Jul. 16--Rochester Public Schools is facing an increase in the cost of its property and liability insurance premiums, in part due to the COVID-19 pandemic.
John Carlson, executive director of finance for RPS, explained the situation to the Rochester School Board at its Tuesday meeting. According to Carlson, the district's insurance costs are increasing by 69% this year.
"COVID-19 hit and insurers are really nervous right now because they don't know if there's a chance that they will become liable if somebody gets sick in one of our facilities," Carlson said. "Right now, we don't think that could happen, but they're planning for the worst, and so that's driving a lot of uncertainty in the whole insurance market."
In addition to the pandemic, Carlson said insurers began taking the distance to larger metropolitan areas into account as a result of the unrest following the death of George Floyd. However, Carlson said that even before this year, insurers had been hit by a number of natural disasters, which didn't help the situation either.
As a result of that increase, the school district's premium will be $826,000 rather than the roughly $500,000 it had budgeted for. Carlson said the district will have to make a revision to its budget in October to account for the increase.
"That's the best we could do this year," Carlson said of the 69% increase in costs. "We knew we were going to have to plan for an increase, but we did not plan for that level of increase."
Another factor in the increase is the rising value of the school district's facilities. Specifically, there was a 5% increase in coverage, according to data from the district.
In the big picture, the additional insurance cost is a small part of the district's $400 million budget for the coming year. And the cost increase could have been worse. Rochester Public Schools is part of a collection of school districts that pool together to purchase insurance. Together, they were able to negotiate the cost down. Before that, they were looking at a cost increase as high as 105%.
RPS saw reduced insurance premiums the first two years it was in the pool. Premiums fell 8% in 2016 and 4% in 2017. But then premiums rose 10% in 2018 and 12% last year.
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