FRANKFORT, Ky. — An additional $5 million is in the process of being disbursed to Kentucky school systems and colleges that were assessed in 2014 to rehabilitate the Kentucky School Boards Insurance Trust (KSBIT).
This is the result, in part, of a lawsuit and settlement handled by English, Lucas, Priest & Owsley attorneys, Michael Owsley and Sarah Jarboe, both of whom are partners in the firm. They worked with attorneys from the Kentucky Department of Insurance (DOI) and Public Protection Cabinet to achieve this outcome.
The lawsuit and settlement already brought about a $1 million payout to these school entities in 2016, $1.8 million in 2018, and avoided an additional $8 million assessment of former KSBIT members. The additional $5 million refund will be divided among the former KSBIT members in proportion to their pro rata share of the total 2014 assessment.
“This comes as welcome news for Kentucky schools,” says attorney Sarah Jarboe. “We expect the funds to be fully disbursed to the school systems by April 12. Mike Owsley and I, on behalf of Green River Regional Educational Cooperative and its member districts, continue to work closely with the DOI and Public Protection Cabinet to ensure that the former KSBIT members are refunded as much money as possible under the terms of the settlement agreement.”
Lawsuit stems from self-insurance funds
The lawsuit stems from $8 million Surplus Notes provided eight years ago to two self-insurance funds within KSBIT. At the time, KSBIT had a deficit in its Workers’ Compensation Fund and Property and Liability Fund.
The Kentucky League of Cities Insurance Services Association provided the funding for the Surplus Notes. Under the terms of the Surplus Notes, repayment of the $8 million principal and interest was only allowed if the KSBIT Funds had a surplus in excess of $2 million.
KSBIT’s deficit continued to grow until 2013, at which point the KSBIT Funds entered into rehabilitation and the Commissioner of the DOI took over management of the Funds as rehabilitator. Former KSBIT members, including the majority of Kentucky’s school districts and colleges, were assessed approximately $49 million in 2014 to pay for all legal liabilities and obligations of the funds.