The City of Flemingsburg will be taking part in a class action lawsuit against the Kentucky Department of Insurance to recover borrowed money.
On Jan. 6, 2010, the Kentucky League of Cities Insurance Services Association loaned $5.5 million for workers' compensation and $2.5 million for property and liability insurance to the Kentucky School Boards Insurance Trust. This was a loan approved and directed by the KDOI.
KSBIT was an organization that began in 1978 as a way to allow schools boards to pool their money and share in the risk, according to the KSBIT website. It allowed school boards to cut down the cost of having to find a private insurance provider.
However, due to a large number of claims, and KSBIT paying out more than it was taking in, it accrued a large amount of debt. When KSBIT began to become unstable, the KDOI requested the loan be made to KSBIT.
"That did not work, and the (DOI) has taken (KSBIT) over," Flemingsburg Mayor Marty Voiers said.
Fleming County School District Superintendent Tom Price said during several meetings last year that the district would be one that had to pay back money on the debt left by KSBIT.
Voiers said, during a recent meeting, that many districts have not been paying back the money for the debt, which led to the KLCIS asking to be repaid the money loaned in 2010.
According to Voiers, the KDOI officials have said they do not consider the money to be a loan and will not repay the $8 million.
"There is now a class action lawsuit to recover some of this money," Voiers said to council members. "As a part of the KLC, this is our money, too, so I hope that you will see fit to pass this resolution, allowing us to be a part of this."
Council passed the resolution and Voiers said he would inform KLC.
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