Schools switch workers comp carriers; $37K savings expected next year

April 29--After 27 years with the same workers compensation insurance carrier, the Helena Public Schools Board of Trustees broke with tradition at Tuesday night's school board meeting and voted to switch providers.

HPS will switch to PayneWest/Montana State Fund for the coming fiscal year instead of staying with its current carrier Montana Schools Group Insurance Authority, a self-insured workers compensation pool for K-12 school districts operated by the Montana School Boards Association.

The coverage is identical, said school district business manager Kim Harris, so that is not an issue.

The projected minimum savings will be $37,000 the first year, she said.

Any rate increases would be tied to a payroll increase, said the district's consultant James Smith of Insurance Consulting & Education.

State Fund said its rate is guaranteed and this is what it will renew for, he said.

HPS' safety rating is better than the industry average, said Harris, although the district's injury claims rose from 107 in 2014 to 178 in 2015.

PayneWest/Montana State Fund was the sole provider responding to the school district's request for proposals published in January, said Harris.

MSGIA did not submit a bid.

At Tuesday's board meeting, Shawn Bubb, MSGIA director, told the board it had asked the school district for an extension of the bid opening from March to early May to allow it to adopt its new rate factors.

The Helena school district was a founding member of MSGIA 27 years ago, he said, and it has been with it ever since.

"We couldn't develop a credible rate," Bubb said in a follow-up phone interview of why MSGIA asked for the delay.

"We work with 398 school districts," he said, and generate their rates in the first week of May.

The district denied the extension request.

MSGIA could have used HPS' history of claims and losses, Harris explained. HPS data from the three most current years -- 2012-13, 2013-14 and 2014-15 -- is already available.

Those were the data that Montana State Fund used to determine its proposal, she said.

State Fund, which is the largest carrier in the state with 27,570 policies, is offering HPS a 44 percent rate decrease for the coming fiscal year, compared to the district's current rate with MSGIA, according to Harris.

The district has paid about $300,000 annually for the coverage, she said.

This decision is about more than just the money, Harris told the board. It's about keeping workers safe.

Her own family had been seriously affected years ago when her father was badly injured in a preventable workplace accident, she said, which created a financial 180 degree turn for her family.

PayneWest/Montana State Fund has a proven track record in improving safety with Butte Public Schools.

"They were paying considerably more in workers compensation premiums than other similarly situated risks," said Rody Holman, a PayneWest sales executive working with the Butte schools, adding that Butte's been able to decrease its premiums in excess of six figures.

HPS' policy term will be five years, beginning July 1, 2016, with an annual renewal.

PayneWest already handles HPS' property and liability insurance.

The workers compensation RFP is just one of several the HPS did this year to pursue cost savings and better service, said superintendent Kent Kultgen in a follow-up phone call.

It also chose a new school photographer and a natural gas provider.

"I don't believe in not giving everybody a fair shot," said Harris of the bidding. "I believe in a fair process."

Natural gas contract

Currently the school district has two different natural gas contracts, one for the four large schools with the state through June 2017, and the rest of the schools are on a different contract, wrote Harris in an email.

In two years, the contracts will be consolidated with one contractor, Commercial Energy, she said.

In 2017-2018 when the district consolidates all its school meters, it's expected to save $90,000 if the weather is comparable to this year, she wrote. The price will drop from 4.137/dkt to 2.97 for the big schools.

In 2016-2017, the smaller schools will already see a price drop from 3.50 to 2.77/dkt, which should save the district $16,000 if the weather is comparable to this year's.

Reporter Marga Lincoln can be reached at 447-4083 [email protected]

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