Insurer helps district cover its bills
 
By Paul Davenport
The Associated Press
East Valley Tribune
 
PHOENIX (AP) -- A nonprofit insurer serving most of Arizona's public school districts is helping prop up a financially troubled school district serving a polygamist community in northwestern Arizona.

The Arizona School Risk Retention Trust Inc. last year began covering warrants - IOUs - issued by the Colorado City Unified School District after the district couldn't afford to pay workers, including teachers who went without pay for two months.

Clyde Dangerfield, a Gilbert Unified School District assistant superintendent who is president of the trust, said the trust is paying the Colorado City district's warrants because as the district's insurer, the trust would be on the hook for any damages payable in potential lawsuits - including some that could produce triple damage awards - from vendors or others.

"That's why the trust stepped in," Dangerfield said. "We're just looking at the insurance liabilities and responsibilities based on the coverage."

The trust uses a $1.8 million line of credit through two banks and at one point had approximately $1.2 million outstanding, but the current balance is down to $900,000, with the debt carrying a 6 percent interest rate, Dangerfield said.

Dangerfield said the trust doesn't have a position on whether the state should place the district in receivership, but he said doing so could mean that the state assumes increased liability for the district's obligations.

"We don't really feel we're at a significant risk," he said of the trust.

While state and other officials have questioned the district's spending practices, Dangerfield said a consultant hired to examine the district's finances concluded that the district had set its property tax rate too low to cover the locally funded portion of its budget.

Dangerfield said the trust was formed in the 1980s when Arizona school districts were burdened by soaring insurance premiums.

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On the Net:

Arizona School Risk Retention Trust: http://the-trust.org
 
EastValleyTribune.com
Originally published August 8, 2005
 
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