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 CAB Moves Insurance Out of Town

July 25, 2007 - In one of his final acts as superintendent of the Charles A. Beard Memorial School Corporation, David McGuire abruptly ended a four-decades-long business relationship between CAB and a Knightstown insurance agency.

On June 13 - the same day he e-mailed his nearly 300-word letter of resignation to school board members - McGuire sent a much briefer letter of less than 30 words to Indiana Insurance Company, which provides CAB's property and casualty coverage. Acting without express prior approval of the school board, McGuire instructed Indiana Insurance to make the Pfenninger Agency, a New Castle firm, CAB's new agent of record, thereby taking the account away from the corporation's long-time agent, Leakey Insurance Agency. Although CAB's insurance had been a major topic of discussion, McGuire said nothing to school board members during a meeting the night before, on June 12, about his plans to drop Leakey for Pfenninger the very next day. This matter also received no discussion at the board's July 2 meeting, the last one McGuire attended before leaving for a new job with Elkhart Community Schools, and the former superintendent is now refusing to answer questions about this decision.

"Actually, that's something that probably would not be to my advantage to comment on at this point," McGuire told The Banner on Monday afternoon. He referred further questions to Ray Pavey, CAB's interim superintendent, who was unable to be reached for comment by the news deadline for this issue of The Banner.

During a phone conversation earlier this month, CAB Business Manger David Bundy told The Banner the decision to switch to Pfenninger had been McGuire's. He said that the former superintendent had been given permission by the school board to make this change during a vote at the June 12 meeting.

"Basically, Dr. McGuire, through talking with our current agent, just kind of made the decision, (and) requested that the board give approval to consider that," Bundy told The Banner. "So, it was basically his decision to just to go through and decide, 'Hey, are we going to use our current agent or are we going to switch?' So, it was his decision to make."

Bundy's explanation about McGuire's decision, however, is not consistent with what transpired at the board's June 12 meeting. While the school board did discuss and ultimately vote on an insurance-related matter that night, the board merely gave McGuire and Bundy permission to seek quotes on property and casualty insurance from local agencies.

In materials provided to school board members in preparation for the June 12 meeting, an agenda item titled "Reports of Superintendent and Business Manager" said, "We are asking permission to seek proposals and/or quotes from area insurance agencies to assure that we are receiving the best price and coverage available." The board acted to give them just that.

"I will make that motion to give you permission to go ahead and seek proposals and quotes," board member Debi Ware said. Board member Larry Selvidge seconded the motion, and Board President Mike Fruth, repeating the motion for the benefit of all board members and others in attendance, said it was "to grant approval to go ahead and solicit … proposals, quotes, whatever, for insurance coverage."

Before the board voted, McGuire offered further clarification of what it was he and Bundy were requesting. "Actually, we're asking to do a couple of different things," he said. "One is to seek proposals and/or quotes, and we may have to ask somebody to serve as our agent of record in order to get them to give us a quote. So, we're asking for permission to do that. Once we've done that, we will put those together and give you our recommendation based on our best judgement on how these compare. You'll, of course, make the final determination." He said nothing about dropping Leakey for Pfenninger.

Official minutes from the CAB School Board's June 12 meeting, which were approved at the July 17 meeting, incorrectly state that Ware's motion was "to seek proposals for coverage and quotes from outside insurance companies and possibly appoint an agent of record as needed." While McGuire had mentioned a possible need to obtain an agent of record in order to get insurance quotes - a point Chad Leakey, vice president of Leakey Insurance, says is untrue - Ware's motion was never amended to say anything about appointing an agent of record, nor did it mention anything about replacing Leakey as CAB's current agent of record.

Immediately after the school board's July 2 meeting, Fruth was asked about McGuire's decision to take the Indiana Insurance account away from Leakey. He replied, "That's something that the administration is taking care of and I don't have any comment on that myself."

A few days after the meeting, board member Kevin Knott told The Banner that he wasn't concerned about McGuire switching the insurance agent of record without prior approval from the board.

"It's an ongoing issue, and if they decide that those changes need to occur, or they decide that issues need to be dealt with on a day-to-day basis, they'll bring those issues to the board meeting," Knott said. "If they don't bring those issues to the board, then it's my responsibility, and other people's, as a member of the board, to ask those questions."

The issue did come before the board at their July 17 meeting, where Bundy advised board members of the change in agent. He also reviewed with the board a summary Pfenninger agent Josh Estelle had sent him on July 2 detailing what Bundy described as "a mixture of changes and additions" to CAB's coverage with Indiana Insurance that are "best for (the) school corporation."

Board members Knott and Vice President Wade Beatty asked, respectively, when the policy changes took effect and whether there was any added cost. Bundy answered that he didn't know the exact date that the changes took effect, but said that CAB was covered. As for the cost, he estimated the increased coverage would add about $5,000 to CAB's annual premium, which he said was around $130,000. The board took no vote at their July 17 meeting to approve the change of CAB's agent of record from Leakey to Pfenninger. The board also took no vote that evening to approve the policy changes Bundy had revealed had already been made without the board's approval.

The Banner tried to contact Knott following last week's meeting to seek comment on the fact that the board was given no reason that night for McGuire's decision to replace Leakey, and the fact that the board was not asked to approve this change or the changes to CAB's coverage. Knott did not return The Banner's calls.

Beatty told The Banner earlier this month and again Monday that the board's June 12 vote had nothing to do with McGuire's decision to replace Leakey with Pfenninger, but simply had to do with gathering proposals to consider before CAB's current policy with Indiana Insurance expires at the end of the year. As for switching the agent of record, Beatty said thought that was a decision McGuire had the authority to make and that the board's approval was not needed.

(Part 2 of this story will appear in next week's Banner. - Ed.)


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