Superintendent’s secret life insurance policy leaves Pikeville school board divided

Lexington Herald-Leader (KY)

April 18-- Apr. 18--PIKEVILLE -- More than 10 years ago, the Pikeville Independent Schools system cut a $154,000 check to pay for a clandestine, million-dollar life insurance policy for the district's superintendent.

The life insurance policy was never publicly discussed or voted on at the time. No mention of it exists in the board's meeting minutes and few records of the policy exist today.

Now, current board members are investigating. Their inquires have left the five-member school board divided, with one member threatening to resign this week.

Neal Smith, an attorney who is acting as a spokesman for board members investigating Superintendent Jerry Green, said the insurance policy was "extremely illegal from start to finish," and that "at the very minimum, that policy should be surrendered to the board."

On Tuesday, the board passed a motion allowing two members, Ashley Brown and Brittany Ratliff, to retain Smith "to assist in the investigation of suspected improprieties relative to monies to or on behalf of a school administrator."

Smith works for the competing Pike County Board of Education, where he is the board's attorney.

The controversy stems from a life insurance policy given to Green in 2008. Green, one of the highest-paid superintendents in Kentucky at an annual salary of $215,000, has held the position for 17 years.

Former school board member Ann Carty said questions about the policy are simply an attempt to undermine Green as part of a personal vendetta.

"They have dug and dug and dug to find something to get rid of this man," Carty said. "(Green) is so honest, he is so moral, he is a man of such integrity, and no matter how this turns out, they have cast all of the suspicion on this man."

Current board member Kevin Pugh also criticized the investigation, and threatened to resign during a board meeting this week.

"I can't support it, I won't be a part of it," Pugh said. "It is not our job to investigate activities of prior boards."

Few records about the policy exist and the board chairman at the time, Tom Hartsock, declined to comment for this story.

Records show that during a regular school board meeting in July 2008, the district's five board members went into closed session and completed Green's annual evaluation. Then, on August 19, the district cut a $154,000 check to Monumental Life Insurance Company. During a regular board meeting the same day, Hartsock resigned, and the district hired his daughter as an instructional assistant.

Hartsock's daughter, Amanda Hartsock, also declined to comment.

In September 2008, board attorney Max Thompson wrote a letter to Green saying the board had, during the July meeting, "agreed to pay for a One Million Dollar Term Life Insurance Policy or pay the equivalent of a term policy premium towards a Whole Life Policy." That letter was dated about a month after the district had already written the check to Monumental Insurance.

Smith alleges that multiple school district officials seemed to benefit personally from this deal: Green received the life insurance policy, which he could cash out at any time, even after his term as superintendent; Hartsock's daughter got a job, which, according to her contract, paid an annual salary of about $14,000; and the husband of the district's finance officer, Denise Clark, may have also benefited -- he worked as a manager at Monumental Life Insurance.

Clark declined to comment for this story.

"I don't know if there's a conspiracy there, but there seems to be three or four people in a closed circle there who were clearly enriched, and it was all done illegally," Smith said.

Smith contends the board could not legally approve additional benefits to the superintendent without voting on it in open session. Because the district paid for the policy without any public vote or discussion, the policy is rooted in a violation of the Open Meetings Act, Smith alleges.

Green declined to comment on whether the board complied with the state's open meetings law when it awarded the policy, but he said there was no conspiracy to have multiple district officials benefit.

Green also declined to comment on whether he or any board members acted unethically in awarding or accepting the policy.

"We're gonna try and do the best job we can to move students forward each day, and make this school district better tomorrow than it was today," Green said.

One board member has asked Green to release a copy of the policy, but Green declined to do so, Smith said.

Green's policy is a whole-life policy, which allows his family to collect on the policy even after his employment with the district ends, Smith said. Green could also "cash out" the policy at any time, collecting the $154,000 plus any interest accrued since it was awarded, Smith said.

"To me it's no different if they would have bought him a new Maserati, paid $154,000 for it and parked it in his driveway," Smith said.

School boards sometimes award term-life insurance policies to superintendents, which can only be collected if the beneficiary dies during his or her employment. Smith said a typical term insurance policy would have cost the district about $700 a year -- far less than the $154,000 paid for Green's policy.

According to state records, Green is the fourth-highest paid superintendent in the state, behind superintendents in three of the state's largest districts in Jefferson, Fayette and Boone counties. About 1,200 students attend two schools operated by Pikeville Independent Schools, which regularly performs above the state average for ACT scores and general academic performance.

Superintendent contracts usually contain information about the benefits they receive, according to a 2013 report from the Legislative Research Commission's Office of Education Accountability. Common benefits for superintendents include life, health and dental insurance, according to the report.

Green's contract does not mention his life insurance policy.

Of the 173 superintendents in the state, 36 had some life insurance benefit as of 2012, according to data from the Kentucky Department of Education. Green, though, is listed as receiving no life insurance benefit.

Green said he notified state regulators of the insurance policy in 2012, when asked to report his compensation and benefits package.

The district handed over copies of his contracts, his W-2 form, and the letter Thompson wrote to Green in September 2008. That letter, however, does not provide any details of the policy.

Thompson, who remains the board attorney for Pikeville Independent Schools, told the Herald-Leader that board members gave the policy to Green because "other districts were attempting to hire him away, so they wanted to increase his overall compensation package."

"That was their goal," Thompson said. "They were satisfied with his performance, so they wanted to keep him."

At the time, school districts were allowed to perform superintendent evaluations in closed session, but once the board made the decision to give him the life insurance policy "the proper way to do that would have been to vote on that in open session," Thompson said.

Amye Bensenhaver, an attorney who specialized in open records and open meetings laws during a 25-year career in the Kentucky Office of the Attorney General, said the board's actions are "indicative of some serious problems."

"I'd be sweating it a little if I was them -- someone could ask that it be rescinded," Bensenhaver said.

Bensenhaver said awarding a benefit to a school administrator is never permissible in closed session, and that some case law supports the idea of rescinding actions taken in secret by school boards.

"Illegal actions taken in closed session can and should be voided," she said.

During a board meeting this week, Tom Hartsock, the former board chairman, criticized current board members for raising questions about the policy. He said previous board members had no intention of keeping the policy secret.

"It may appear that something is not in the minutes ... (but) you don't know that we didn't vote on that. You don't know what our intention was," Hartsock said. "Why would we hide something in closed session, and then instruct the board attorney to write a letter on our behalf?"

"If I was going to keep something quiet and not exposed, we certainly wouldn't have him write a letter," Hartsock said.

Brown, one of the board members pushing for the investigation, said if the board does not find any evidence of wrongdoing, then the board will drop its investigation.

In the meantime, she said it deserves to be investigated.

"If something doesn't sit well with me ethically, morally, any of those things, it also deserves to be looked at," Brown said. "If we don't shed light on some of the things that have gone on, then we're perpetuating the same behavior, and our kids are watching."

Will Wright is a corps member with Report for America, a national service program made possible in rural Appalachia with support from the Galloway Family Foundation. Reach him at 859-270-9760, @HLWright

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