The preliminary Kentucky School Boards Insurance Trust individual school district assessments were recently released; giving schools the estimated amount they will have to pay to make for KSBIT’s more than $50 million deficit.
On Jan. 14, KSBIT issued a memo, alerting Kentucky school districts of the deficit and the individual school assessments that would be needed to offset the deficit. The individual school district assessments where reached from member participation from 1993 through 2012, causing a significant financial burden for many school districts. The assessment ranged from the largest with the Fayette County Board of Education in the amount of more than $2.7 million dollars to a few school districts that did not participate during the time frame and did not owe anything.
KSBIT began in 1978 and offered a low cost, risk pool insurance to Kentucky school districts. The pool serviced the majority of Kentucky’s 174 school districts with workmen’s compensation and property and liability insurance at some point.
The pools allowed school districts, colleges and universities to combine resources to obtain low cost insurance while sharing the risks. As insurance became more competitive, KSBIT struggled to stay afloat. In the memo, dated Jan. 14, KSBIT affirmed that they attempted to do a number of steps to address the pools’ deficit, including management of the funds and an $8 million loan by the Kentucky League of Cities Insurance Association in Jan. 2010.
As members continued to drop out of the two insurance pools, the deficit continued to escalate until it grew to an estimated $50 to $60 million deficit. As a result, past and current members were factored in to create individual school district assessments based on premiums paid, the projected cost of claims and the number of years each member participated in the two insurance pools. The assessment factored in three methods of payment: a one-time flat payment of the assessment amount, a predetermined 10 year or 20 year payment option.
For many school districts that are already facing tight budgets, KSBIT was just an extra unexpected expense.
Bo Matthews, Barren County Schools superintendent described the KSBIT assessment as “terrible timing,” in light of other possible financial hardships, including sequestration of the Budget Control Act of 2011, where planned cuts to education and other government funded entities could occur as a cost saving measure.
The Barren County Schools’ KSBIT assessment is estimated at $182,676.
For the full story, see the print or e-edition of Thursday's Glasgow Daily Times.
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