Arkansas legislators request consultant for school insurance study

Arkansas lawmakers on Thursday approved a request to hire a consultant to conduct a study of rising property insurance premiums for public school districts, in preparation for next year’s fiscal session.

The Arkansas Legislative Council’s Executive Subcommittee authorized the Bureau of Legislative Research to release the request for proposals next Monday, and for the scope of work to include a review of higher education insurance premiums as well.

Gov. Sarah Huckabee Sanders last week announced the state would cover 30% of the cost increase of insurance premiums for K-12 public schools. Arkansas districts will see an average increase of 130% in the upcoming academic year, according to a press release from the governor’s office.

Arkansas governor authorizes aid for rising school insurance rates

ALC’s Performance Evaluation and Expenditure Review Subcommittee on Tuesday approved a request from the Arkansas Insurance Department to transfer $10.8 million from the state’s restricted reserve account to offset the cost of increased premiums. 

The funding will be split three ways — $6.3 million for the 170 districts in the Arkansas School Boards Association-managed program, $4.46 million for the 68 districts in the Arkansas Public School Insurance Trust (which is managed by the Insurance Department), and nearly $118,000 for the Bentonville School District, which procures insurance directly through the open market.

Factors contributing to rising premiums include “poor claims experience, difficult conditions in the insurance marketplace and a negative outlook from weather models,” Insurance Commissioner Alan McClain wrote in a letter to lawmakers. 

Insurance premiums are increasing nationwide, Education Week reports, because climate change is causing more frequent natural disasters that affect school operations and require insurance companies to pay out.

Other factors include additional legal liability from increasing lawsuits and the growing frequency of cybercrimes. The Little Rock School District spent nearly $692,000 as the result of a cyberattack last year, according to the Arkansas Democrat-Gazette. More than $242,000 was paid in a ransom to hackers who had sensitive information like Social Security numbers and government identification numbers.

BLR Chief Legal Counsel Jill Thayer said Thursday the RFP will be posted on the Office of State Procurement’s website and submissions will be accepted until Aug. 21. Thayer said she’ll provide summary documents to the subcommittee, which will have two meetings to select a vendor.

BLR will then work on a contract that will be presented to a policymaking subcommittee, before ALC can provide final approval on Sept. 15.  

Pending approval, the contract will run from Sept. 15 to June 30, 2024 with an option for one renewal of up to six months. The subcommittee and BLR will have the option to renegotiate at the time of the renewal. 

A final report from the subcommittee, including proposed legislation, will be provided to ALC by March 15, 2024.