The health plan that more than 100 Idaho school districts and charter schools relied on to cover their employees has run out of money. A state official now controls it, and local school boards are pulling from their own budgets to repay a $13 million shortfall.
Since Sept. 24, the Idaho School Benefit Trust has been controlled by Dean Cameron, head of the Idaho Department of Insurance, who serves as its court-appointed rehabilitator. The order from Judge Lynn Norton of the Fourth District Court in Ada County gives him control of the trust's bank accounts, contracts and records, plus the power to pursue legal remedies if there are signs of criminal conduct. The five trustees, four of them former school superintendents, remain in place, but the order bars them and the trust's benefits manager from conducting its business without his written permission.
On Oct. 9, Cameron said collecting the money and getting districts to sign had been somewhat harder than expected. Nearly 20 districts were already behind on payments before the shortfall bill went out, he said, and claims for employees of any district that is in arrears or has not paid are being held.
One district is still a holdout. Wallace Superintendent Todd Howard said his North Idaho district will keep making monthly payments but will not sign the 12-month contract required for monthly payers. Under the department's terms, a district that pays monthly without signing that contract, an addendum to its participation agreement, is treated as delinquent.
How a $22.5 million cushion ran out
Until this fall, the trust was self-funded. Member districts and charters paid contributions in, and the trust paid medical claims for employees, retirees and dependents, with Blue Cross of Idaho processing the claims.
In August 2021, the trust had $22.5 million in its fund balance. Four years later, it was down to $2.1 million. An independent audit put the trust $11.3 million below its legally required surplus as of Aug. 31, 2025. Nine months later, it was $23.9 million short. The trust lost $12.6 million in the first three quarters of its fiscal year and sat at a $10.5 million deficit at the end of May, when state law required $13.4 million in reserves.
The department opened an examination on Aug. 3, declared the trust financially hazardous on Aug. 25 and asked the court two days later to hand control to the state. The department's fix had two parts. Blue Cross lent the trust $11.9 million at 6 percent interest to cover claims from the plan year that ended Aug. 31, and every member got a bill for its share of the shortfall so the loan can be repaid. Since Sept. 1, Blue Cross has fully insured the plan, so new claims are the insurer's risk rather than the districts'.
Districts pay, many under protest
For many school leaders, the sore point is timing. Districts had to commit to the 2026-27 plan year by July 1. On July 14, the trust's benefits manager told them the money was gone. In a Sept. 18 letter to Gov. Brad Little, a group of North Idaho superintendents said they believe the trust deliberately held back the news until renewals were locked in, leaving local education dollars to cover what they called the trust's "systemic silence."
Each member had until Sept. 10 to pick a lump sum or monthly installments, with the first money due Sept. 30. Monthly payers had to sign the binding contract and pay $21.74 per plan member each month under a financing agreement, while lump-sum payers avoid interest. Several districts scrambled to find lawyers without a conflict of interest. Kimberly Superintendent Luke Schroeder said his district tried three other firms before landing one, met with that attorney on deadline day and had trustees approve a lump sum later the same day. He said the district felt "threatened" by the warning that employees' medical claims would go unpaid.
Kimberly, Filer and Caldwell sent Blue Cross identical letters saying they waive no legal rights. West Jefferson signed the monthly contract but attached a list of concerns. Superintendent Shane Williams wrote that the department had declined to share the terms of the Blue Cross loan, saying they were exempt from public disclosure, and the district called the Sept. 10 timeline "unreasonable and dangerous."
The bills come out of school budgets that taxpayers fund. Caldwell's share is $594,647. West Bonner County is covering $117,200 out of contingency funds, in monthly payments through June 2027. Coeur d'Alene, the trust's largest member, owed $1.8 million. Superintendent Shon Hocker told the state that "as stewards of taxpayer funds," the district needed more information before paying that much.
His board first voted to pay $51,000 a month without signing the contract, then learned that option required a signature. After an emergency meeting, and with some employees reporting denial notices for care received in July and August, the district paid its full share in a conditional lump sum by Oct. 1. Hocker told staff the payment would "put an absolute end to the uncertainty" about their summer coverage.
Cameron rejects the word "denied." He said no claim for a legitimate, covered service has been denied under the Blue Cross arrangement. Those claims have been held or left unprocessed, he said, because the money to cover them was not there. Any teacher who received a denial, he added, should contact the Department of Insurance.
Gov. Little's office has said insurance decisions for school employees belong to local districts and charter schools. It said it is confident the department is "taking appropriate actions" and will support efforts to bring stability to districts and their employees.
Investigators are still looking for answers
A separate team of department staff and contractors is investigating what went wrong and whether anything inappropriate happened. Cameron told lawmakers in September he hoped that work would wrap up before the Legislature convenes in January. He has said he cannot yet disclose what the department has found in the trust's books. If examiners uncover administrative or criminal violations, the department says law enforcement will be brought in where appropriate, and any money recovered will go back to the trust's member schools and districts in proportion to what they were assessed.
Cameron said no state general fund tax dollars are paying for the takeover or the investigation. The department runs on fees from insurers, agents and third-party administrators, and it is not charging the trust for its work. He is reviewing about 16 trust contracts, including deals with actuaries, consultants and lawyers, and said anything that pulls money away from paying claims is "being carefully scrutinized." The contract of benefits manager Debbie Hainke expired Sept. 30.
The department will stay in charge until Blue Cross is repaid, which could take three years. The next decision belongs to school boards. This year, renewal notices went out in late April with answers due July 1. When that window opens again, every member district will have to decide whether its employees' health coverage stays in the trust at all.