Concord school district faces $5m budget shortfall

A pair of unanticipated expenses contributed to a roughly $5 million gap between the Concord school district’s anticipated revenue and expenses this school year, prompting officials to consider raising the tax rate higher than previously anticipated.

School board members decided Oct. 8 to consider a 6% hike in the local education tax over last year, which is 1.5 percentage points more than was anticipated when the board initially approved its budget for the year in March. The new rate would mean an increase of $0.86 per $1,000 of property value, or $301 on a home valued at $350,000.

The district recently received an unexpected $2 million bill from the risk pool that administers its health insurance, part of a debt shared by dozens of school districts across the state.

Administrators then became aware as they completed their first financial review of the school year that expenses for contracted student services, such as out-of-district special education placements and occupational and physical therapy, would significantly outpace projections. The district is currently anticipating that its expenses will cost $4.2 million, which is more than double the $1.9 million that had been budgeted.

The district also received less state adequacy aid than the Department of Education previously projected, though that difference was nearly offset by receiving more money through the state’s special education aid than expected. A lack of growth in the district’s total property valuation further affected the district’s anticipated tax rate.

Board members settled on the broad strokes of a plan to cover the gap, though they didn’t take any votes on it. Under their approach, $3.3 million of the gap would be covered through withdrawing from trust funds and reducing expenses, including freezing certain vacant positions. About $1 million would come from raising the tax rate, and the remainder would be deferred until the end of the year, when it could potentially be covered by unused funds or by additional trust fund withdrawals.

Unlike most school districts, in which residents must approve the budget in a direct vote, Concord’s board sets its budget and tax rate itself. The budget is initially approved in the spring, but a final vote on the tax rate does not come until the fall. The board plans to hold a public hearing later this month prior to taking that vote.

A 6% rate increase would be the highest Concord residents have seen in their local education taxes since 2022, when the rate grew by nearly 8%. Over the last 10 years, the rate has grown by an average of 2% each year, slightly lower than the average rate of inflation during the same period.

Concord, which has relatively robust reserves in its trust funds, is comparatively well suited to handle the unexpected costs. Still, the barrage of expenses is testing the district’s resilience and demonstrating the financial headwinds facing school districts.

Board member Barb Higgins likened the district’s situation to “a family who’s budgeted for years and done everything right.”

“We’re working really hard to pay our heat on time and, one by one, things are coming and we inch our way toward being unhoused,” she said. “That’s how I feel right now.”

Fifty-eight other school districts in the state face new bills from SchoolCare, the insurance provider. Lisa Duquette, SchoolCare’s executive director, said the board of the risk pool elected to issue an assessment to its members because health insurance claims had significantly outpaced its projections and depleted its reserves over the past two years.

Jack Dunn, Concord’s business administrator, said he has heard from counterparts in other districts who are also experiencing significantly higher costs for contracted services this year.

The services are mandated through students’ individualized learning plans and can prove extremely unpredictable, because they can cost over $100,000 for some students. When a student enrolls in a district — sometimes partway through the year — the district is responsible for paying those programs and specialists.

The special education expenses that districts have submitted for reimbursement to the state have increased roughly 50% since 2017, according to the Department of Education.

The factors that have driven the growth are multifaceted and likely involve the ramifications of the pandemic, earlier identification of disabilities and the deterioration of other community supports.

“The social safety nets are abandoning our community, and the school and our local taxpayers are like the last line of defense to feed and shelter and get therapy and clothes,” board secretary and member Cara Meeker said.

Board members struggled with whether they should increase the tax rate to cover the gap, but they worried that relying completely on trust funds when the student service costs could continue to rise in subsequent years, leaving the district in an increasingly financially vulnerable position.

“Things are outpacing what we can handle, unfortunately,” Dunn said.

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