District designates insurance carrier
Two local insurance agents say they won't submit bids again for the school district's business. The process, they say, is simply too controversial.
Last week, Tonganoxie school board members agreed, on a 5-2 vote, to accept a $75,214 insurance bid from J.W. Evans and John Evans Jr. of Evans Insurance Agency.
In doing so, the board rejected Diane Bretthauer's $77,605 bid, submitted through Mills Insurance Agency.
As in years past, the vote for the district's insurance carrier followed a complicated, confusing and sometimes bitter bidding process.
Denny Payne, a Topeka insurance consultant hired to organize and administer the bidding process, recommended that the board accept the bid submitted by Evans.
He noted the confusion caused because Evans and Bretthauer had submitted bids based on different property values. Bretthauer's bid was based on $17.5 million property valuation, as specified by Hartford Insurance. Evans' original bid was based on a property valuation of $15.4 million, as specified by the school district. According to Payne, both bids should have been based on the numbers given by the school, but Bretthauer said the school property, considering additions and changes made during the last 12 months, was actually worth closer to $17.5 million.
After the bids were opened, Evans increased his coverage to the higher property value and stayed with his original bid of $75,214. This left Evans' bid standing $1,800 lower than Bretthauer's. Bretthauer also had an opportunity to change her bid, but did not do so, saying she would not bid for less than the value of the property.
Board member Ron Moore asked what the district's current coverage is now.
"I guess it's $17.5 million," Payne said.
"You've got to have in your bid package parameters and specifications," Moore said. "But you would think, as a minimum, you would bid at least your current coverage."
Payne said he had originally thought the specified value of $15.4 million was accurate.
J.W. Evans noted that, according to the bid prospectus, any changes in bid specifications would be sent to all prospective bidders in writing. And, Evans said, he was not aware until the bids were opened of the higher value.
"We bid what you sent me," Evans said. "That's all I can say."
After the board members voted in favor of Evans insurance, Bretthauer thanked the board for having given her the opportunity to be the agent for the district in the past. She ended her comments on a more serious note, saying, "The Lloyd Mills Agency will no longer participate in the bidding process."
Later, Brian Miller, of Farm Bureau Insurance, who had considered submitting a bid but decided against it, also said he would not be interested in bidding for the school's insurance in the future.
Board member Rick Lamb said he had received more phone calls about this issue than any other during the year that he's served on the board.
"This has not been handled fairly," Lamb said, referring to the discrepancy in property values.
"We've got to get real specific on the specifications and valuations and go over that with a fine-toothed comb," he said. "And then just bid it and let the chips fall where they may."
Board member Ron Moore described the outcome of this year's bidding process as "terrible."
"This is the second year in a row that we went through this rigmarole," Moore said. "I thought it would be better this year. But things happened. And one of the things that happened is that we didn't have the coverage values correctly stated. You've got to bid the proper price so that you have the proper comparison. That didn't happen. And then when you open the bids at a public table, the cat's out of the bag."
Richard Erickson, school superintendent, said he had consulted with Norm Wilks, an attorney with the Kansas Association of School Boards, who suggested that in the future, rather than seeking bids, the board, or a consultant hired by the board, could ask for insurance proposals.
When contacted by The Mirror, Wilks said Kansas law does not require a school board to bid for insurance and other services.
"However, in many situations, it is beneficial to the school district and the various suppliers to respond to a request for proposals," Wilks said.
This can sometimes help a board make a decision, he said.
"Many times in the bidding process, there is the assumption that everyone bids at the same things and it goes to the lowest responsible bidder," Wilks said.
"When you're looking at services, there are many other components that go into the delivery of services."
During the two school board meetings in which the insurance bidding was discussed, board members expressed gratitude for Bretthauer's work following the May 11 tornado, which ripped the roof off the elementary school and caused other damage to district property. With Bretthauer's guidance, roofers were at the school the next day and classes were held the following Monday.
However, the board members said they had an obligation to keep costs down and one way to do that was to accept the lowest bids.
"Our responsibility is to the taxpayers of the school district," Richard Dean said. "There are a lot of people out there who want the most for their money."
Bob DeHoff agreed.
"When it's our own money, that's one thing," DeHoff said. "As it is, we're bound by the bid process and we have to go ahead with the lower bid."
As for Payne, the insurance consultant hired to steer this year's bidding process, his last words to the board were apologetic.
"I'm sorry for the mess," he said.