PORTSMOUTH — New Hampshire Secretary of State David Scanlan is expected to attend the Monday, March 16 City Council meeting in the wake of a controversy about SchoolCare’s demand for a $1.57 million payment from the city, according to Mayor Deaglan McEachern.

SchoolCare, a nonprofit risk pool that works to provide health insurance to all the city’s school employees and 90 school districts statewide, stated “if any” town or city “failed to pay the assessment, then SchoolCare may stop paying claims on insured members,” Deputy City Attorney Trevor McCourt previously told the council.

SchoolCare is overseen by the secretary of state’s office.

McEachern stressed during a March 13 interview “we need to be able to provide health care for our teachers, that’s the highest priority we have in these discussions.”

McEachern, in his letter, thanked Scanlan for his “willingness, expressed through our conversation … to come to Portsmouth to discuss these issues at the City Council meeting on March 16. The city’s concerns arise from the extraordinary assessment SchoolCare recently imposed on its members.”

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The mayor went on to write, “SchoolCare reported approximately $29.5 million in reserves as of June 30, 2023; those reserves were depleted quickly, and SchoolCare now reports an operational deficit. … The size and timing of the assessment have had immediate and serious impacts on taxpayers.”

Portsmouth counteroffer rejected by SchoolCare

Stating “Portsmouth seeks to approach this situation constructively,” McEachern’s letter describes a counteroffer.

“While the city does not agree that risk pools have statutory or contractual authority to levy assessments of this nature, we want to remain part of a stable, effective pool and contribute to a reasonable solution,” McEachern said.

He wrote Portsmouth is proposing to pay $247,660.71 and the remaining $1,322,945.07 over a two-year period to avoid the “disruption” paying the full amount.

The mayor confirmed that when McCourt recently appeared before SchoolCare’s Board of Directors, Portsmouth’s counteroffer was rejected. But he stated Portsmouth remains “willing to work with SchoolCare to make sure our teachers get the health care they deserve.”

What mayor is expecting from secretary of state

McEachern said based on his conversation with Scanlan, he expects the secretary of state to “come tell us why this is legal, and answer any questions we have. I look forward to that.”

McEachern stressed Portsmouth would not be “bullied” by SchoolCare into paying an assessment it believes is not legal under state law. He added if SchoolCare were to stop paying claims filed by Portsmouth’s school employees “that would be a breach of the contract.”

“We’re looking at all available options,” McEachern said. “We believe we have made fair and legal offers to SchoolCare, and want to be able to have our teachers have no interruption in their health coverage. Unfortunately they’ve taken the tack that they have. It’s not a just or fair thing to do.”

He expects that after city councilors hears from Scanlan, they could have a discussion about next steps.

“ We may have to talk to our legal counsel first,” McEachern said.

McEachern says solution should be rate-setting, not billing taxpayers

McEachern maintained in his letter to Scanlan “this assessment raises broader policy concerns warranting your direct attention given your statutory responsibilities.

“It was levied contrary to state law, the membership agreements and SchoolCare Board policies, without a meaningful public process,” McEachern wrote. “By shifting costs retroactively and disproportionately onto taxpayers rather than sharing them prospectively and transparently through rate-setting, this approach undermines confidence in the public risk pool model.”

He told Scanlan the implications “extend well beyond Portsmouth.”

“Municipalities and school districts across New Hampshire depend on the stability and predictability of public risk pools in order to responsibly plan their budgets and manage taxpayer dollars,” he said. “When large retroactive assessments are imposed without clear authority or process, it creates uncertainty not only for local governments but for taxpayers across the state who ultimately bear the cost.”

McCourt sent out a statement from the city’s Legal Department on March 13.

It stated city officials on March 13 “affirmed that health insurance coverage for Portsmouth School Department staff remains in place and uninterrupted, while the city continues to seek a reasonable and lawful resolution of an unprecedented and disputed, mid-year assessment imposed by” SchoolCare.

In the release McCourt reported the “city has proposed multiple paths toward resolution, each of which SchoolCare has declined.”

McCourt added the city “will provide a public update to the City Council and School Board at the March 16, 2026 City Council meeting, following an anticipated public presentation” by the Secretary of State.

The city’s “school side employees,” have been members of SchoolCare, a risk pool that administers health insurance, “since about 2012,” he said previously.

The city has agreed to pay for SchoolCare coverage next fiscal year, even though rates are projected to increase by 26%, McCourt told the City Council previously.

“I’ve also found as of June 30 of 2023, SchoolCare had a reserve in the amount of $29.5 million, which was then paid down and extinguished and exhausted over a period of three years,” McCourt said. “This assessment again is designed to refill a portion of that reserve, with the remainder apparently to be recovered through rate setting, through the ordinary course.”

SchoolCare leader seeks agreement

Lisa Duquette, the executive director at SchoolCare, previously said she’s “absolutely” hopeful the city and SchoolCare can reach an agreement.

“We have 98% of our membership who either paid in full, or have entered into agreements to pay in full by July 15,” she said.

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Monday’s council meeting is scheduled to start at 7 p.m. and will be held in City Council chambers.