Archive for Wednesday, June 28, 2000

School board to decide insurance

June 28, 2000

Tonight when the Tonganoxie school board takes its annual vote on the school's insurance carrier, board members will face a tough decision.

Tougher than they had planned.

Richard Erickson, school superintendent, said to help make the decision this year, the board hired Denny Payne, a Topeka insurance consultant, to organize and administer the process of taking bids for insurance.

"This is the first year we've used him," Erickson said. "It's been a controversial process the last several years, and we just wanted to have an outside party take care of us. Obviously, as a consultant, he has the expertise in dealing with these situations."

But this year, negotiations hit a snag when the two insurance carriers submitted bids based on different property valuations.

Diane Bretthauer, representing Mills Insurance Agency, submitted her bid based on Hartford Insurance's estimate of school property values of $17.5 million.

J.W. Evans based his bid through Employers' Mutual on a valuation of $15.4 million.

Bretthauer, who said her bid reflected the addition of the school's new track, bleachers, lighting, scoreboard and pressbox, noted that Hartford would not insure the district for less than the $17.5 million value.

When the bids were opened on May 31, agents saw both bids, and on June 12, Evans submitted a new bid of $75,214 based on the $17.5 value. Bretthauer's bid is $77,065.

In a letter last Friday to Erickson, Payne noted that the bid submitted by Evans is $1,851 less than Bretthauer's bid.

Payne wrote: "With this in mind, it is my recommendation that Tonganoxie School District 464 place the insurance for the year July 1, 2000 to July 1, 2001 with EMC through the Evans Agency."

Erickson said that Payne is being paid between $1,000 and $2,000 to handle the negotiations.

Board member Richard Dean noted that in the past the school district alternated insurance carriers each year and eventually changed over to the bidding process to save money. But the bidding process only works when comparing apples to apples, Dean said, noting that the original bids should have been based on the same property value.

When asked if it helped to hire a consultant this year, Erickson replied, "I'll have a better idea on that after Wednesday. It's still controversial. In the future I would hope we would continue with an outside consultant."

Several board members contacted Monday said that even with Payne's recommendation, this will be a difficult decision to make.

"We've got nothing but praise for Bretthauer's Hartford insurance and there are people in the community who are going to express the same opinion," said board member Phil Weide.

Board member Rick Lamb said Monday he would need time to think about it. He noted that Bretthauer's work had enabled the district to resume classes the week after the May 11 tornado.

"It's frustrating," Lamb said. "It's a difficult decision to make."

Or, as Weide said, "It's going to be up to the board now to weigh out the differences and, unfortunately, there always has to be a winner and a loser."

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