SAN ANTONIO -- These days, school districts across the nation are searching for ways to make money. And one local district is trying something, it says, no other district in the country has done before. It's figured out a way to make money when its employees die.
It may sound like a strange idea, perhaps even a bit morbid, but the Southside School District is paying for life insurance policies on 25 of its key employees; and the district is listed as one of the beneficiaries. So if one of those employees dies, the district makes money.
The district says it will also help them hold onto their top administrators, since they'll be getting free life insurance.
News 4 WOAI Trouble Shooter Jaie Avila asked Southside administrators, “What does the employee get out of this?"
"Unfortunately, the employee passes away, but the heirs are the ones that are going to benefit, along with the school district," Ricardo Vela, Southside ISD’s Assistant Superintendent, answered.
Here's how it works:
The school district pays the premium to insure the employee for up to fifteen times their annual salary. If the employee dies, the death benefit is shared between the family and the school district. The exact split hasn't been determined yet, but the district claims the family will get at least 50% of the payout.
But if the employee leaves to work for someone else, the district can keep paying on the policy and collect the entire death benefit.
"Does any part of you think that this is kind of morbid? That the district might profit off an employee's death," Avila questioned.
Richard Vela paused before answering, "Do I feel it would be morbid? No, because I feel we would be providing a fringe benefit to our employees that is going to be of great benefit to their heirs."
We got a different reaction when we explained the plan to people in the district.
Mercy O'larnic, a local parent, said "To me, that doesn't sound appropriate. It just seems they're benefiting off a death. I mean, even though it could be an accident or what have you, I just don't think that's appropriate. That should be left to the family."
The district says schools will benefit in another way, because it will be able to borrow against the value of those life insurance policies. They tell us the money can be used to buy things like buses, computers and receive a better interest rate than they would from a bank.
"This is going to be a trend for the future in Texas and in the nation,” Vela explained. “[Districts] have an opportunity to grow their money, and at the same time, have a fringe benefit for their employees."
Southside ISD estimates it will cost $3.2 Million for those life insurance policies. But they insist the investment will pay off, even if some of its employees aren't around to see it.
Employees will have to give their consent before the district can take out the policies and the workers will have to pay the taxes for the coverage. The life insurance plan has already been unanimously approved by the Southside school board and the final details are being worked out with the insurance companies.
