From KELOland, something I’d heard about over the course of the last decade finally happened – the great insurance death spiral that is the Associated School Boards Insurance plan finally came to greater light – and school districts are now having to pay the piper for not adequately funding the insurance pool that many of them are part of:
How would you feel about a $13.5 million bill that you didn’t even know you had?
School districts across South Dakota are in that situation. 53 districts in a health care insurance pool to cover their employees found the fund was millions of dollars in debt last year. Now the schools have to pay it back.
Since public schools are taxpayer funded that means, in part, you’ll be paying it back too.
and..
The fund is managed by the Associated School Boards of South Dakota, a non-profit organization out of Pierre. It gets paid nearly $1.5 million a year to manage several trusts, including the health insurance fund for many school districts.
and..
Over the last decade, the South Dakota Health Benefits fund has plunged deeper and deeper into the red. In 2005, it was $1.4 million in debt. And last year, after the first full audit of the fund, that debt added up to $13.6 million.
Nonprofit? That’s just a tax classification. Lots of people in the education blob make oodles of profit mismanaging tax dollars. The $13.5 million shortfall is just business as usual in the public sector. Can’t wait to see how the annual $100 million from the extra half-penny gets frittered away.
The central question: How did the Associated School Boards mess this up for the past 10 years and nobody called them on it? This wasn’t a surprise to any of them. So which is, incompetence or fraud?
CORREX last sentence: “So which is it, incompetence or fraud?”
fraud.
Tara, I’m inclined to see both at play. Incompetence in overpromising on returns from investments, and fraud in hiding that fact. But I like the comment below, too: “They probably got a bonus.”
“The fund is managed by the Associated School Boards of South Dakota, a non-profit organization out of Pierre. It gets paid nearly $1.5 million a year to manage several trusts, including the health insurance fund for many school districts.”
Obviously, they’re overpaid. If they knew about it, and failed to take appropriate action, it’s not incompetence.
they probably got a bonus
I think there’s a former legislator that they let go, that needs to explain this
Having been involved as an insured, you are going in the right direction Mr. Schoenbeck.
I think he “retired” as opposed to being get let go.
What legislator was that?
Maybe it’s Schoenbeck himself !
The fact the liability is concentrated in just a few school districts, it could be related to how the self-insurance pool is set-up and these schools had claims which exceeded actuarial norms.
If I’m correct, it isn’t fraud but allowing the deficit to get so big without earlier corrective action was let’s say “unwise.”
The coverage and rates were terrible because of the pool. It was like Obamacare on steroids. The ASBSD should be dissolved. It charges school districts for garbage services. Here is another scandal: employment services. The ASBSD embargoes free state job services involving school district employment positions; consequently, they can charge school districts hundreds and thousands of dollars each to post listings on their website, which looks like a webpage from 1996. Pat, you could quit your day job and charge school districts half of ASBSD’s rate for the same “job services.”
Question: Is there anything that could have been done by the Legislature/Executive Branch without infringing on local control?
I don’t know that State Government had anything to do with this. This was a group of school districts that thought they could do better than the marketplace.
I just bet you they come whining for more money and another tax increase.
Self insured plans can work but a government pool isn’t in my opinion a wise risk vs reward for us as tax payers. Fully insured plans are known risks. With multiple options in the group market I can’t believe this decision was made. Getting into self insured plans is easy, getting out can be expensive and difficult.
Who is in charge of this fiasco?
Dr. Wade Pogony
Pat,
Exactly. When it sounds to good to be true, it is usually too good to be true. On the surface, it appears some districts chose to hold more self-funded risk and they got bit.
Malcolm McKillop used to manage the insurance pool.