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 Discussion, Dissent Follow Board’s Decision to Approve Additional CAB Insurance Coverage

August 29, 2007 - It took more than a month for it to act, but the Charles A. Beard School Board has now approved changes made without its prior approval to CAB's property, casualty and liability insurance coverage.

The board voted unanimously at its August 21 meeting to approve more than a dozen changes that had been made, according to the date on a letter to CAB from its new agent, as of July 2. Despite being advised of these changes at its July 17 meeting, the board took no action at that time to approve them.

Business Manager David Bundy told board members at last week's meeting that the coverage changes resulted in a $757 increase, bringing the premium for July 1 through January 1 to $65,000. The changes, which Bundy briefly went over with the board at the July 17 meeting, included increased limits in some areas, as well as some added coverage CAB previously didn't have.

Although it approved the coverage changes and payment of the premium, the board still has not voted to OK the switch from a local insurance agent to one in New Castle. As was the case with the coverage changes, this was also a decision that had been made without the board's prior approval.

On June 13 - the same day he submitted his own letter of resignation - former Superintendent David McGuire wrote CAB's insurer, Indiana Insurance, and instructed them to remove Chad Leakey of Leakey Insurance as CAB's agent and replace him with Josh Estelle of the Pfenninger Agency in New Castle.

Neither McGuire nor Bundy had been given the board's permission to do this, and neither said anything about this change during a special meeting held July 2. When Bundy brought the change in agent to the board's attention at the July 17 meeting, the board took no action to approve the switch.

Bundy told The Banner after last week's meeting that he believed the board had approved the switch in agents during the June 12 meeting. However, The Banner's review of an audio recording of that meeting revealed that the board merely gave its permission for McGuire and Bundy to begin the process of gathering quotes to consider for coverage that will take effect January 1.

Leakey briefly addressed the board during the public comment portion of last week's meeting. He told the board that Indiana Insurance only permits its clients to have one agent, and because of the switch to Pfenninger, his agency would not be allowed to submit an insurance quote for the board's consideration. "Pfenninger now represents Indiana insurance, and I have no company to bid with," Leakey explained. "Therefore, I would like for the board to vote to rescind that letter. … I would just like a fresh start."

Board member Ron Womack said he had thought that, despite the switch to Pfenninger, Leakey would have been able to submit a quote at the same time they're received from other agencies. When he asked whether or not there was anything that could be done so that Leakey would be allowed to do that, Board President Mike Fruth said it would be necessary to check with Indiana Insurance.

Leakey told the board that McGuire had rebuffed his efforts to update CAB's insurance last fall, saying he wanted to wait until after the first of the year to make any changes. If the changes had been made in the fall, Leakey said CAB would have had coverage for the $69,000 settlement of lawsuits filed by three Knightstown High School students expelled last fall over a homemade horror film parody - a settlement to which his insurance agency contributed $7,000. He also said his efforts to schedule a coverage review meeting twice earlier this year with McGuire and Bundy had been unsuccessful.

Leakey received support at last week's meeting from Banner owner and publisher Eric Cox. Citing what he said was Leakey Insurance's decades-long commitment to the Knightstown area and CAB students and their programs, Cox said, "That's a good illustration of their efforts to reinvest in this community. I think that should weigh on your minds as you consider this insurance decision."

Saying he thought this switch in insurance agents had been handled in a "suspicious way," Cox said he thought it was an issue that needed "to be discussed frankly and publicly." He ended his remarks by urging the board to reevaluate how much Leakey Insurance has contributed to CAB and the community over the years and reconsider the decision to move the account to a New Castle agency.

Wayne Township resident Jamie Maxwell also tried to voice a concern he had about an insurance-related issue at last week's meeting. Standing to address the board, Maxwell began, "As a taxpayer, I question …" Fruth promptly interrupted Maxwell, who had not signed up in advance to speak at the meeting. "You're out of order," Fruth shouted. "You need to sit down. You're out of order."

A couple of minutes later, Maxwell again stood and began to address Womack. "Ronnie, I question …" Fruth again interrupted Maxwell and told him he was out of order, but Maxwell stood his ground. "Let's call it out of order, then," he said. "I question how you can have an expenditure of that amount of money, Ronnie, without the board voting on it. That's what my concern is."

(Although a new policy that takes effect September 1 requires persons wishing to address the school board to sign up at least five days prior to the meeting, the current policy, which was in effect during last week's meeting, has no such requirement. In fact, the policy currently in effect, according to CAB Public Access Officer Jena Schmidt, explicitly states, "All persons present, even though not scheduled, will have the opportunity to address the Board under the item 'Recognition of Visitors.'" Although Fruth told The Banner as recently as July 2 that this is not CAB's current policy, Schmidt was unable to locate any policy that superseded it. - Ed.)

Near the end of last week's meeting, Board Vice President Wade Beatty remarked, "So far, everything that's been out in public has been one-sided." He asked Bundy to elaborate on the reasons why the insurance account had been switched from Leakey to Pfenninger.

Bundy told the board that CAB had not had coverage for the settlement in the student expulsion case, and had no coverage for an episode of employee dishonesty involving CAB's former business manager, who is alleged to have stolen money on the job. He also claimed CAB did not have insurance that would have covered instances of sexual abuse prior to January of this year, something Leakey had disputed earlier in the meeting.

"At that point, it became apparent to me that we were not getting the coverage we needed … and I was not at all comfortable with that," Bundy told the board. "And as Dr. McGuire and I discussed it, I supported considering a change, because I did not have the confidence at that time that we had the coverage in place that we needed."

Bundy said he felt more comfortable dealing with Pfenninger, which he said had experience representing other school corporations, including Eastern Hancock and New Castle. "This wasn't a decision that happened just in the course of one conversation," he said. "It was numerous issues that … basically led us into this decision."

After Bundy spoke, Leakey asked Fruth if he could respond to the business manager's comments. Fruth said that he could not and adjourned the meeting.


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