To cover deficit in Kentucky School Boards Insurance Trust
FRANKFORT, Ky. (July 18, 2013) — Every Kentucky school district will likely pay an assessment to cover the deficit in the Kentucky School Boards Insurance Trust, a state legislative committee was told today.
The fund, which was taken over by the Kentucky League of Cities from the Kentucky School Boards Association in 2009, is expected to levy a total assessment of at least $50 million on past and present members of KSBIT, according to earlier reports from state officials. Those members likely include every Kentucky school district, according to Kentucky Department of Insurance Commissioner Sharon Clark.
Clark told the Interim Joint Committee on Labor and Industry today that her department was notified in June 2012 that KSBIT would be discontinuing insurance due to a growing deficit in its workers’ compensation self-insurance and liability pools.
The fund experienced an approximate $4 million deficit after several “catastrophic events” in 2011 alone, Clark said.
“It was our sincere hope that with (KLC) management there would be improvement,” Clark told the committee.
The Department of Insurance is now considering three assessment options, Clark said, with a report on estimates and other data expected to be made to the department by mid August. The department hopes to have a plan in place by the end of this year.
The Department of Insurance has final authority to approve an assessment plan, and no assessment will be final until after the plan is approved, according to a June 4 letter from the KLC to all KSBIT members. A letter to all KSBIT members from the KLC dated June 26, 2013 says a public hearing on the upcoming assessment plan will be convened by the Department of Insurance sometime this fall.
Meanwhile, school boards across the state are looking at their options to pay whatever their assessment is in the end. One option may be to bond the cost of the assessment, said Clark. Another option may be for school boards to make a one-time payment to cover costs.
State law requires school districts to carry insurance on school property, boilers, automobiles, as well as workers’ compensation and unemployment insurance, the Department of Education stated early this year when news of the assessment broke. KSBIT was created in 1978 to help meet the statutory requirement, covering risks ranging from accidents to compensation for sick or injured workers for both school districts and many colleges and universities.
The fund has carried a deficit in all but three or four years since its inception, Clark said.