In the midst of all the expected fiscal challenges facing Harlan County Schools in the coming year, there’s also an old debt that could wind up costing the district nearly half a million dollars.
This was one of several items the board of education discussed during the regular monthly meeting Monday evening.
Several months ago, the Kentucky School Boards Insurance Trust (KSBIT) informed its members that deficits existed in both its workers’ compensation and liability pools. KSBIT also told school leaders the local districts would be responsible for the costs of settling the accounts that applied to them.
Despite the fact the county school district has not been a member of KSBIT for at least 16 years, the cost of covering existing and potential claims remains an issue for the funds, as well as recovering additional premium payments that were apparently inadequate when originally issued.
The KSBIT Board of Trustees met in May and considered two options — hiring an administrator to manage the claims or entering into a transaction with a reinsurer that would effectively dissolve the trust.
The trustees contacted school boards across the state earlier this month requesting their input on the decision, though the KSBIT board will make the final decision subject to approval by the Kentucky Department of Insurance.
However they decide, Board Attorney Johnnie Turner noted the local district will be responsible for the cost of their portion because of the way contracts with KSBIT were worded, allowing for claims that applied to years covered by the trust to still be liable even though the district is no longer a member.
“Back then they had ‘lifetime awards’ (in the workers’ compensation system),” Turner said. That option was eliminated during the administration of Gov. Paul Patton when the state’s entire workers’ compensation system was revamped.
“Basically, they are asking school boards if they want to take the risk and stay in it or sell it and be out of it,” said Superintendent Mike Howard.
If the trust opts for the reinsurance plan, it is estimated the district would have to pay $458,000. Alternately, if the trust chooses to hire an administrator and continue to manage the plan themselves, the debt to Harlan County might only be as high as $461,000 with a best estimate of $364,000, but the liability would remain unknown as costs could rise based on claims that could still be filed in the future. Even the most current estimates are subject to change, trust officials say.
Turner said current discussion led him to believe the state would look to issue bonds to pay the debt and then dissolve the trust, but that was speculation at this point.
“Well, we’re definitely going to have to pay it,” said Chairman Gary Farmer. “You can’t get rid of it.”
Using the financing options available to school districts, the first assessment payment could be deferred until the 2014-15 fiscal year.
With what they believed were no good options available, the board chose not to respond to the trustees’ request for input on the decision.
Howard announced the selection of Edna Burkhart as the new principal of Harlan County High School. She was hired earlier Monday by the school’s site-based decision making council. Howard, who participated in the candidate interviews, said the council chose from a group of seven applicants.
Howard also told the board that new principals would soon be hired for Green Hills Elementary, James A. Cawood Elementary and North Evarts Elementary.
Interviews are currently being conducted at Green Hills and JACES, with 19 applicants up for the position at JACES.
The Evarts principal position has just recently been posted, he said.
In other personnel action, Howard reported the district had received three retirements and four placements of certified staff, while there had also been three employments, one resignation and two transfers among classified staff.
In other action, the board:
• Again discussed the status of plans to complete storm drainage projects at Rosspoint and Cumberland, maintenance work at Wallins and outdoor cleanup at the high school.
• Approved payment of claims totaling $461.130.88;
• Approved the annual Assurances Document;
• Declared as surplus with no monetary value two refrigerators in the Career and Technical Education foods department at HCHS;
• Approved a medical leave of absence for a teacher;
• Approved a continued medical leave for a teacher;
• Approved an out of state trip to Lincoln Memorial University for the high school’s 21st Century Program participants;
• Declared 30 GX620 computers as surplus with no monetary value;
• Approved the Workers’ Compensation Expenditure Report for May 2013;
• Approved participation in and application to the Permanent Agreement Addendum for at-risk students to receive after-school meals and snacks in the Child and Adult Care Food Program;
• Declared as surplus with no monetary value a cart, metal table, aluminum pans, cutter/divider, large sifter and vegetable shredder at Green Hills and a fax machine at Rosspoint;
• Approved applying for the “Pathway to Financial Success” grant by Discover;
• Approved the 2013-14 salary scale schedules;
• Approved the membership agreement with the Kentucky Valley Educational Cooperative for 2013-14;
• Approved bids for pumping sewage plants, grease traps and port-o-johns for 2013-14 school year;
• Accepted bids for electrical supplies for 2013-2014 school year;
• Accepted bids for paint and paint supplies for 2013-14 school year;
• Approved bids for gym floor screening and recoating for 2013-14 school year;
• Accepted bids for maintenance and custodial supplies for 2013-14 school year;
• Approved an insurance quote from Liberty Mutual Insurance for property, general liability, inland marine, automobile and umbrella coverage at $391,256;
• Agreed to a special meeting on or soon after June 25 to approve raising the dropout age to be eligible for a $10,000 state grant;
• Approved the second reading of annual policy updates for the Kentucky School Boards Association;
• Approved the United Mine Workers contract with classified staff that extends the existing contract’s terms through June 30, 2016.