money, he argued.
“In the end, the members of that organization are responsible for paying the bill,” he said. “There is no other source of revenue … these entities are not insurance companies. They’re simply pooled money for pooled risk to provide coverage for their members.”
In April, the Dover School District sued SchoolCare in Strafford County Superior Court, arguing the risk pool’s $1.7 million surprise assessment fee and its threats to halt paying out health care claims if the district didn’t pay were illegal.
Superior Court Judge John Curran issued a preliminary injunction requiring SchoolCare to continue paying out the claims, and ruling that the school district was likely to succeed on the merits of its case. While the lawsuit is continuing, the preliminary injunction has suggested the court could rule that the assessments were illegal, raising major questions for the rest of the state.