Risk pools haven’t worked out so well for many Texas school districts in the past. The most recent example is the TSHBP risk pool whose short life span violently ended in financial disaster requiring pool members to cough up millions more in unbudgeted assessments to pay for plan shortfalls.
The problem was not so much the failure of the pool, it was the failure of prospective pool members to properly assess the financial condition of the pool before participating in it.
“How can a superintendent or school board, as fiduciaries of taxpayer funds, jeopardize a district’s assets by participating in a risk pool, when they have no idea as to the pool’s financial ability to pay losses?” – Robert Reim
Texas Senator Mayes Middleton has introduced SB 1276 which, if passed, will require risk pools to provide public accountability of a pool’s finances.
Was Middleton’s motivation to introduce this bill have anything to do with the TSHBP disaster?
Read SB 1276 HERE
Middleton’s bill doesn’t matter. Most school districts base their decisions on what other districts have done rather than on independent business-based decisions. Answering the question “What other school districts have your plan?” often seems more important than “May I see your financials?” Speaking of the latter, back when TSHBP was aggressively marketing their program a prospective TSHBP member asked our opinion. Unable to obtain the information we needed from TSHBP we advised “Stay away!”
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