The NOLA Public Schools district’s property insurance bill will increase nearly 50 percent next year, a jump of nearly $4 million, district officials informed Orleans Parish School Board members at their monthly committee meeting Tuesday afternoon.
It’s a familiar feeling for many New Orleanians experiencing similar hikes in homeowners and flood insurance premiums after another year of devastating tropical storms — that is if they weren’t dropped altogether by their insurance company.
“We certainly had a bit of a shock last week,” District Chief Financial Officer Stuart Gay told board members as he reviewed the new quotes.
This school year, the district paid $7.6 million for property insurance covering district-owned school and office buildings. That will increase to $11.2 million next school year, an increase of 47 percent.
“Not a lot of great news on the insurance front,” he told members.
The district has yet to receive all insurance quotes it has sought, Gay said.
“Due to the Jubilee in London, the district has not yet received final numbers from the London insurance market,” the agenda item read.
When Hurricane Ida roared ashore west of New Orleans in late August last summer, the city was spared the worst of the damage, but rain and wind along with prolonged power outages and intense heat without air-conditioning, damaged some campuses. Frederick Douglass High School, run by KIPP New Orleans Schools, on St. Claude Avenue had extensive water damage after rain made its way in through windows during the storm and sat stagnant in heat. The school had to relocate for a significant part of the year. In total, 29 buildings experienced damage, most of it was minor.
Additionally, Gay said there was a roughly 6.3 percent increase in the estimated value of the district’s insured property. That’s because replacement costs — the cost of a two-by-four, for example — have increased dramatically due to supply chain shortages.
Gay said the district also lost its deductible cap for named storms that cause damage. It is unclear what that limit was previously and whether it was an overall cap or per facility. Officials did not immediately respond to a request seeking the deductible amount.
Facilities Preservation Program
In other facilities news, Chief Operating Officer Tiffany Delcour gave a presentation on the district’s School Facilities Preservation Program — a taxpayer-funded plan that provides funding for capital repairs based on a school’s enrollment. Delcour said the district’s schools need roughly $336 million in capital repairs over the next 10 years.
But, Delcour said, the way the preservation program was written into state law in 2014 presents significant limitations.
In 2014, the city public school system was still composed of the state-run Recovery School District charters, OPSB charters and traditional district-run schools. The millage approved by Orleans Parish votes sends a certain amount of money per student, based on tax collections, to occupied buildings.
That means the district can’t invest that money in swing space — empty buildings that may be needed for emergency relocations or during construction. It also means that some new buildings can accumulate more money than old buildings with more extensive repair needs.
“Those things made sense in a time we didn’t know what this would look like in five to ten years,” Delcour said of the 2014 legislation.
But now, the district can’t freely access those funds or decide where to spend them, she said.
“If you have a building that is collecting more money than it needs, you can’t move that money,” Delcour said.
“We actually have a really big problem,” Delcour said. “About $129 million is not available because it is in accounts for facilities that don’t need work.”
Meanwhile, she said, just a handful of district properties account for 40 percent of the expected capital repair requirements over the next 10 years.
Board member Katie Baudoiun asked what the district could do to address the problem.
“You’ve been alluding to changes that could make this more effective…but what are some things you think might make it a more effective program based on our needs?” she asked.
Delcour had suggestions, but also noted that total financial capital overall was the larger concern.
“All the changes in the world won’t solve our problems because it’s about finances and needs,” Delcour said, but a few changes could help.
She said holding a small portion of funding intended for new buildings back for older buildings could help address more immediate capital repair needs. Readjusting the formula to account for building size and/or amenities rather than simply basing it on enrollment counts would also make more sense, she said. Those are changes that would need to be made at the state level.
All this comes amid the district’s plan to “right-size” due to declining enrollment.
“We don’t need to penalize a facility because we’re having current enrollment challenges,” she said.
“Defining it based on enrollment is tough as opposed to building size, building amenities,” she said. “It takes much more to maintain a building with a gym and an auditorium rather than a regular school.”
Delcour said the school board could ask for an additional millage from voters or seek additional loans. Though she said the latter was unlikely due to the amount of money needed.
Board member Carlos Zervigon, who attended New Orleans Public Schools, said he recalled deferred maintenance being a challenge in the system. The 2014 legislation appeared to be centered around charter operators, he said, by guaranteeing funding was doled out by student. But now as a united school system, the district can’t move funding to the most critical facility needs.
“The solutions have created a new problem if we don’t fix this.”