New Orleans public schools will pay 55% more for property insurance this year
New Orleans public schools received a blow they knew was coming this week — another large jump in the district’s property insurance premium, on top of last year’s 50% increase.
The premium is up another $4.3 million, an increase of more than half, to $12.2 million for the fiscal year, which starts in July. Board members approved the new policy Thursday evening.
Higher insurance rates are the main cause, though the district also saw its total insured value rise from $1.9 billion to $2.4 billion due to repairs and upgrades, which also increased its premium.
“It’s really a squeeze,” said Stuart Gay, the district’s chief financial officer, at the board’s Tuesday meeting. “We have a lot of work to do this year again with looking at our facilities and doing some things to try to help mitigate cost overall.”
That includes selling buildings and properties that are not in use.
Gay said the district has tried “every other lever” to bring costs down.
“We’ve almost pulled them all at this point,” Gay said.
Individual charter schools pay the district for property insurance based on how many students they enroll, rather than the cost of insuring their actual building. Last school year, the per-student cost was $185 for schools. Now it’s $280.
Gay said the district covers the cost of insuring vacant properties directly, using money from its general fund.
New Orleans isn’t the only district facing prohibitively expensive insurance rates. Costs are up everywhere, as insurers retreat from high-risk markets like Louisiana, driving up prices there the most, but also across the country since the whole market is interconnected.
John Ford, deputy commissioner of public affairs for the state’s Department of Insurance, said in an email that rates have risen significantly in coastal Louisiana for all types of commercial properties, including school buildings.
He said the department is trying to bring down rates by incentivizing insurers to write new policies, promoting higher building standards, and supporting other policies that could make the state more attractive to insurers.
Olin Parker, New Orleans school board president, said he hopes to see more action from the state, including more funding for schools to help offset insurance costs.
Schools in Louisiana received billions of dollars in federal stimulus dollars to help combat the coronavirus pandemic — which many say provided a vital lifeline — but that funding was temporary and runs out this school year.
Parker pointed to K-12 funding, which has been near stagnant in the state for the last decade.
It’s a concern he’s brought up before.
“I just want to make that point again,” he said.