Failed Oklahoma School Insurance Coop Seeks Payments

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Some Oklahoma school officials say efforts by a failed school insurance cooperative to collect about $720,000 to pay current and expected claims and debts would create a financial hardship and may be illegal.

The Oklahoma Schools Property/Casualty Cooperative has sent notices to 56 former member schools for amounts ranging from $890.71 to $67,680.32.

Stilwell Public Schools superintendent Geri Gilstrap told The Oklahoman that the $46,031.57 her district has been asked to pay would fund two positions.

“That’s money that could be directly benefiting children instead of just going out the window,” she said, adding that she believes paying the assessments would be illegal.

“We have not belonged to the co-op for a couple years now,” she said, saying districts are not allowed to retroactively pay bills. She said the district has turned the matter over to its attorney.

The cooperative was formed in 2010 by several dozen districts hoping to save money on property and liability insurance premiums while still obtaining coverage, but claims and some schools leaving the cooperative led to financial losses during the first three years of its four years. It has stopped providing coverage and plans to phase itself out of operation.

Another question is whether the districts are being asked to pay debts of other districts, which also would raise legal concerns. Blake Lawrence, attorney for the cooperative, said that’s not happening.

“No school district is being asked to cover the liabilities of another, but rather these liabilities were incurred by the cooperative while the cooperative was actively providing coverage for its members,” Lawrence said.

The Tulsa law firm Rosenstein, Fist & Ringold represents 32 of the school districts on the assessment list, according to attorney and firm member Doug Mann. He said the firm has advised the schools not to pay the assessments until they can be more thoroughly reviewed.

The cooperative’s bylaws may have added to the confusion by stating that the governing board has the power and duty to “access” members of the pool as deemed necessary to protect the financial stability of the cooperative. The cooperative’s board has taken the position that “access” was a typographical error and the word was supposed to be “assess.”