District to begin insurance broker search [Richmond Register, Ky.]

March 23--RICHMOND -- In mid-January, 174 school districts received a memo that the Kentucky School Boards Insurance Trust was dissolving, and member districts would be left with the bill.

However, districts are being offered a 10- or a 20-year financing option for their assessed amounts, which will be determined based on what the district paid in premiums, what claims a district made on the trust and the number of years the district participated.

"Almost every district in the state has been a part of KSBIT at some point," said Debbie Frazier, Madison County Schools' chief finance officer.

In February, Madison County received a "high-end" estimate that it would be liable for more than $1 million, Frazier said. That represented $730,969 for worker's compensation and $313,230 for liability losses.

"They've (KSBIT) given us every indication that this is a high estimate and we can expect that this will come down," she said.

Districts have been directed by the state Department of Education to hold off on any settlement with KSBIT until the department is satisfied that the assessments are appropriate, Frazier added.

"We've got to make some plans for a huge hit," said board member John Lackey at Thursday's board meeting.

Although Superintendent Tommy Floyd said the district will not have to start paying for two years, Lackey said the district will have to begin paying for a much more expensive insurance plan.

"It will be something we will be paying for in two different ways," Lackey said. "Both by the more expensive premium and also because of the assessment ... Are we going to expect to raise taxes to do this? Are we going to make cuts? Or are we going to do both?"

Since 1990, Madison County Schools has had fleet, general liability, educator's legal liability, property, worker's compensation and pollution insurance all through the KSBIT.

Coverage will continue only through June, so the school board moved Thursday to begin a broker search.

The first stage of choosing insurance providers should begin with a broker search, said Marvin Welch, the district's chief operations officer.

After attending two insurance fairs and speaking with multiple brokers, Welch told the board he heard two themes over and over: "The first was: Pick your broker first. The second was: The sooner you can pick your broker, the better."

If the district went through the Kentucky Educational Development Corporation process of posting the district's information for bids, it would obligate the district to whichever broker a particular underwriter does business with, Welch said.

"You then would have no say in picking your broker," he said. "It may be somebody who's not even from Kentucky or somebody who doesn't have sufficient staff to really service you ongoing."

Although "procurement of insurance" is a big part of what a broker does for the district, it should not be all they do, Welch said.

"For example, with KSBIT, we frequently would have them come and look at our playground equipment and other safety issues," he said. "That's one of the services you expect -- looking at risk and risk reduction."

The sooner you pick your broker the better, he said. It gives the broker more time to determine insurance needs, write up proposals for underwriters and collect multiple quotes.

But, with all the other districts seeking insurance at the same time, "it's better we get in sooner when all the underwriters are still hungry than later when they are not as hungry," Welch said.

The district will start advertising in the newspaper and have two weeks to collect proposals under the agreed timeline. An evaluation committee, which would include a board member, will look at the proposals and interview brokers. The board should have a recommendation by the April 18 meeting, Welch said.

"From the contacts we've been having, I think you will have several strong, viable candidates. The hard part will be deciding which is the best of the strong candidates," he said.

The selected broker will make recommendations to the board by the May 9 regular meeting.

School safety upgrades

Over the past several years, the county school district has been augmenting security in all its schools, architect Tony Thomas told the board.

However, since the Sandy Hook, Conn., school shooting in December, the department of education has issued a mandate to all districts to ramp up security measures, Thomas said, many of which Madison County was already following. But, the local district still will have to make some changes to four schools.

The measures and their costs are: updating security vestibules at Mayfield Elementary, $6,895; Waco Elementary, $4.847; Foley Middle, $5,425; and Clark-Moores Middle, $9,940.

To enter the school, "You would have to come in and stop and present yourself in a locked vestibule to someone who would make a decision as to whether or not to let you in the school," Thomas said.

For example, at Clark-Moores, a visitor must push a buzzer to enter, but the office staff have little interaction with the visitor, who they can only see through a camera monitor, he said.

District receives unexpected funds

Two one-time receipt of funds came in during March that will "significantly impact our situation," Frazier said.

The state conducted a five-year audit on a utility company and the school district received $664,000 in back-pay utility taxes, she said.

The district also received $159,000 in Medicaid back-pay from 2010-11 school year claims, she said.

These numbers will be reflected in May's tentative budget.

"Thanks for bringing up the good news," said board chair Mona Isaacs.

In other business:

The board moved to revise the 2012-13 school calendar so that the last day of school for students is May 24 instead of May 23 to make up for time missed during the state basketball tournament, said Randy Neeley, director of pupil personnel.

May 28-30 will be planning days to make up for three weather days and will allow teachers and staff to meet their contractual obligations, he said.

Minimum attendance required by the Kentucky Department of Education is 170 six-hour days or 1,062 hours.

"We will actually be at 174 days and 1,073 hours," Neeley said.

During his superintendent report, Floyd introduced new district technology coordinator Bob Moore.

He also spoke about Senate Bill 97, which will allow school districts to raise the dropout age to 18 on a voluntary basis. Once 55 percent of the districts have done so, it would become mandatory for all other districts to follow within four years.

Madison County Schools had only six dropouts last year, the superintendent said.

"I'd like to ask our board to consider being one of the first school districts in the state to say that we want to adopt an 18-year compulsory (attendance age for dropouts). That's my personal stance on the issue," Isaacs said.

At the end of the meeting, Isaacs made a motion to adjourn by singing "Happy Birthday" to Floyd, who turned 50 on Thursday.

Crystal Wylie can be reached at cwylie@richmondregister.com or 623-1669, Ext. 6696.

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