An insurance fund that more than 100 school districts and school boards rely on has depleted its reserves, and the fund’s manager told school leaders they would be responsible for covering the shortfall.
The trust’s benefits manager, Debbie Hainke, sent a letter to member schools last week saying medical claims had been “extremely high” over the last year and the trust had “exhausted its reserves to meet these high claims”.
Debbie Hainke, benefits manager at the Idaho School Benefit Trust
” data-large-file=” class=”wp-image-123125 size-thumbnail” alt=”” width=”200″ height=”200″ size=”auto, (max-width: 200px) 100vw, 200px”/>Debbie Hainke (Photo courtesy of the Idaho School Benefit Trust)
The shortfall is estimated to be the sum of one month’s contributions, Hainke wrote. The trust is working with the Idaho Department of Insurance and Blue Cross of Idaho — the trust’s benefits plan administrator — to better assess the deficit and find ways to “mitigate the immediate financial impact on participating school districts,” she added.
The letter clarified that the trust and “participating school districts are responsible for the funding shortfall.”
School leaders are eagerly awaiting more information from the Idaho School Benefit Trust.
“The outstanding question is how the trust will pay for insurance claims that continue to come in,” said Todd Howard, superintendent of the Wallace School District.
“How should this be addressed?” Howard said Thursday.
For Caldwell School District Chief Financial Officer Zach Wagoner, Hainke’s letter came as a surprise.
As a financial expert, he said he likes to look at profit and loss statements and balance sheets, but there were no financial details in the letter.
“Right now I just – I have a lot of questions.” Waggoner said.
He wants to know whether there will be an “immediate cash impact” and what that might look like. He noted that districts have already adopted budgets for the fiscal year that begins July 1.
A screenshot of the Idaho School Benefit Trust website.
” data-large-file=” class=”wp-image-123136 size-full” alt=”” width=”1920″ height=”1071″ size=”auto, (max-width: 1920px) 100vw, 1920px”/>A screenshot of the Idaho School Benefit Trust website.
Hainke’s email prompted a quick response from state Superintendent of Public Instruction Debbie Critchfield. Two days after Hainke’s message, Critchfield sent an email to school administrators saying she was aware of the situation and was working with the governor’s office and the Department of Insurance on next steps.
“No decisions have been made and we will communicate with you as we work on solutions,” Critchfield wrote. “We’re just learning the details and have questions of our own.”
Established in 2014, the Idaho School Benefit Trust allows school districts and charter schools to pool their insurance dollars and use one pot to cover claims. The trust raised $171 million from its members in 2023.
The money is managed by five trustees appointed by the Idaho School District Council and a performance manager. The council, made up of school leaders across the state, describes itself as a “cooperative services agency” that helps public schools pool resources for supplies and services such as insurance.
This graphic shows the annual rate increases for the Idaho School Benefit Trust. (Screenshot of Idaho School Benefit Trust renewal presentation)
” data-large-file=” class=”size-full wp-image-123122″ alt=”” width=”1789″ height=”580″ size=”auto, (max-width: 1789px) 100vw, 1789px”/>This graphic shows The Idaho School Benefit Trust rate increases every year. Rates jumped for the coming benefit year, including a 19.5% increase for health plans. (Screenshot of Idaho School Benefit Trust renewal presentation)
The trust is one of a few insurance options for public school employees. Districts and charters can also enroll in the state’s insurance plan. Or they can work directly with plan administrators like Blue Cross or Regence.
According to plan renewal presentations reviewed by EdNews, the trust has touted its low rate increases compared to other benefit plans in recent years – an average of 6.1% per year over the last decade.
At the same time, the trust was running a deficit, according to financial disclosures required of tax-exempt organizations. In 2020, the trust had a fund balance of $22.5 million, but it stood at $11.1 million at the end of 2023, disclosures show.
Dale Layne, executive director of the Idaho School District Council, wrote in an annual report last August that the trust ““remains on solid financial footing and has excess reserves of approximately $3,004,082.”
Layne is a non-voting member of the Trust’s Board of Trustees. He declined to comment for this article, referring EdNews to Hainke, who did not respond to messages seeking comment.
The trust’s reserves have now been exhausted and renewal rates have skyrocketed. For the upcoming benefit year – which runs from September 1, 2026 to August 31, 2027 – participants expect a 19.5% increase in health plans, as well as a 6.6% increase in dental plans and 5.6% in employee assistant plans.
The rate increases are tied to inflation, according to a renewal presentation the trust shared with attendees. In the 2024-25 benefit year, medical claims increased by $9.8 million, the presentation said. The cost increases are concentrated in medical services, inpatient hospital stays, surgeries and medications, including chemotherapy and infusions. A 15% increase in hospital costs is expected for the coming performance year, the presentation said.
Districts and charters are responsible for covering the increase in claims because the trust was self-funded in the 2025-26 performance year. Unlike fully insured plans—where the plan administrator (Blue Cross) covers the cost of higher-than-expected claims while retaining the savings if claims are lower than expected—self-funded plans require employers (districts and charters) to bear the risk.
According to Hainke’s email to members last week, the trust is moving to a fully insured plan for the upcoming benefit year. The transition will be “Help reduce performance costs and reduce the risk borne by school districts,” Hainke wrote. “This extension is not impacted by the remaining funding requirements for the 2025-2026 performance year noted above.”
Meanwhile, principals are wondering how much they will owe for the current funding year. Public school budgets are already tight after state lawmakers kept K-12 spending low and did not increase discretionary funding for the second school year in a row.
West Bonner Superintendent Kim Spacek said districts set their budgets based on what they know and there isn’t much “wiggle room” for adjustments.
“It’s always a concern when they set a budget and tell you what the increases are going to be, and then they tell you, ‘Oh, by the way,'” Spacek said.
“When you belong to a charitable foundation, you actually leave your decisions to the people who work in the foundation,” he added.
https://www.idahoednews.org/top-news/insurance-trust-has-run-out-of-money-and-idaho-districts-have-to-pay-the-debt/
