The USD 503 Board of Education is facing a lot of tough choices as financial hits keep coming.
The district had anticipated a $600,000 shortfall for the 2026-2027 fiscal year with declining enrollment. This led the district in recent months to make extensive budget cuts.
Monday night, the board learned the financial impacts will be even greater than initially anticipated.
Superintendent Lori Perkins explained that due to issues with Tri-County Special Education’s software transition some time back, miscalculations occurred. Those issues were just discovered showing a $2 million discrepancy. Perkins said the district was prepared for a $127,000 increase in Special Education costs, but is now being told its costs will increase by $254,000. An outside accountant is coming to review everything Friday.
USD 503’s board representative on the Tri-County board, LeeAnn Hunter said there will be no additional funding from the state this year for Special Education, either. According to the state Constitution, Kansas is supposed to reimburse school districts for 92% of the "excess costs" of providing special education services. It currently reimburses only about 67%. This left Parsons last year having to cover $1 million in costs that should have been covered by the state, reducing needed funds for salaries and maintenance. This year that burden will now potentially increase to around $1.25 million, but discussions continue.
Added to that hit, Perkins shared that the Greenbush Health Trust informed the district the last week of May that rather than an anticipated 5.1% increase in health insurance rates equating to around $100,000, it faces a 31.9% increase, increasing the district premiums by $642,000.
Perkins said she is in discussions with Greenbush to address the rate increase, while at the same time the district is seeking alternative options. Because of the timing of the news, Perkins said they missed the window to join one group, but they are looking into individual plans through Blue Cross Blue Shield. Board president Jeff Quirin also suggested the district look into Aetna. It is unknown if any of the alternatives would be more affordable. Conversations with Greenbush Health Trust continue. Perkins said they have no pat numbers, but may have the percentage decreased from 31.9% to 15.5%.
“We are absolutely in limbo right now,” Perkins said. “They said we’d get a reduction, but there are no set numbers.”
Proposals for property and liability, cyber liability and workmen's comp insurance were also considered Monday. Staying locally with EMC, would mean a $26,519 increase.
“The $26,000 is significant. That’s an aide’s position,” Perkins said.
The policies are not comparing apples to apples. Joining the KICS (member- owned) Pool with 200 other school districts would save the district the premium increase, but deductibles, if there were an incident, are $50,000 to $150,000 per building which would quickly eliminate those cost savings if there were a claim. EMC, on the other hand, is offering deductibles of $75,000 on the middle school and high school main buildings, and $10,000 on all other buildings in the district.
The board also considered that the district would be committed to a 3-year agreement with KICS with no guarantee on cost changes. Other disadvantages with KICS were stated as well.
While noting the benefit in premiums with EMC, Perkins explained to the board one of her greatest concerns is EMC’s policies not insuring a building after a roof has reached 15-years-old. While the roof at Lincoln is currently being replaced, and Garfield and Parsons Middle School have both been completed in the last three years, Guthridge’s roof and a large portion of Parsons High School’s roofs are nearing the 15-year mark. Guthridge’s roof would be more affordable, but the high school’s roof replacement will be very costly. Considering the financial shortfalls in the budget, Perkins said the district may have to defer that maintenance, and EMC would not insure those buildings, where KICS would, no matter the age of the roofs.
“It’s all about the risks you want to take,” Perkins said.
Insurance agent Bob Wood reminded the board that EMC is only allowed to accept a certain amount in premiums and when the district doesn’t make claims, whatever goes above that amount is reimbursed to the district each year, whereas KICS keeps all those funds. Wood told the board he was also able to negotiate a 4% increase in the district’s property valuation given improvements made.
“EMC has worked really hard to make you a good offer to keep your business,” Wood said.
The board considered the pros and cons of each proposal, and in the end unanimously chose to absorb the greater premium to support a local business that has always been there to immediately address their needs, and is offering lower deductibles.
To help offset the increase in premium, the board chose to go with lower liability limits on cyber insurance, a savings of $6,000 to $7,000.
As for workmen's comp, it is through a separate company. The district faced an increase in workmen’s comp claims, but Perkins said some of those employees are no longer with the district, so the district may be able to negotiate a lesser increase in premiums.
Considering the overall picture, Quirin said the district may have to seek an increase in the mill levy after years of no increase. The district has held the line on tax increases since he has been on the board, never having approved any significant material increase. In fact, he said the mill levy has decreased as they have paid off bonds and interest and other special mills.
“But this is considerable. The costs are large,” he said of the increased expenses. “And that’s how we’ll have to fund it.”