S.D. Tribal School Waits for Insurance Settlement from St. Paul Travelers

April 24, 2006

The South Dakota Crow Creek Tribal School is in danger of closing because an insurance company has not settled the school’s claims from a fire that destroyed the student dormitory at the campus in Stephan a year ago, officials said Friday.

School Superintendent Scott Raue and Gov. Mike Rounds held a news conference to discuss the situation, saying they hope Minnesota-based St. Paul Travelers will settle the insurance dispute quickly so the school for American Indian students can finish the school year.

Raue said the school, run by the Crow Creek Sioux Tribe in central South Dakota, used its own money to build temporary dormitory buildings and a kitchen area so the school could operate this year. He said the school money was spent in anticipation of getting the insurance settlement.

Raue said that unless the insurance dispute is settled, the school might be unable to make payroll on May 3, which could mean the school would close two weeks before the end of the school year. Besides local students, the school also educates students from other areas of the state.

“All along it was our goal to make sure the students at our school had a safe setting, an educational setting that we could operate for over 600 students so they could be safe. We accomplished that,” Raue said. “We are here today because of the fact that the insurance carrier has not in my estimation done good faith in what they promised they would do.”

Rounds, who was in the insurance business before becoming governor, said the press conference was not intended to put pressure on St. Paul Travelers, which he said has an excellent reputation. But he said he directed the state Insurance Division to write a letter asking the insurance company about the delay, and he said he has asked state Attorney General Larry Long to look into the matter.

“We fully intend to do everything we can to resolve the situation in hopefully an amicable fashion prior to the time the school would have to close,” the governor said.

Kim O’Connell, a spokesperson for St. Paul Travelers, said company officials familiar with the case were not available late Friday to comment.

Investigators couldn’t determine the cause of the April 2005 fire, but said it was not deliberately set.

Raue said the school’s total loss from the fire amounted to about $4.5 million. The Bureau of Indian Affairs provided $1.3 million to help build temporary dorms so classes could open last fall, and the school has received some other help, including about $400,000 from the state.

St. Paul Travelers already has advanced some money to the school, but officials said they believe the school is still short about $2.6 million.

The school was insured for extra expenses and lost income through a program in which many South Dakota schools join together to insure themselves. Money from those schools is used to cover small losses. But the program, run by the South Dakota Associated School Boards, buys insurance from St. Paul Travelers to cover large losses.

Dick Tieszen, a lawyer for Associated School Boards, said St. Paul Travelers has argued that because the school received $1.3 million from the BIA, the insurance company is entitled to a credit that would reduce the insurance payment by that amount.

Tieszen said he could not discuss details, but the school has offered to accept less than its original claim in order to settle the issue quickly.

“The school is in jeopardy,” Tieszen said.

The Crow Creek School District has 600 students, with about 400 in the middle school and high school in Stephan. Raue said 204 students live in the new temporary dorms built in Stephan.

Raue said the school system has 220 full-time and part-time teachers and other staff, and he hopes the staff members would agree to work without getting paid to finish the school year if the insurance dispute is not settled.

Crow Creek Sioux Tribal Vice Chairman Rocky Fallis said some people might criticize the decision to use operating money for the temporary dorms. But he said Raue should not be blamed for that decision because the tribal council, which also sits as the school board, agreed to that plan to keep the school open.

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