The ConVal School Board voted to proactively encumber funds to offset potential impacts of HB 1610, which is currently awaiting Gov. Kelly Ayotte’s signature or veto.

If it passes, HB 1610 would retroactively change the requirements around school districts’ ability to retain unspent funds. The bill would require districts to vote annually on whether to allow retention of year-end unassigned general funds, reduce the maximum retention limit from 5% to 3.5%, and restrict how the funds may be expended.

ConVal Business Manager Neal Cass said the biggest concern the SAU has about HB 1610 is that it would take effect immediately, and would rescind what ConVal voters had approved in March.

“This bill would rescind the voters’ authorization to retain a portion of the fund balance, and it would require all unassigned fund balances to be considered revenue for fiscal year 2026, which ends in two days (July 1), and is then returned to the taxpayers,” Cass said. “When we created and presented the budget for the upcoming year, we factored in the fund balance to help level the tax rate for the voters. This abrupt legislative change will create severe tax instability.”

Cass said ConVal already limits the percentage of retained funds to well below the state limit.

“ConVal voters previously approved a 5% retention amount, and the school board then capped the amount at 2.5%, which is the maximum amount the district has ever retained,” Cass said at Monday night’s meeting of the board.

New Hampshire school districts typically rely on a portion of unspent funds, which usually result from staff positions that were budgeted but not filled, to offset the impact of unexpected expenses that may arise during the school year and that are not part of the district’s budget.

In a June 26 letter to the board recommending the encumbrances, Cass stated that “in reality, these funds protect taxpayers from volatile, sudden financial shocks.”

“School districts are legally prohibited from operating at a deficit, yet we can face mid-year fiscal volatility entirely outside our control. A single new student requiring highly specialized, out-of-district Special Education placement can unexpectedly cost upwards of $100,000, mid-year. Unanticipated health insurance costs, such as the SchoolCare assessments that some school districts recently experienced, present similar shocks. Retained fund balances act as a vital buffer, allowing us to absorb these unpredictable, non-discretionary costs without freezing operations, cutting academic programs, or triggering sudden tax spikes,” Cass wrote.

Cass recommended the board encumber a portion of other funds to help mitigate the potential impacts of House Bill 1610 if it is signed into law, as is allowed by RSA 32:7, which concerns the lapse of appropriations.

“Under this statute, the school district has the authority to encumber any unexpended portion of fiscal year 2026 appropriations. This does not include any revenue, by the following specific statutory requirements,” Cass said. “Should the governor veto this bill, the board should take into account in August what the unassigned fund balance retention will be.”

Cass recommended the potential encumbered funds come from the district’s health insurance trust fund.

Jim Kingston of Temple moved to amend the wording of the second motion to: “accept encumbrances for 2026 as listed, and, should House Bill 1610 of 2026 fail to become law, these encumbrances shall reduce the amount available for the board to withhold, under our policy, the 2.5% limit by the same amount encumbered.”

The amendment was approved unanimously by the board.

The board passed three motions: to accept the monthly financial update and encumbrances as presented by the SAU; to approve proposed additional encumbrances for FY 2026; and to approve a budget transfer in case of approval of the additional encumbrances.

Mike Hoyt of Bennington, chair of the ConVal School Board, said that adding the additional encumbrances of $1,076,123 would ensure the district’s emergency funds would be retained for the next year, allowing the district to retain the same amount that had been approved by voters.

SAU 1 Board holds first meeting

The newly created SAU 1 board, which is required by state law in the event that Francestown completes withdrawal from the ConVal district before Jan. 1, met Tuesday night, June 30.

Francestown’s withdrawal would change SAU 1 from a single-district SAU to a multi-district SAU administrating both the ConVal School District and the Francestown Independent School District.

Hoyt explained the role of the new SAU 1 board, which is to set the SAU 1 budget, determine which SAU services will be delivered to each district, and to evaluate and hire a superintendent for each district.

“The role of the SAU board is to put together the SAU budget, which we need to have by January 1,” Hoyt said. “We will need to get it done before Jan. 1, because there will be public hearings leading up to that process. We will try to get the budget done as soon as possible, because both districts will be putting together their budgets.”

Cass swore in board members Curtis Hamilton of Greenfield, Tom Burgess of Peterborough, Mike Hoyt of Bennington and Janine Lesser of Peterborough to the SAU 1 board. Hoyt was voted in as chair, and Brenda Marschok will serve as secretary. Lindsay Potter, who is special education director for ConVal, will serve as treasurer. Jim Fredrickson of Sharon will also serve on the board.

Also at Monday night’s meeting, Kevin Pobst of Francestown was sworn in as the new Francestown representative to the ConVal School Board. Pobst, who has previously represented Francestown on the ConVal School Board, was appointed by the Francestown Select Board following the resignation of Laura Mafera.

Mafera is Francestown’s representative to the Francestown Independent School District board. Pobst serves on the FISB withdrawal committee.

Francestown has previously stated its intention to withdraw from SAU 1 in order to lower costs and reduce the burden on the ConVal district, but the town cannot start the process of also withdrawing from the SAU until the withdrawal from ConVal is complete.

“The intention of the FISB is to go before the State Board of Education in December for withdrawal, and to have completed the town vote on withdrawal by Dec. 1. Our goal is to try to create no extra work for Ann (Forrest) or Neal (Cass) or anyone else,” Pobst said.

The next meeting of the SAU 1 board will take place Tuesday, July 22 at 6 p.m. in the SAU 1 conference room behind SMS Middle School in Peterborough.