Madison County Schools to receive $125,000 refund

March 23-- Mar. 23--In mid-January of 2013, 174 school districts received a memo that the Kentucky School Boards Insurance Trust was dissolving, and member districts would be left with the bill, including Madison County, who was expected to pay an estimated $1.1 million at the time.

The memo sent the Madison County School Board of Education preparing for the worst and scrambling to make plans for the financial fallout from the event.

In February 2013, Madison County received a "high-end" estimate that it would be liable for more than $1 million, representing $730,969 for worker's compensation and $313,230 for liability losses.

Districts were being offered a 10- or a 20-year financing option for their assessed amounts, which was 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.

Although districts were given the option to make payments in yearly installments, the school board sought to budget more than $1 million from the general fund to pay the full amount.

KSBIT operated a risk pool, low-cost insurance program to cover workmen's compensation, property and liability insurance and other services to member districts. In 2010, the Kentucky League of Cities took over administration of the fund and put in $8 million to cover the deficits accrued to that time.

According to a previous Register story, the Kentucky League of Cities Executive Director Jonathan Steiner said the liabilities and deficits go back to 1990. KLC tried to cut costs, reduce fees to agents and charge higher premiums, but actuaries for KLC determined what was thought to be a $6 million deficit in 2010 was actually $16 million. It then grew to $28 million, Steiner said. Ultimately, KSBIT left a deficit of something in the neighborhood of $50 million for members to be responsible for.

In 2014, Kentucky Employers' Mutual Fund Insurance (KEMI) accepted $37 million in claims liabilities for KSBIT, providing commonwealth school districts with the "...softest possible landing for Kentucky school districts and injured workers," by the Kentucky Department of Insurance.

On March 19, 2019, KEMI sent out a press release stating that KEMI will be refunding $4.77 million back to former KSBIT policyholders.

Madison County Schools is expected to receive a $124,923.34 refund check.

According to MCS Community Education Director Erin Stewart, the district plans to use the refund amount to offset current year expenditures.

"Any additional refunds will be used in the same way unless the Board of Education votes to dedicate any future funds to a specific project," Stewart said. "To my knowledge, they do not have any plans to do that."

The refund is a result of effective management by KEMI to control claim costs, according to a news release by KEMI.

"I am pleased that KEMI is in the position to provide this refund to KSBIT, and I'm proud of the work by KEMI employees who made it possible," said Brandon Voelker, chairman of KEMI's board of directors. "KEMI provided improved service and savings to school districts throughout Kentucky at a time when no other insurance company was willing to offer a competitive solution, and I believe KEMI's success with KSBIT demonstrates why the company was created in the first place."

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