City Affirms Continuation of Employee Health Coverage Amid Ongoing Dispute with SchoolCare

March 13, 2026

The City of Portsmouth today 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 the New Hampshire School Health Care Coalition (SchoolCare).

SchoolCare, a statewide pooled risk management program, has advised the City that it will cease paying health insurance claims for School Department employees on May 1, 2026. To avoid this outcome, SchoolCare demands that the City pay or agree to pay a disputed assessment issued outside of the municipal budget cycle, despite the City’s continued and timely payment of monthly contributions under its membership agreement. The City disputes the authority of SchoolCare to impose an assessment of this nature, and their authority to unilaterally discontinue paying on valid claims for covered individuals.

In response, the City has proposed multiple paths toward resolution, each of which SchoolCare has declined.

On October 1, 2025, SchoolCare issued a $30 million “assessment” to 90 New Hampshire school districts and municipal entities to address operational and reserve shortfalls. Portsmouth’s share of that assessment totals $1,570,605.78. This is the first time SchoolCare, or any other New Hampshire risk pool, has levied an assessment against its member entities.

The City recognizes the understandable concern this situation has created among School Department staff and their families. The City has not terminated health insurance coverage, has no intention of doing so, and continues to meet its contractual contribution obligations to SchoolCare. The dispute concerns SchoolCare’s unprecedented mid year “assessment” and not employee benefits.

The “assessment” was imposed outside normal budget cycles, leaving municipalities with limited options to absorb an unplanned and significant cost. SchoolCare’s invoice required payment or entry into a payment plan by December 31, 2025, with interest accruing thereafter, and indicated that member claims could be impacted if payment was not made. The City disputes SchoolCare’s authority to impose an assessment, which is not expressly authorized by contract, state law, or SchoolCare’s own governing documents. Although SchoolCare claims its Board policies are confidential, a copy of SchoolCare’s Board policies, which expressly prohibit assessments, has been provided to members of the media by the City pursuant to RSA 91-A.

The full statewide budget impact of the assessment remains unclear, but at least one member community, Somersworth, reports that school employee layoffs were driven in part by the need to fund the assessment. SchoolCare has indicated that 88 of its 90 member entities have either paid the assessment or agreed to a payment plan. Portsmouth and Dover are the only members that have not.

According to information recently provided by SchoolCare, the risk pool reported approximately $29.5 million in reserves as of June 30, 2023. Over the subsequent three fiscal years, those reserves were fully depleted, and SchoolCare is now operating at a deficit. The City’s concern is heightened by the pace at which SchoolCare’s reserves were exhausted, and by the absence of advance notice to members that a mid year assessment of this magnitude was likely.

Under New Hampshire RSA 5 B and SchoolCare’s membership agreements, the program’s funding mechanism is rate setting. SchoolCare knew as early as November 2024 that it faced a growing deficit that would exhaust reserves by July 2025, yet set rates for the 2025–2026 fiscal year at levels that did not reflect those known risks. Had rates been set appropriately, the rates would have been higher, incorporating sufficient funds to cover operating expenses and to replenish reserves. These costs would have been shared prospectively between employers and employees, rather than shifted retroactively and entirely onto taxpayers. Ordinary rate setting dovetails with the stable and predictable municipal budgeting process.

During the 2025 legislative session, there was legislation which would have permitted assessments by risk pools under a revised regulatory framework. That legislation did not pass. Nonetheless, SchoolCare proceeded with the assessment without consultation with its membership. Similar legislation is pending in the current legislative cycle.

The City of Portsmouth has repeatedly sought to resolve this matter collaboratively, including presenting its concerns to the SchoolCare Board, and proposing settlement options that balance the City’s fiduciary obligations to taxpayers with the goal of maintaining SchoolCare as a viable risk pool. SchoolCare has rejected the City’s settlement offer and has indicated that the City must either pay the assessment as invoiced or face termination of claim payments.

SchoolCare has indicated through counsel it may be receptive to input from Secretary of State’s office regarding Portsmouth’s proposal.

The City’s proposed settlement agreement was to pay the City’s pro-rata share of the current operational deficit in cash before May 1, 2026, with the remaining assessment amount, designed to replenish reserves, to be incorporated into rates over a two-year period. This methodology follows closer to past practices and a plain reading of RSA 5-B, while respecting SchoolCare’s need for a cash influx in order to continue to operate.

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 Secretary of State David Scanlon.

Mayor Deaglan McEachern said, “The City of Portsmouth stands with our School Department staff and is committed to ensuring that they and their families continue to have access to health insurance. We will not allow this dispute to jeopardize the wellbeing of our employees.”