The Bell County School district owes nearly $659,369 to the Kentucky School Board Insurance Trust (KSBIT), according to information given to school board members during their monthly meeting.
The cost includes worker’s compensation and general liability costs for the years the district used KSBIT.
School districts across the state are facing payouts to KSBIT for debt acquired by the trust. That debt is more than $60 million.
“You don’t have a choice on whether you get to pay this or not,” said Steve Silcox, the district’s director of finance.
The district signed an agreement years ago that holds school districts liable in cases such as this.
“I think, personally, school districts should sue,” said Jeff Saylor, personnel coordinator. “KSBA (Kentucky School Board Association) should have to answer for what they’ve done.”
The Bell County School District left KSBIT in 2002-2003 because the company continued to increase premiums.
“I am so glad we left it back then,” said Bell Superintendent Yvonne Gilliam. “If we had stayed with it all of these years, (the debt) would be over $1 million.”
“This board is being held liable for something you had nothing to do with, things that were done 30 years ago,” said Gilliam.
KSBIT wants school boards to decide how they want to go about paying the debt by the end of the month. There are two options — runoff and novation.
Under the runoff option, KSBIT will continue to pay all valid claims. Districts will not know what the liability amount will be. Districts may end up having a second assessment.
If no claims go against the district, the amount to pay could be less the expected.
Under the novation option, KSBIT will transfer claims to a large, national A-rated reinsurer to take over the future responsibility for all present and future KSBIT claims. Districts pay a fixed amount.
Silcox said most districts are choosing the novation option because there is a set amount and it is better for budgeting purposes.
KSBIT also wants districts to explain how they are going to pay. There are three options: 10-year payoff, 20-year payoff and capital outlay payoff.
If the board selects the 10-year option, under the $659,369 price, they would pay $70,000 per year. If they choose the 20 year option, they would pay $40,000 per year.
The capital outlay payoff would require the board to pay the entire amount all at once. Gilliam said the board would not be able to do that.
The bonds used to pay off the debt do not go against the district’s bonding capacity.
The board decided to table this matter until they receive more information.
Other items discussed during the finance portion of the meeting included:
■ Attorney invoice;
■ Payment of bills;
■ The Kentucky Educational Technology System’s (KETS) Offer of Assistance one and two;
■ Bond of Depository for 2013-2014.
Reach Anthony Cloud at 606-248-1010, ext. 208, email@example.com