Schools appeal insurance ruling

Child care regulation at issue

Tuesday, June 24, 2014

Three school districts in Northwest Arkansas are appealing to the Arkansas Supreme Court to temporarily stop the enforcement of a new state regulation requiring districts to buy liability insurance for child care programs.

The appeal follows a June 5 decision by Pulaski County Circuit Judge Chris Piazza, who allowed a lawsuit filed by the school districts to continue but denied their request for a preliminary injunction.

The state regulation affects all school districts statewide that operate child care, pre-kindergarten and after-school care programs.

Attorney Mitch Llewellyn has advised the Fort Smith, Greenwood and Van Buren districts to wait for the Supreme Court to respond, and delay decisions on general liability coverage for child care programs until August. The districts already have the required liability coverage on vehicles.

Fort Smith Superintendent Benny Gooden said he doesn't anticipate buying a policy by the state's deadline July 1, but district officials are weighing their options.

School districts want to protect their immunity from lawsuits but have to consider that against the Department of Human Services rule that approved programs must have a liability policy in place, Gooden said.

"In the immediate future, it certainly puts us and all other school districts in a quandary," Gooden said. "You can ignore what the rule is. Then, you don't have an approved program. You can't get funded. You could go out and purchase a policy and see what happens."

Another option would be to stop offering child care programs, but Gooden thinks it's important for children to have options for care, he said. Fort Smith's pre-kindergarten programs serve about 350 children.

COVERAGE REGULATION

The new regulation stems from Act 778 of 2009, which directed the Child Care and Early Childhood Education Division of the Human Services Department to develop rules setting a minimum level of general liability insurance coverage for licensed child care centers and licensed and registered child care family homes.

Rules to implement the law were finalized in 2011 as part of the state's minimum licensing standards for child care centers, but the department delayed enforcement until July 1, department spokesman Amy Webb said.

About 44,000 children participate in early childhood programs at 464 sites on public-school campuses, Webb said. About two-thirds of those programs are overseen by school districts, while the rest are run by another provider partnering with the district.

After July 1, officials will verify that providers have insurance during their scheduled visits by the department, Webb said. If a provider lacks insurance, the facility will be cited and scheduled for a follow-up visit.

In the lawsuit, the districts argue that the new regulation will "destroy" and "obliterate" their immunity.

Under Arkansas Code 21-9-301, schools -- like counties, cities and other political subdivisions of the state -- have tort immunity, which protects them from lawsuits seeking damages for harmful acts. The law provides an exception and allows for damages to the extent covered by liability insurance.

Most districts have not carried liability insurance for that reason, said Shannon Moore, director of the Arkansas School Boards Association's risk management program. Moore is advising member districts to obtain coverage by July 1 if they want to continue to be licensed child care providers.

Moore knew of one school district that already had coverage and of an education service cooperative that had purchased a policy effective July 1, but she said more districts are seeking quotes and studying the policies. She estimated that she had received 75 to 100 applications from districts seeking quotes from BancorpSouth Insurance. The annual premiums are about $20 per child enrolled in the child care or after-school program.

Mike Mertens of the Arkansas Association of Educational Administrators said some districts are concerned about the implications on their immunity, while others have concerns about cost, which ranges from about $1,500 a year for small, rural districts to $20,000 a year for large districts.

The association believes school districts with licensed child care centers or pre-kindergarten programs should be exempt from the liability insurance requirement.

Mertens attended a joint meeting of the Senate and House Insurance and Commerce committees Thursday and said lawmakers expressed interest in exempting districts, possibly during the 2015 legislative session.

COMPLIANCE ATTEMPTS

Some districts are working to comply.

The Pulaski County Special School District is part of the Central Arkansas Risk Management Association, which coordinates a self-insured liability program for a cooperative of school districts, counties and municipalities, said Bill Goff, chief financial officer for the district. The program isn't an insurance product, so it does not conflict with the district's tort immunity, he said.

If the district was sued, the district's first defense would be tort immunity, Goff said. The self-insured program would kick in for claims for which immunity doesn't apply.

Goff is trying to determine whether the self-insured coverage is sufficient for child care licensing, he said. If the district has to purchase coverage, the additional cost could mean that the district will increase the fees it charges for its after-school programs. The district this month informed parents of its plans to charge an enrollment fee of $40 for next school year and tuition of $150 to $170 a month.

The Rogers School District has purchased liability insurance for its 340-student pre-kindergarten program at an annual rate of $2,714 through Rogers Insurance Agency, spokesman Ashley Siwiec said.

Van Buren interim Superintendent Kerry Schneider said his district has a quote for a $1,600 policy that would cover 80 children in four classrooms. He's interested to hear whether the Supreme Court will hear the appeal.

Greenwood Superintendent John Ciesla said he has solicited quotes and plans to review policies. About 100 children participate in the district's pre-kindergarten program.

"We hope a resolution comes in the near future," Ciesla said. "I know that deadline's growing closer and closer."

NW News on 06/24/2014