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Finance report: district running under budget; staff flags 1% wind/hail deductible and management-fund role
Summary
The business officer reported the district is running well against budget but highlighted a new 1% wind/hail deductible from EMC Insurance and defended the management fund balance as necessary to cover large but rare costs; staff said districts are discussing pooled self-insurance alternatives.
Lewis Central’s finance report on May 19 showed the district operating under budget for the fiscal year but raised concern about insurance changes that could affect future spending.
Andrea, a district finance staff member, told the board the published general fund budget is about $41.98 million and that the district expects to be under that figure. She said EMC Insurance — the carrier used by many Iowa school districts — has moved to a 1% deductible for wind and hail on building policies. She explained the deductible is calculated as 1% of each building’s insured value and that a large claim could therefore be substantial.
Board members asked whether other carriers might offer better terms and whether districts were seeking alternatives. Andrea said most large insurers will not cover school districts and that only a small set of carriers are in the market in Iowa; she said some districts are exploring pooling to self-insure the 1% layer among participating districts to reduce the burden on any single district.
Andrea also explained the purpose of the management fund balance: it is legally restricted and used to pay rare but large expenses such as lawsuits or large insurance deductibles without drawing from the general fund. She said legislative proposals to restrict management-fund use have been discussed at the state level and that staff will continue to explain the fund’s role to legislators.
On capital funds, staff said the district is watching premiums and summer capital-work invoices and expects to close the year with healthy balances in management and capital accounts.
The board received the report; staff said they will continue to monitor the insurance market and report back on any feasible pooled self-insurance options.
