, Corbin, KY

June 14, 2013

Deficit assessment tops $900,000 for Whitley County School District

The Times-Tribune

CORBIN — By John L. Ross / Staff Writer

Whitley County Board of Education members learned Thursday their assessed share of a deficit accumulated by the Kentucky School Boards Insurance Trust (KSBIT) is much higher than originally estimated.

KSBIT, which oversaw a risk pool, low-cost insurance program to cover workman’s compensation, property and liability insurance and other services to its members, accumulated a $28 million deficit, which was announced earlier this year.

Member school districts, including Whitley County Schools, learned they will have to make up the difference.

KSBIT sent an unsigned memo to its members explaining the executive board decision to assess between $50 and $60 million to its member body to make up the deficit.

Deputy Superintendent Paula Trickett explained to board members the original estimate of Whitley County School’s assessment was approximately $700,000.

Board members heard that figure during their regular May meeting.

But on Thursday, Trickett said the school system’s assessment could be as much as $989,616.

She described two options the board could review to fulfill their assessment obligation.

The first option she described as a “novation,” which means a one-time assessment that would end the school system’s obligation to help with KSBIT’s deficit.

That option’s price tag is approximately $983,499. “It’s a significant increase (over the original estimate),” Trickett said.

The second option she described to board members she called a “runoff” payment option.

Under that option, she said that the best estimate would be approximately $775,000 — but that estimate only has a 55 percent confidence level. The high estimate for the runoff option, which Trickett said has an 80 percent confidence level, is $989,616.

The kicker for the runoff option is it leaves the assessment open-ended, according to Trickett.

Superintendent Scott Paul said the runoff would require a third-party administrator that would remain in place until the end of the deficit-reduction plan — which leaves the chance for future assessments.

“It’s a gamble for us,” said Paul, who recommended the runoff option.

KSBIT’s board of trustees is slated for a special meeting via teleconference in Lexington June 24, according to Board member Delmar Mahan.

“(That’s) when they’ll make the final call,” he said.

Mahan motioned to approve going with the runoff option, with a second from Board chair Larry Lambdin. The board was unanimous with its decision.

In other board business:

— Board members unanimously approved the school employee pay rates for the 2013-2014 school year, and it was noted there were no across-the-board raises included for next year. Board vice-chair J.E. Jones motioned to approve the pay rates, with a second from Brenda Hill.

— The Whitley County Board of Education unanimously approved Bollinger, Inc. as the insurance company used to cover student accidents. It was noted the annual premium cost is $65,650, “the same cost as last year.” Jones motioned to approve Bollinger, with a second from Hill.

— Board members reviewed two quotes concerning various insurance required — fleet, property, liability and worker’s compensation. The quotes were from two companies, Liberty Mutual and Wright Specialty Insurance.

Gerald R. Hignite, with Curneal & Hignite Insurance, was on hand at the meeting Thursday to explain the quotes to the board members. One issue discussed by board members was the inclusion of flood coverage in the policy. Hignite explained the insurance definition of a flood is “the excess runoff of surface water.” The other difference mentioned was a $6,000 difference in the quotes prices. Hignite explained to board members that while Wright has been in business for 25 years, they’ve only been in the business of school system insurance for approximately three years. Liberty, according to Hignite, has more experience in that department.

 “(I’d) feel more comfortable with Liberty,” Paul said.

Mahan motioned to approve the lower bid from Liberty, with a second from Board member Malorie Cooper. The board was unanimous with its decision.

— The board unanimously approved completing BG-4 forms to closeout finished school projects. There were five projects which required this final paperwork — the WCHS soccer field, the WCHS environmental and athletic complex, the renovation for the bus garage, the turning lane for Whitley East, and the partial roof replacement at WCMS.

Lambdin motioned to fill out the paperwork, with a second from Jones.

— The board unanimously approved the $220,235 pay application for CMTA Energy Solutions GESC (Guaranteed Energy Savings Contract) as well as heard a status report from Adam Pierce, with CMTA.

“So far we’ve had cooperative weather,” Pierce said. He explained there were several energy projects close to completion, and all summer projects are expected to be done before the new school year kicks off.

Lambdin made the motion, with a second from Mahan.

— The board also held a closed session at the end of the meeting. Lambdin said the session was to discuss personnel matters. The 20-minute session ended, and reconvened into open session. Lambdin said no decisions were made during the closed session.