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Thu May 2, 2013
Insurance Penalties Loom for Kentucky School Districts
Area schools are being hit with hundreds of thousands of dollars in penalties, in the wake of the dissolution of the Kentucky School Boards Insurance Trust, or KSBIT.
The penalty payments are intended to fix a $60 million deficit in KSBIT's worker’s compensation and property and liability pools. The penalty amount is 60 percent based on premiums, and 40 percent based on that school district’s past claims.
The insurance program was attractive to districts due to its low premium costs in worker’s comp and liability coverages.
Marshall County Superintendent Trent Lovett said his district will have to pay more than $300,000 despite opting out of KSBIT in 2003.
"They saw the writing on the wall," Lovett said, referring to his predecessors. "(They said) 'Wait a minute - this is not going to work. Sure, we're saving money right now on our premiums, but whenever it becomes financially unstable, guess who's going to be footing the bill. We are.'"
Graves County Finance Director R.B. Mays said his district will be hit the hardest, with a penalty estimated at more than $700,000. Calloway County Superintendent Kennith Bargo says his district's estimate is $498,000.
The school districts will either have to write a check for the debt, or accept a novation from an outside insurance company in which they assume the debt. KSBIT will shut down on June 30.