Local school districts could be in for a large payout due to deficits in the Kentucky School Boards Insurance Trust (KSBIT). Kentucky school districts are now facing a $50 million to $60 million bill to pay off an outstanding deficit acquired by the insurance trust.
Pineville Superintendent Terry Hayes stated he currently has no idea how much of the bill the Pineville district will have to pay. He said the bill will impact the district, but he doesn’t know how big the impact will be.
“Budget cuts in general have impacted our school (district),” said Hayes. “This will certainly have a negative impact all across Kentucky.”
The Pineville School District was still using KSBIT when the report of the bill arrived. According to Hayes, the district has been using KSBIT for at least 15 years. Pineville schools will continue to be insured by KSBIT until June 30. After that, Hayes said the district will accept bids for insurance.
The Middlesboro School District has also been a member of KSBIT for the majority of KSBIT’s existence.
“This couldn’t have come at a worse time,” said Middlesboro Superintendent Rita Cook. “It makes it more difficult to plan ahead.”
Cook stated SEEK (Special Education for Exceptional Kids) money is decreasing and some grants that would help schools are going away. Similar to the Pineville School District, Middlesboro does not know how much they will have to pay.
The Bell County School District will also be affected by the pending bill, but school officials could not be reached for comment on Thursday.
KSBIT states they plan to do an assessment (under a fair methodology to be approved by the Kentucky Department of Insurance) of current and past participating members to fund the deficit and the transfer of liability to a qualified insurer/reinsurer.
Factors in the assessment methodology will consist of premiums paid, the projected cost of claims in each pool by member and the number of years of participation by each member in years generating a deficit, according to the memorandum.
According to reports by the Herald-Leader, the Fayette County Public Schools’ payment will be around $2 million.
Harlan County Schools Superintendent Mike Howard said his district has not participated in KSBIT in approximately 15 years. The district has participated in a self-insurance program since leaving KSBIT.
KSBIT provided low-cost insurance to most of Kentucky’s school districts for items such as workers’ compensation and property. According to a memorandum from KSBIT, a financing option negotiated by the Kentucky School Boards Association (KSBA) will be available so participating districts have the choice to pay their portion of the assessment over a 20-year period to help minimize the impact.
Anthony Cloud can be reached via email at firstname.lastname@example.org or by phone at 606-248-1010.