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 School Board Members Lose Vote to Return CAB Insurance to Knightstown

October 24, 2007 - Charles A. Beard School Board members hoping to undo a former superintendent's decision to drop CAB's longtime local insurance agent in favor of one in New Castle found themselves on the losing end of a 4-3 vote last week.

Following nearly a half hour of discussion and debate, school board members Kevin Knott, Ron Womack and Leah Kopp voted at the October 16 meeting in favor of a motion to reinstate Chad Leakey of Leakey Insurance in Knightstown as CAB's agent of record for Indiana Insurance, provider of CAB's liability, property and casualty insurance. With board President Mike Fruth, Vice President Wade Beatty, and members Debi Ware and Larry Selvidge defeating the motion, Josh Estelle of the Pfenninger Agency in New Castle will remain CAB's new agent of record for Indiana Insurance.

The switch from Leakey to Estelle was made four months ago, without board approval, by former CAB Superintendent David McGuire. On June 13 - the same day he submitted his own letter of resignation at CAB - McGuire wrote to Indiana Insurance and instructed them to remove Leakey as CAB's agent of record and replace him with Estelle.

CAB's insurance had been a major topic of discussion at the board's June 12 meeting, the night before McGuire made the switch. While the board voted that night to give McGuire and Business Manager David Bundy permission to seek proposals and quotes from area insurance agencies for coverage that would begin in January, neither McGuire nor Bundy had said anything about dropping Leakey in favor of Pfenninger's Estelle, even though a June 1 e-mail from Estelle to Bundy that The Banner obtained through a public record request clearly shows such a change was being considered nearly two weeks before that meeting.

Despite McGuire's switch to Estelle, he and Bundy did not advise board members of the change in agents at a special board meeting July 2, the last meeting McGuire attended before taking a new job in Elkhart. The decision to drop Leakey for Estelle was not publicly disclosed to the board until Bundy told them of the change at the board's July 17 meeting.

Board members voted unanimously at their August 21 meeting to approve changes made in CAB's insurance coverage since Estelle had taken over as agent in early July, and approved payment of a $65,000 premium to Pfenninger Agency that would keep the corporation covered through January 1. However, despite having several meetings since first learning of the switch in insurance agents, the CAB School Board had never taken any vote with respect to that specific issue until last week's meeting.

With CAB expecting to receive bids from area agencies by November 6 for coverage that will begin in January, Knott said state law does not permit Indiana Insurance to be represented by more than one agent of record. Because of the switch McGuire made, Knott said Leakey would not be permitted to submit a bid for Indiana Insurance unless he is once again made CAB's agent of record.

"I believe in my mind, and I'm thoroughly convinced, that it would be responsible and appropriate action to allow this agency to be able to provide a proposal for insurance," Knott said, noting Leakey's more than 40 years of representing and supporting CAB, its students and the community. "It was really cloudy and it's not clearly stated in written terms about whether or not (Leakey) will have the opportunity to provide a proposal. The question, in my mind, has never been fully answered. I feel that a decision was made without an opportunity for this agency to at least provide a proposal or an opportunity to continue in some form or fashion in providing … the quality service that they provided for five to six administrations."

Womack told fellow board members he agreed with Knott. "The one issue that really bothers me is Leakey Insurnace … not being able to bid on insurance," he said. "Leakey's has covered the school for several years and, to my knowledge, they have had no problems with complaints that I have been aware of. … For Leakey's not to be able to bid is not right, having had so many good years of coverage in the past."

Like Knott, Womack also said he had not understood that McGuire's decision to switch agents would prevent Leakey from submitting a proposal on behalf of Indiana Insurance. He said he put much of the blame for not realizing this on himself, saying he probably should have asked more questions.

"I was unaware at the time the decision was made to change the agent of record that Leakey's would not be allowed to bid on future coverage," Womack said. "And I think all of us maybe being honest with each other, at the time the decision was made, we did not know that that would knock them completely out of being able to bid. … Someway, this needs to be corrected."

"Why does Leakey not have the right to bid?" Beatty asked. "In October (2006), we made them an agent of record for Citizens Insurance. It was going to be one of the bidders. Why all of sudden can they not bid? … There's several insurance companies out there, and this school board, in October, made them an agent of record for that company. Now, if they can't use that company, did we make an error in doing that?"

Knott said he raised this issued because he wanted Leakey Insurance to be CAB's agent of record for Indiana Insurance, which would permit them to submit a bid on behalf of the company they had represented until McGuire made the switch. He then made, and Womack seconded, a motion to reinstate Leakey as CAB's agent of record for Indiana Insurance as of the start of this week.

In response to a question from Ware, Bundy said CAB could still go through the bidding process if the agent of record for Indiana Insurance was switched back to Leakey. However, he said he didn't think that making sure Leakey could submit a bid on behalf of Indiana Insurance should be the board's primary concern.

"This became an issue that we did not have adequate representation from our agent," Bundy said. "I think that is the bigger decision than going out and getting quotes. There are many things and many phone calls, many discussions, angles that I've looked at, and when it comes down to it, I don't think that, for many, many reasons, that it was in the school corporation's best interest to have Leakey Insurance continue to represent us as a school corporation."

Knott asked Bundy whether he had ever sat down with Leakey to go over CAB's policies and address any concerns there may have been over coverage.

"I talked to Chad on many occasions," Bundy said. "Not one time did he come up and say, 'Do you have issues with your coverage?' … There were plenty of opportunities for that to occur. It didn't occur - it never occurred. … When the discussions came about coverage, they were after we found out we didn't have coverage when he told us we did."

Beatty also raised an issue regarding materials Leakey had provided board members immediately prior to their June 12 meeting, saying e-mails between Leakey and an Indiana Insurance representative showed Leakey didn't put a quote together for CAB until two hours before he was scheduled to meet with school officials. Knott pointed out, however, that the e-mail correspondence did not reflect prior discussions and the length of discussions Leakey had with the Indiana Insurance representative.

Before the board voted on Knott's motion to reinstate Leakey, Fruth asked if such a switch would be legal and whether there were any notification time periods that need to be followed. With interim Superintendent Ray Pavy saying he didn't know, Knott amended his motion to state that a change back to Leakey, if approved, would be subject to any legal requirements regarding notification.

Once it became clear the vote on Knott's motion was going to result in a split vote, Fruth called for a roll call vote. As each board member's name was called, they registered their respective votes for or against the proposed change, with the motion failing 4-3.

While the board's discussion and debate and eventual vote on this matter did not come until near the end of last week's meeting, the insurance issue actually had been broached earlier, during public comments. Near the end of his close to 10 minutes of remarks to the board, Knightstown businessman Ron Short spoke of the "adversarial nature" of CAB's last two administrations and criticized the decision to drop a local agent in favor of one from New Castle.

"[Y]ou placed the insurance for this school system outside of this community," Short said. "To me, that clearly indicates that those people involved … do not have the interests, the concern for this school system and this community that you should have, and everyone concerned should step down immediately, clear the air and start out in a better direction."

Short left last week's meeting immediately after he addressed the board. Due to his early departure, he missed the ensuing discussion, debate and vote that took place on this issue.


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