Leann Hubbard said she’s never seen such a large unexpected, unbudgeted financial obligation.

The business manager for Lewiston Independent School District said the district’s estimated share of the Idaho School Benefit Trust’s $13 million shortfall exceeds $1 million.

Like every other school district in Idaho, Lewiston’s budget is already set. Employee premiums are already set. But beginning next month, the district will start making monthly payments to the trust until that more than $1 million is satisfied. Hubbard said the money will have to come out of the fund balance.

District leaders do not want to cut any programs, she said. They will watch spending carefully and look for cost savings throughout the year.

Lewiston is one of several school districts EdNews contacted to ask how they will pay down their portion of the trust’s shortfall. Each district is unique, and the payment amount depends on how many employees and dependents are on the insurance plan.

Hubbard wants to know how the Idaho School Benefit Trust ran out of money.

“There should be safeguards to prevent the reserves depleting,” she said.

In mid-July, the trust’s benefit manager, Debbie Hainke, informed the 108 member employers — mostly school districts and charters — that the trust exhausted its reserves paying extremely high claims.

She sent another email Thursday telling members that an additional $13 million is needed to cover claims for the 2025-26 benefit year. The members are responsible for covering that shortfall. The trust told members they have to choose a payment option by Sept. 10 — and pay a lump sum or make a first monthly payment by Sept. 30.

The trust provided members with two important numbers Thursday. If they opt for a lump sum, they will have to pay $714 per employee and dependent on the plan. For monthly payments, they will pay $22 per employee and dependent. The monthly payments will likely continue for three years.

“It’ll be interesting when the (Department of Insurance) gets their audit done and hopefully has more explanations on why the safeguards didn’t prevent this,” Hubbard said.

In a Friday interview, an insurance broker compared the situation to the 2008 financial crash.

Just as homeowners back then thought their mortgages were safe and backed by the Federal Deposit Insurance Corporation, school leaders felt comfortable with the history, reputation, oversight and underwriting of the Idaho School Benefit Trust.

“Essentially, it’s an unraveling of something that seemed so safe,” said Scott Jones, executive vice president of employee benefit sales for HUB International.

A lump sum from Orofino

Orofino School District is taking the lump sum option, according to Superintendent Jason Hunter.

The district is in a “pretty decent place” after years of good financial management, he said, and will take the estimated $280,000 to $300,000 payment out of a proprietary insurance fund the district has built up through a deductible buy-down program.

While the trust ran into trouble after claims exceeded contributions, Hunter said the opposite took place in Orofino.

Basically, the district created its own separate, self-insured pool by buying down employee deductibles. If employees have low claims over a year, the district is able to put money into a fund that can help offset the cost of insurance premium increases.

But now that money will go toward paying down the trust’s shortfall. Hunter said paying the lump sum will not have a negative impact on students or programs.

“I don’t want to make it sound like it’s no big deal by any means,” he said. “It’s a significant hit, but we’ve had pretty good financial management for the past many years.”

Frustration over lack of communication in Grace

In Grace School District, Superintendent Jason Moss said the estimated lump sum obligation is $74,330. If the district chooses monthly payments, it would be about $2,260.

“We have discussed the issue amongst ourselves and with our insurance broker and would most likely choose the monthly payment option,” Moss wrote in a Tuesday email to EdNews.

He said district staff are frustrated that they were not notified of the shortfall earlier.

“While I recognize and appreciate the contractual agreement we had with ISBT, I am disappointed by the lack of communication over the past several years as the trust began experiencing significant losses,” Moss wrote.

Public tax documents show the trust’s fund balance was $22.5 million in August 2021, but dwindled to $2.1 million by August 2025, after the trust recorded a loss of $9 million in one year.

A fluid situation in Horseshoe Bend

Less than a week after learning of the payment deadlines — just as a new school year begins — many public school leaders are still figuring out how to proceed.

Horseshoe Bend Superintendent Dennis Chesnut wrote in a Tuesday email that he considers this a fluid situation.

“Obviously, this wasn’t part of our budget as the budget was already set by the time we received the news,” Chesnut wrote. “While the trust has given us deadlines, there are still some questions that need to be answered before I am comfortable cutting any checks to the trust to help cover this shortfall.”

The trust will provide school districts with an aggregate lump sum amount “in the near future,” according to the email Hainke sent on Thursday.

An exact quote for Marsing

Marsing Superintendent Norm Stewart said he’s leaning toward monthly payments, even though it will cost a bit more over time.

After receiving Hainke’s Thursday email, Stewart said his business manager reached out for more information. Hainke responded on Monday afternoon and said the district has 132 medical members on the trust’s insurance.

The lump sum is a little over $92,000, Stewart said, and he received an exact quote for the monthly payments: $2,869.46 for 36 months.

“We’re looking at that as a better option for us,” he said.

That money will come out of the general fund. It will require making some changes and pulling money out of the reserves. Stewart said anytime a district has to find extra funds, it’s naturally going to be a burden.

“We formed the budget not around an idea that this was coming up,” he said.

Three districts dispute membership list

The Idaho Department of Insurance last month provided EdNews with a list of the 108 member employers (opens in new tab) that participate in the Idaho School Benefit Trust.

As EdNews has contacted some of the districts on that list, three superintendents said their districts are not medical members and not liable for paying down the shortfall. The list has 10 members highlighted in yellow to denote dental and vision only. The three districts in question — Hansen, Blaine and Bonneville — are not highlighted.

Hansen Superintendent Shane Hild said the district left the medical portion of the trust after the 2024-25 school year and now only participates in dental and vision.

“Debbie at the Idaho Benefit Trust confirmed that Hansen SD is owing zero dollars in regards to the medical benefits shortfall,” Hild wrote in a Monday email.

Superintendent Jim Foudy in Blaine County School District confirmed with his human resources department that the district left the trust a few years ago and is now with Select Health.

“We are still part of the Benefit Trust for vision and dental,” Foudy wrote in an email. “For dental, it’s one of two options for employees. We are not part of the Benefit Trust for medical.”

Bonneville Superintendent Scott Woolstenhulme said his district has been with Select Health for the past two years and uses the trust for dental only.

“We haven’t had any specific communication that there’s going to be any cost to us on the dental side,” Woolstenhulme said in a phone call earlier this month. “But it would surprise me just because I don’t think that’s what’s creating the issue for them.”

EdNews Tuesday reached out to the department to verify the membership list. Public information specialist Julie Robinson said the list reflects the current record in the department’s system and an examination is underway. She suggested EdNews should ask Hainke to confirm the list.

“We do not have access to that detailed membership information except through Ms. Hainke,” Robinson wrote in an email.