Print

Email story

Comment

Email editor

Insurance bills hit schools hard

Insurers won't cover more than $50-million in losses. That's trouble if a big storm strikes.

By DAVID DeCAMP
Published December 21, 2006

LAND O'LAKES - Big hikes in insurance premiums aren't just thinning taxpayers' wallets. They're crimping the public schools' coffers.

The insurance bill for Pasco County schools jumped from $2.8-million last year to $6.7-million this year, even though the amount of coverage dropped from $100-million to $50-million.

Olga Swinson, chief financial officer, said the school district had no choice. Insurers would write policies risking no more than $50-million this year, even though schools are lower-risk buildings often built strong enough to serve as hurricane shelters, she said.

What happens if the big one hits, causing more than $50-million in damage to Pasco schools?

"That's a question we hopefully don't have to answer," Swinson said.

She said the district would likely rely on federal aid, as Charlotte County did after seven schools were destroyed by Hurricane Charley in 2004. A new elementary school costs $20-million to build, for example. And if the money doesn't come from the federal government, Swinson said, the reconstruction costs could be billed to taxpayers.

The coverage limits mean only 4.45 percent of the $1.1-billion in Pasco schools property is insured.

School districts across the state face the same problem.

Statewide, school districts paid $178-million this year, an 81.5 percent increase over last year's $98-million tab, according to a report from the Florida Association of District School Superintendents.

But the amount of covered property fell 80 percent - from $7.4-billion last year to $1.5-billion this year.

The result: Less than 3 percent of the value of Florida schools is covered. Two years ago, 21 percent of property was insured.

Bill Montford, chief executive officer of the association, wrote in a September letter to the state's insurance reform committee the situation left schools "facing catastrophic increases in property insurance rates."

School Board member Allen Altman, a Farm Bureau insurance area manager, said the sparse insurance coverage means a large storm in a highly populated area could be devastating - and create a big bill for taxpayers to cover.

And Pasco, which has had relatively little hurricane damage, is actually better off than other places, he said.

"What taxpayers need to be aware of, and what our state officials and legislators are becoming aware of ... is the risk we face for a devastating, catastrophic event," Altman said.

The problem is not just higher rates. School districts are building more classrooms, increasing their property values, Montford said. The class size amendment boosted construction, particularly in growing communities.

Pasco, which has 67 schools, opened five of them this year. Five more are due next year.

Schools are not the only places where taxpayers face more insurance costs.

Pasco County government faces a similar dilemma. Its $2.5-million premium was a 156 percent increase. The policy covers $25-million in damage. County officials said in October that anything above that loss would likely be big enough that federal aid would be expected.

Although state lawmakers will have a special session next month to address insurance reform, most of the debate has focused on homeowners insurance. Altman said he's unsure legislators could do much to improve school districts' insurance woes.

He said much of the problem is due to a tight market for reinsurance, which is backup insurance bought by insurers. Plus, the push for homeowner-related reforms is stronger than the outcry among agencies.

David DeCamp can be reached at 727 869-6232 or ddecamp@sptimes.com

[Last modified December 21, 2006, 06:16:36]