Debt of over $300,000 in legal ‘limbo’

Last updated: June 18. 2014 2:38PM - 544 Views
By Mark Bell Contributing Writer



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Harlan County Schools could wind up paying over a quarter of a million dollars due to the failure of an insurance trust fund they have not been involved with for over 15 years.


During Tuesday night’s regular monthly meeting, Superintendent Mike Howard and Chairman Gary Farmer updated the board members on a situation that has been in flux for over 18 months.


In February 2013, the board first discussed the collapse of the Kentucky School Boards Insurance Trust (KSBIT). At that time it was feared the failure might wind up costing the district as much as a half million dollars even though they had not been a participant in the trust since 1997.


For years KSBIT provided low-cost insurance to most of the state’s school districts for worker’s compensation and property liability. When debts accumulated in the range of $60 million, the trust’s board and the Kentucky League of Cities, which operated the trust, chose to dissolve.


The original plan was for the debt to be resolved by school district bonds, based on the amount each district owed. The formula to determine what each district owed took some months to calculate.


In the meantime, the commissioner of the Kentucky Department of Insurance sued the KSBIT board and the League of Cities over the method used to calculate the debts. The hearing was held in Franklin Circuit Court in March and the court’s decision was released on May 13.


According to the ruling, the county schools owe $293,718 for worker’s compensation claims filed under the trust from 1990-1997. The district also owes $11,659 in property liability from that same time period.


“Every time they talk about this the cost keeps going down,” Howard commented, noting the board may still have the option to sell bonds to cover the debt.


However, according to board attorney Johnnie Turner, the situation is still unresolved as the decision is bound to be appealed and it is unknown how long the board may have to wait before needing to make a decision.


“Everything is still in limbo,” Turner said.


In other action, the board approved the first reading of an amendment to policies covering substitute teachers and employees’ insurance for both certified and classified staff.


The changes are to address new regulations requiring health insurance and how those affect “variable part-time” employees.


The scheduled work time for these employees will now need to be pre-approved and limited to no more than 129 hours per month. The policy becomes effective after the second reading, which is scheduled for July and in time for the 2014-15 school year beginning in August.


The board also approved Howard’s plan to provide full-time employees with two personal days for the coming school year. This would be in addition to the 10 sick days permitted.


The board accepted the superintendent’s employment report that included seven new hires in classified positions, three classified retirements, three certified staff “call-backs,” and one certified retirement.


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