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Ky. schools face insurance costs as trust disbands

Roger Alford, Associated Press

LEXINGTON, Ky. (AP) -- Kentucky school districts being walloped with an unexpected bill for some $60 million in past insurance claims are considering bonding to soften the financial blow.

The financially troubled Kentucky School Boards Insurance Trust is going out of business on June 30, forcing school districts across the state to search for new providers of workers compensation, property and liability insurance policies.

And, despite already strained budgets, they also have to find fast cash to cover the cost of the outstanding insurance claims.

"There couldn't be a worse time for this to happen," said Bill Scott, executive director of the Kentucky School Boards Association. "And we're just very, very sorry that the timing was so unfortunate."

School districts are receiving fewer federal dollars, state funding is stagnant, and, in some cases, there have been losses in local revenue. It has all added up to widespread layoffs in recent years.

About 40 percent of the state's 174 school districts participate in the insurance program, but all will share in paying past claims because all have been a part of the program at some point.

The individual shares will likely range from less than $100,000 for some districts to more than $1 million for others. Fayette County, the state's second largest district, is facing a bill that could be somewhere between $1 million and $2 million.

Scott said a proposal being looked at closely calls for the state's school districts to join together to sell bonds that could be repaid over 20 years.

The decision to disband the Kentucky School Boards Insurance Trust was announced publicly Monday in Lexington after leaders in each school district were notified.

The Kentucky School Boards Association had two years ago turned the insurance program over to the Kentucky League of Cities to be administered. KLC Executive Director Jonathan Steiner said Monday a financial review revealed the program had fiscal woes that were worse than first believed, forcing the June 30 shutdown.

Scott said the insurance plan's financial deficit has risen along with the cost of medical care. He said the economic recession and accompanying volatility in the stock market added to its problems.