State Education Department

School Districts' Casualty and Property Insurance Programs (Follow-Up Review)

Most school districts purchase casualty and property insurance from private insurance companies. In our prior audit report 93-S-79, we examined the procedures used by the State Education Department to oversee this activity. We found that, because the insurance cost data reported to the Department by the school districts was often inaccurate, the Department could not analyze the data to identify districts with unexpectedly high costs. We visited eight districts and found that the costs of at least two of these districts were significantly higher than necessary because the districts did not use a competitive process to purchase their insurance policies. As a result of our intervention, one district accepted a competitive proposal from another insurance company at savings that exceeded $100,000 a year. We recommended that the Department be more active in its oversight of school district insurance purchases. In our follow-up review, we found that, due to reductions in staffing, limited progress had been made in implementing our prior audit recommendations. However, Department officials told us they are trying to find a way to implement our recommendations with fewer staff.

For a complete copy of Report 95-F-54 here.
For a copy of the 90-day response click here.