The Floyd County school system faces yet another fiscal challenge, following an assessment by the Kentucky Department of Insurance, which affixed a more than $1 million bill on the school district.
In January, the Kentucky School Board Insurance Trust (KSBIT) sent out a memo to its partners stating that the group had incurred significant deficits to its worker’s compensation self-insurance pool and the liability self-insurance pool. The deficits are expected to be $50 million to $60 million. Since January, KSBIT has no longer accepted any new or renewed business.
According to KSBIT officials, despite taking action to reduce the deficits, such as cutting operating expenses, attempting to rebuild market share, shift to a managed care model and increasing premiums sharply, deficits have continued to grow with escalating claims costs and departing districts.
In an effort to remove the deficit, KSBIT was assessed by the Kentucky Department of Insurance, creating a plan which would force all previous and currently insured members to make a payment based on the premiums paid, number of years of deficit participation, and the projected cost of claims in each pool by each member as of June 30, 2012.
Floyd County finds itself with the seventh-highest bill on the list, with a staggering total liability estimate of $1,055, 904.
“Well, obviously, this is just another significant financial impact on the district,” said Floyd County Supt. Henry Webb. “We don’t think that’s going to be the final number, but obviously it’s still going to be a big number.
“It’s another major cut on top of everything we’re doing fiscally.”
According to the memo, “KSBIT was created in 1978 to provide insurance coverage through nonprofit self-insured pools which allowed school districts, colleges, and universities to combine resources and while sharing the risks.”
Webb said Floyd County has been a member virtually non-stop since the program began, and that is one of the reasons why the district finds itself assessed so high.
“There are only 35 to 45 districts left in KSBIT, we’ve never left them, we’re still with them,” said Webb. “A lot of the school districts have left them.”
Webb says that Floyd County is also one of the biggest school districts in the state, and that in the past they have had multiple issues with workers comp. “Our overall size and past history are the reasons why we’re up there. We’re a pretty big district.
According to Webb, he believes Floyd County schools will be able to weather this fiscal storm, like it has others.
“We’re still in okay shape, because we’ve been really fiscally conservative. We just got to wait to see what the final number is. It could be as low as $35,000 a year, but obviously we don’t have enough money to make a lump sum payment.”
Fayette County topped the list with an assessment of nearly $3 million. Two of Floyd County’s neighbors, Pike and Knott, were fifth and sixth respectively, with marginally higher assessments.