Hurricanes Deal Deep Blow to Schools’ Finances

Oct. 19--Getting back to normal after a devastating hurricane is long, arduous, and expensive for schools.

In Florida's Panhandle, education leaders have started the strenuous work of cleaning up and repairing schools ravaged by Hurricane Michael earlier this month, but they are also running into a longer-term problem: steep cost estimates that could lead to mounting piles of bills.

In North Carolina, where Hurricane Florence walloped communities across the state and some schools remain closed more than five weeks later, education officials are just now getting a clear picture of the storm's heavy hit to districts' finances and the deep emotional blow to students, teachers, and school communities. Some districts were running into roadblocks with their insurance providers--including the state education agency--over what storm damage would be covered.

New Hanover County, N.C., was one of the hardest-hit regions. There, Superintendent Tim Markley dipped into the district's estimated $15 million surplus to allocate up to $9 million to pay for schools to be cleaned up and readied for students to return. While the district has had no disagreements with its private insurer over flood coverage for four of its schools located in flood zones, its state-provided insurance has been a different story. That policy, Markley said, has a mold exclusion. An insurance adjuster told district officials that cleanup of mold--which was found in nearly all the damaged schools--may not be covered, Markley said.

"Our contention is that the hurricane caused the water damage to the drywall, and it's the water damage that should be covered," Markley said. "The fact that we couldn't come in and deal with the water damage led to the mold."

Markley was also told that the insurance may not cover damages caused by a leaky roof if the leak existed before the storm.

"We are going to make the claims and see what gets rejected," said Markley, who has discussed the hurdles with State Superintendent of Public Instruction Mark Johnson and elected officials.

Reserve Funds for Emergencies

North Carolina lawmakers approved a measure last week to send millions of dollars to schools as part of a recovery package. But some schools were already haggling with the North Carolina Department of Public Instruction--an insurer of many districts--over what it would pay for. Whether the agency's policies would pay for mold damage, HVAC failures, and some roof damage was still being negotiated.

In the meantime, districts are tapping surplus funds to make speedy repairs. They hope to recoup the money later, either through reimbursements from insurance or from the Federal Emergency Management Agency, FEMA, which requires painstaking documentation and can take years to materialize.

The saving grace for many districts could be whether they have cash on hand to hire contractors and prevent small problems from morphing into bigger, more expensive ones, said David Stephens, the executive director of risk management for the Florida School Boards Insurance Trust, which provides insurance to several of the state's districts.

While larger districts may have a big fund balance to draw on and the wherewithal to have contractors lined up ahead of a storm, smaller districts may not have had the opportunity to build up a reserve to cover this magnitude of expenses.

"The initial problem a lot of the districts are going to have is actually finding people to do the work," Stephens said. "If they don't have pre-positioned contracts, where you'll have some of the large companies come in and start the process of drying out the facilities, rebuilding them ... then you are going to run into a lot of secondary problems: mold, mildew, those kinds of things."

But building up such a rainy day fund can be difficult as reserves are often looked upon as luxuries--dollars that should be used to reduce property taxes or increase teachers' salaries, said Andrea Messina, the executive director of the Florida School Boards Association who was on Florida's Charlotte County school board when Hurricane Charley hit in 2004.

"This is one of the reasons why it is crucial for districts to have more than a 2 or 3 percent fund balance that's unappropriated," Messina said. "School districts never know when events like this are going to happen."

"All of those extra dollars are eyed by any group or line item that needs additional funds, when in fact districts need to save a certain amount of money for things like this," she said.

In Florida, districts insured through the Florida School Boards Insurance Trust can tap into a reserve fund that the trust keeps for when districts face catastrophic events. That gives schools almost immediate access to cash to hire contractors, who are lined up ahead of time by the trust, Stephens said.

Worrisome Enrollment Losses

Back in North Carolina, districts are beginning to tally deep enrollment losses, as the numbers of students and families made homeless by Florence surge.

In New Bern, N.C., 117 of the 406 students at Oaks Road Academy were absent on the first day students returned to school after the storm, and the numbers have gotten worse, Superintendent Meghan Doyle said.

Rebuilding can be overwhelming in a place where both residents and local businesses suffer significant losses, Messina said.

"What we typically see after these events is that the family will relocate to some other state, region, or city with family members with whom they can stay before they can get on their feet," she said. "It may take a few years before they get back to this area."

After Hurricane Charley, many Charlotte County families didn't return, and the district ended up with about 2,000 fewer students than it anticipated over time, Messina said.

Enrollment drops can have financial consequences for districts because state funding is often based in part on the numbers of students who attend. (In North Carolina, the state department of public instruction has said that it will use the average daily membership over the first four months of the school year, rather than the first two months to divvy up the state's $10 billion in K-12 funding.)

'Multimillion Dollar' Damages

Some Florida school officials, who are still in the earlier stages of inspecting storm damage, did not even want to begin to guess how much it will cost or how they will pay for what's predicted to be the most expensive storm in the state's history.

Florida Education Commissioner Pam Stewart, who visited with school officials in three counties last week, said that expenses from Hurricane Michael were likely to be "historic," like the storm itself.

Jim Norton, the superintendent of the Gulf County school district, a school system of about 1,900 students, estimated "multimillion dollar" in storm damages. The county's four schools were not piles of rubble, but were all affected, he said.

Norton is hoping to open schools this week. Schools in the northern part of the county still did not have power last week, while others in the southern end were being used as shelters and staging areas for utility companies, FEMA workers, and other disaster relief workers, he said.

Norton marveled that one of the schools, Port St. Joe Elementary, which was built in the 1950s as a high school, withstood the storm's ferocious winds, which registered up to 150 miles an hour in some places.

"It is built like the rock, and it really weathered the storm," he said. "It was spared. I don't know how; I don't know why."

But the wider community was just devastated, said Norton, who lost some cottages and whose furniture from his home ended up in a neighbor's yard.

Among the hardest-hit areas was Mexico Beach, whose students attend Gulf County schools in the town of Port St. Joe.

Many of those students are connected to the Tyndall Air Force Base--which took a heavy hit in the storm--and teachers who live in Mexico Beach have lost their homes, Norton said. And he predicts that will lead to the loss of students when schools finally reopen.

"We will have school up and [going] because we have people who want to see their community rise again," Norton said.

The Bay County district, which includes Panama City, did not give a timeline for opening, but said that it was working on a plan that will likely include students from badly damaged schools sharing space at other campuses.

Published in Print: October 24, 2018, as Hurricanes' Financial Hit to Carolina, Florida Schools Is Deep

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