The Kentucky School Board Insurance Trust paid millions in royalties to the Kentucky School Boards Association over several years before announcing last month that it would disband due to financial woes, the Lexington Herald-Leader reported.
School districts around the state are now trying to come up with $60 million to pay off the trust’s deficit.
For decades, the Kentucky School Boards Association administered the trust and profits were used to subsidize programs offered to districts. The newspaper reported that the insurance trust has paid nearly $7.5 million to KSBA in royalties and management fees since 1997. KSBA began decreasing royalty payments in 2005 when the insurance trust began to lose money, but the financial deficit kept rising along with the cost of medical care.
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