The Kentucky School Boards Insurance Trust announced Monday that it will disband, sending ripples of concern through school districts statewide.
“It’s a major thing. Superintendents and finance officers all had a heart attack this morning,” Dennis Davis, Mercer County superintendent, said at a school board meeting Monday night.
Joining KSBIT, as its referred to by most educators, has been optional. The organization was created in 1978 as a self-insurance fund, which means participants are owners as well. Those who are part of the fund gain dividends if there is a surplus and must pay if there are deficits.
Unfortunately, the time is coming to pay out for current and former members. Deficits were incurred for the Workers’ Compensation Pool from 1990 to 2011 and the Property and Liability Pool from 1993 to 2012.
Anyone who was a member of the self-insurance company in those years could be forced to pay. Since its inception, KSBIT explained on its website, the trust has processed more than 116,000 claims and incurred more than $400 million in losses.
The Danville school system, which currently has liability and property insurance in the pools at KSBIT, has been a member in the past, according to Joy Campbell, district finance officer.
“We’re not as deep as other districts may be; however, we will still feel an impact,” Campbell said, explaining that some districts had always been covered by KSBIT and the organization served every district at some point.
Danville purchased workers’ compensation with KSBIT from 1990 to 2005 and liability only from 1990 to 2003. This year, the district has purchased coverage for both property and liability with KSBIT.
While she said Danville will “be able to handle the assessment out of reserves,” Campbell stressed that “it is not a good time to have an added, mandated expense,” considering all of the other budget adjustments being made at the state and national levels.
She anticipates it could be four to six weeks before the assessments are completed and the district is notified regarding the expense.
The Boyle County school system also has used KSBIT, according to Assistant Superintendent David Young, who explained that it has not been the exclusive carrier for the district, but has been used over the course of the past several years.
However, Young said, they can’t yet anticipate how KSBIT’s announcement will impact the district.
“It is definitely unfortunate. It’s not something that we can control as a district,” he said. “When the time comes, it is something that we will have to deal with.”
Young said, due to the connection with the Kentucky School Boards Association, KSBIT was a widely used provider, which is why it will cause such major ripples in the commonwealth.
KSBIT is expected to offer financing options for those districts that need it.
A letter on Monday from KSBIT to current and former members states that despite cutting costs, shifting to a managed-care model for medical care, and increasing premiums, “the deficits have grown as claims costs have escalated, and a substantial number of districts have continued to leave the two pools due to competitive pressures.”
Current members are promised coverage until June 30.