This week, three weeks into the school fiscal year, NOLA Public School and charter officials were slammed by the sticker shock of ever-increasing insurance premiums. When compared with last year, schools will pay a 55% increase in property insurance premiums, according to a new insurance policy that the Orleans Parish School Board will consider this week.
Recently, the insurance industry has been in a tailspin in Louisiana, on the heels of several devastating hurricanes including Laura, Delta and Zeta in 2020 and Ida in 2021. Since 2020, more than 20 insurance companies, making up one-sixth of the state’s market, have gone bankrupt or pulled out of the state.
That has left homeowners struggling to find new policies or grappling with staggering increases in premiums. For NOLA Public Schools, this year’s 55% increase comes on top of a 50% increase last year.
The insurance costs will jump by roughly $100 per pupil. For insurance alone, the district will pay roughly $280 per pupil, for students housed in district buildings.
The majority of charter schools that make up the decentralized NOLA Public Schools district use district-owned buildings, some chosen by the charters and others assigned by the district. Some of the district’s handful of vacant buildings have been placed on a surplus property list to be rented or sold. Other vacant structures serve as backup, “swing spaces,” when a charter must move locations for facility repairs or other reasons.
Charters vary widely in enrollment size. The condition of the buildings they occupy also range widely, from brand new to more than a century old. Because of those variables, the district pools the overall costs of property insurance and charges schools on a per-pupil basis rather than invoicing them based on the actual insurance costs of their specific buildings.
The three-school Crescent City Schools network will have to find the money to cover the increases, said Chief Operating Officer Chris Hines. And that’s not easy, because state funding has not kept pace with pandemic-related cost increases, high inflation rates, and this property-insurance spike.
Only once since 2008 has the Louisiana Legislature raised the state’s Minimum Foundation Program funding, a per-pupil block grant that goes to local schools. “We continue to have the same pot of money every year,” Hines said.
That hurts student offerings, Hines said. “Every time the costs of non-instructional items – like district-procured property insurance – increases, we have to divert money from student programming to pay these higher costs.”
School officials were already bracing for higher rates. Last week, Charles Story, the district’s director of school finance, wrote to charter leaders informing them of the new quote. The current insurance market is “a mess,” he wrote.
Overall, the 2024 premium increased from $7.9 million to $12.3 million. The district’s total insured value (TIV) also increased from $1.9 billion to $2.4 billion, due to building upgrades and the increased costs of repairs, Story wrote in an email.
The exact per-pupil costs are still being finalized, Story wrote. “But based on the premium increase amount you can estimate it to be near $280, he said. This of course depends on system-wide enrollment,” Story wrote, noting the current market is “a mess.”
The district’s Total Insured Value cited by Story in his email appears to include vacant buildings in the total policy cost. To save money, the district is already looking at ways to reduce total value for vacant buildings and to shed vacant swing space that won’t be utilized.
“We are already looking at ways to modify our program for FY25 to reduce TIV for vacant buildings, swing space that won’t be utilized and other opportunities in an effort to mitigate large increases in premiums,” Story wrote.
The Lens has asked for information on how those premiums are calculated. In June, a district spokeswoman said, “If a building does not have students in it, then the district pays the associated premium.”
Collegiate Academies, a four-school network, plans to use a substantial portion of its rainy day fund to cover the increase, said Chief Strategy Officer Davis Zaunbrecher.
“We had held contingency (funding) in our budget for things like this,” Zaunbrecher wrote in an email. “This (increase) will eat up roughly a quarter of that.”
At this time, Zaunbrecher doesn’t expect any cuts to school programming. But he said that he’s “excited” to work with other school leaders to determine ways to rein in future increases.
Zaunbrecher said the district must work to get the property insurance increases under control.
“It’s important work and there’s no indication that the market will get easier,” he said.