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15-382. Authorization to self-insure; pooling agreements; joint agreements; trustees; liability coverage and pool requirements; definition

A. The school district governing board may determine that self-insurance is necessary or desirable in the best interest of the district and may provide for a self-insurance program or programs for the district including risk management consultation. Any risk management consultant or insurance administrator employed by a school district governing board must be licensed under title 20, chapter 2, article 3 or 9, and such license shall be verified by the school district governing board prior to employment.

B. The school district governing board may:

1. Enter into intergovernmental agreements or contracts with pools operated pursuant to section 11-952.01 for participation in programs offered by public agency pools. In addition to the joint purchasing of insurance or reinsurance or the pooling of the retention of risks for property, fidelity and liability losses, these programs may include the joint purchasing of health benefits plan, life or disability insurance, prepaid legal insurance or the pooling of the retention of their risks of losses for health, accident, life or disability claims or the provision of the health and medical services enumerated in section 36-2907.

2. Separately contract with a trustee or board of trustees that provides a common self-insurance program or programs with pooled funds and risks to more than one district, a community college district formed pursuant to chapter 12 of this title or an association of school districts within this state that is funded by member school districts pursuant to section 15-342, paragraph 8 or a pool created for and operated solely for charter schools pursuant to section 11-952.01. Beginning January 1, 2010, a trustee, board of trustees or pool that contracts with a school district governing board or charter school pursuant to this paragraph shall comply with title 38, chapter 3, article 3.1, title 39, chapter 1 and section 11-952.01, subsections M and N.

3. Enter into cooperative procurement agreements with other districts pursuant to rules adopted pursuant to section 15-213 to participate in programs for either self-insurance or the joint purchase of insurance.

4. Separately establish a self-insurance program solely for its district.

C. If the school district governing board, either alone or in combination with another school district or an association of school districts in this state that is funded by member school districts pursuant to section 15-342, paragraph 8, establishes a self-insurance program, the governing board or an association of school districts shall place all funds into a trust to be used for payment of uninsured losses, claims, defense costs, costs of training designed to reduce losses and claims, the cost of related employee benefits including wellness programs, life, disability and other fully and partially insured group insurance plans, programs that allow for participation in a cafeteria plan that meets the requirements of the United States internal revenue code of 1986, costs of administration and other related expenses. If a member of the governing board or employee of the school district is acting as a trustee, the trust shall be administered by at least five joint trustees, of whom no more than one may be a member of the governing board and no more than one may be an employee of the school district. Funds budgeted for self-insurance programs shall be subject to district budgetary requirements, including but not limited to the requirements that the funds be budgeted within the maintenance and operation section and the budget limitation on increases as prescribed in section 15-905. The funds, upon being placed in the trust, shall not lapse at the close of the fiscal year, except that any cash balance remaining after termination of the program and settlement of all outstanding claims shall be used for reduction of school district taxes for the budget year. The trustees of the trust must be bonded, a stop-loss provision must be incorporated in the trust agreement, and an annual audit must be performed by a certified public accountant and a copy of the report kept on file in the district office for a period of not less than five years.

D. If the self-insurance is for liability losses, excess liability coverage or reinsurance must be obtained as follows:

1. For a single school district, the coverage may include an annual aggregate limit of no more than three million dollars and the maximum retention per occurrence shall be one-half of one per cent of the district's maintenance and operation budget.

2. For a pool, the coverage may include an annual aggregate limit set by the pool and the maximum retention per occurrence shall not exceed one-half of one per cent of the combined maintenance and operation budgets of the districts in the pool.

E. "Self-insurance program" as used in this section means programs established and wholly or partially funded by the school district governing board. Self-insurance programs shall not include a decision by the governing board not to carry insurance upon a particular risk or risks.