Several area school districts have been hit with big bills the past two weeks to cover insurance claims against the failed Kentucky School Boards Insurance Trust.
KSBIT, which provided workers' compensation and property and liability insurance for school districts across the state, became insolvent and shut down in June 2013, leaving a $60 million debt for participating districts. Any school district that was a policy holder from 1990 to 2011 is subject to an assessment to pay the deficit.
Even though McCracken County Public Schools hasn't purchased insurance through the trust for about a decade, it received an invoice for $122,032 for the workers' compensation portion of the KSBIT assessment, according to Johnna DeJarnett, assistant superintendent.
Paducah Independent Schools will have to pay its share - $210,834 - for the workers' compensation program.
Neither McCracken County nor Paducah Independent schools has yet to learn how much it owes for property and liability claims.
The added expense follows an annual state-mandated pay raise, which has the school district tightening its belt, said Paducah Superintendent Donald Shively.
"We're used to things being extremely tight and having to be as efficient as possible as a district without disrupting services to our students," Shively said.
He feels the district is in good shape to absorb the payment. However, citizens could see an increase in local taxes.
"The KSBIT assessment and the annual state-mandated 1 and 2 percent pay raises, as well as our contributions to state retirement, all go into the decisions our board makes in regards to the local tax levies. If there's an adjustment in the local tax levy, I just hope our community understands what's going on economically for our schools at this time," Shively said.
Hickman County Schools received bills for both funds in the amount of $154,554. Superintendent Casey Henderson said it will take board discussion to devise a plan for payment.
"Right now, we've just received this information. At the August meeting, I plan to inform the board of all the options," Henderson said. "We knew that the assessment would be coming, probably this year, but we didn't know for how much."
It's a tough pill to swallow, even though officials knew it was coming, said Jay Simmons, superintendent of Carlisle County Schools.
"Especially for a small district, it's really tough," he said. "We had worst case and best case (estimates), but the numbers were closer to worse case but not as bad."
Carlisle County owes $234,275 for workers' compensation and $56,671 for property and liability claims.
Simmons said it could mean the district will have to cut jobs when leaders know the full impact at the end of the year.
"Many districts have already had to cut jobs; we have. But we have to look at all our options," he said.
Superintendent Tamara Smith at Fulton Independent Schools is also concerned about the impact on personnel.
Smith said the district will look for "anything we can possibly cut" to cover a total bill of $72,000, but personnel cuts are not out of the question.
"It's something we didn't plan for in our budget, and it's a hard hit for our district. That (amount) is at least two certified staff," Smith said.
Graves County Schools owes $366,568 for workers' compensation and $225,549 for property and liability claims. Calloway County owes $283,00 and $155,000, respectively.
Ballard County owes $186,262 for workers' compensation claims and Murray Independent owes $52,398. Neither has seen bills for property and liability claims.
School districts will not be required to make full payments this year.
The assessment asks for 25 percent of the workers' compensation obligation by Aug. 31. The remaining balance is to be paid in annual, equal payments over six years, due Aug. 31.
Districts are being asked to pay for property and liability debt with 40 percent upfront by Sept. 15. The remaining balance is to be paid in annual, equal payments over two years.
Otherwise, districts must take out a bond for the total or rely on any existing contingency funds.
"This is a lot of money that we could do a lot for students with," said Calloway County Superintendent Steve Hoskins. "We paid all those premiums all those years and here we are. This is big money; it's not trivial at all."
Staff writers Genevieve Postlethwait and Becca Schimmel contributed to this article.