Oregon’s Education Equation: Global trends drive insurance calculations

Dave Harvey, Property and Casualty Coverage for Education Administration director, travels Oregon telling school leaders how they rely on each other to hold insurance costs down. (Photo by Jake Arnold, OSBA)

The ripple effects of insurance mean a hurricane in Florida or a legal change in California can show up in Oregon school budget discussions this time of year.

Property and liability insurance is a significant line item in schools' budgets, but much of the expense is driven by events outside a district's boundaries. School leaders can make choices to minimize their costs, but a major disaster, lawsuit or court decision anywhere in the system affects everyone.

"You have to have insurance," said Dave Harvey, PACE Administration director. "But you are reliant on your neighbors not to have issues that will cost you money."

School district finances are wildly complicated, with dozens of sources of interlocking income and expenses that are mostly out of school leaders' control. Through the rest of the year, the OREdNews series "Oregon's Education Equation" will be taking a deeper look at important aspects of school district finances. Insurance costs are a mixture of local choices and the ramifications of state legislative moves, national incidents and international winds.

OSBA and the Special Districts Association of Oregon joined forces in 2006 to create Property and Casualty Coverage for Education. PACE members contribute to a pool that covers a significant portion of losses and pays for coverage in the global insurance market for the largest events. Because it's a cooperative effort, the fewer claims on the system, the healthier the pool, the better off everyone is.

PACE covers around 300 Oregon entities, including education service districts, community colleges, charter schools and all Oregon's school districts except for the three largest. The Portland, Salem-Keizer and Beaverton school districts self-insure.

Education entities' total PACE contributions are expected to exceed $90 million in 2026-27, more than double what it was in 2020-21. The global market is driving much of that change.

This year, members' average cost will increase 9.5% after an average increase of 14.3% a year over the previous five years, according to Chris Hill, PACE underwriting manager.

PACE works hard to make those cost increases as predictable and smooth as possible, Hill said. PACE is mindful of districts' budgets while also trying to maintain enough of an asset pool to ride out any spikes, he said.

PACE's ongoing efforts at containing costs and strong fiscal management have held members' cost increase under the rate of insurance market increases. Member contribution costs have increased 168% over the past 10 years, while the cost to provide insurance has increased 184% and the claims paid out have grown 268%, Hill said.

Last year, PACE was able to pay out more in claims than it took in from members because of the money it makes from investments. PACE has more than $80 million invested and net assets of $50 million, according to its 2025 fiscal report.

PACE's basic coverage is broken broadly into two categories: Property and general liability.

PACE covers roughly $35 billion in Oregon school property. Much like personal homeowner or car insurance, individual district rates depend on things such as property value, claims history and the deductible level.

For property, modern building techniques and technologies have reduced the dangers, offsetting the higher values of newer buildings, but a big local claim can still reset everything.

"One bad wildfire can affect it all," Hill said.

PACE Board Chair Dawn Moorefield warned that Oregon's aging school facility infrastructure is a ticking time bomb, though. Older facilities are more expensive to insure and more prone to costly failures. The state provides limited grants to districts for specific types of capital projects, but it's otherwise up to local districts to determine how to cover building maintenance and upkeep through their general fund budget or via a capital construction bond that must be approved by voters.

School districts facing tight budgets must weigh every spending choice against staffing costs, which make up more than 80% of school budgets. Replacing an increasingly loss-prone facility might be put off in favor of keeping important staff, said Moorefield, the Jefferson School District superintendent, but that raises the potential cost down the road.

Moorefield said PACE can help, though. PACE provides free inspections so schools can spot problems before they become claims.

PACE's preventative training for staff is even more important, Moorefield said.

General liability insurance, which covers things such as lawsuits and student injuries, is soaring in cost.

PACE offers districts a 5% discount on rates if districts complete training courses. This year, PACE emphasized sex abuse prevention. In 2026-27, PACE's training emphasis will be proper supervision to prevent accidents. PACE pays out more for bodily injury claims than any other general liability category.

PACE tells districts that heading off big accidents and big lawsuits saves everyone money, and every dollar that isn't spent on insurance is another dollar that can go to classrooms.

"I think it is supremely important for superintendents to understand the importance of making sure our staff are well trained," Moorefield said. "Prevention is one of the few ways districts can take control of costs. A lot of things can be avoided."

For property insurance, PACE pays the first $7.5 million in total statewide claims after deductibles with reinsurance picking up anything above that.

For general liability, PACE covers the first $2.5 million of a claim after a district's deductible, and then reinsurers cover up to $20 million. PACE coverage maxes out at $20 million. Above that, costs go back to the district.

The PACE pool covers the majority of claims, and a network of reinsurers pick up the catastrophic-level events. Reinsurance is basically insurance for PACE. PACE takes out policies with the international insurance markets, and the factors affecting those rates are often outside Oregon districts' reach.

Reinsurers have become harder to find for the school general liability side, Hill said. State legislatures around the country have passed laws addressing issues such as sexual abuse, employment practices and liability in schools that have led to more lawsuits and higher settlements, scaring off insurance companies.

Oregon legislative actions that make it easier to sue schools and harder to take action against employees also increase the schools' liability, making coverage more expensive, according to Harvey.

"New laws have ripple effects even if a school never gets sued," Havey said. "Our reinsurers are taking everything into account."

In addition to offering insurance coverage tailored for education entities, PACE delivers services from OSBA and SDAO. OSBA's contributions include legal advice, communications expertise, training and legislative advocacy. SDAO handles risk and claims management and underwriting.

Dawn Watson, a PACE board member and OSBA Board president, said services such as legal advice at no additional cost pay for themselves.

"The thing that saves you the most is the preloss legal advice," said Watson, a Phoenix-Talent School Board member. "A couple of calls to a private attorney could cost more than a smaller district's whole PACE membership. When it's free, you make the call before there is a problem, keeping our students and staff safer."

Watson said her district watches the PACE rate closely during budgeting season.

"The rate goes up every year; we know this," Watson said. "With PACE we get a better deal than we could privately."

- Jake Arnold, [email protected]

Previously in Oregon's Education Equations

District leaders balance instructional hours against other needs