Editor’s note: Thank you to the State Fire Marshal’s Office, Jeffrey Elmore in the Speaker’s Office, Andrew Smith in the Senate Pro-Tem’s Office, and Superintendent Mark Garrett for working with the authors. This article is part of EdNC’s playbook on Hurricane Helene. Other articles in the playbook are available here.
The Public School Insurance Fund (PSIF) is a state-managed insurance fund created to insure the property assets of North Carolina Public Schools. The PSIF was formerly maintained by the N.C. Department of Public Instruction (DPI).
In 2020, the fund was transferred to the Office of State Fire Marshal (OSFM). The OFSM manages the State Property Fire Insurance Fund, a fund with a massive portfolio. This transfer was initiated to combine the two insurance portfolios into a single pool of over $70 billion.
The Public School Insurance Fund in 2025
Participation in the PSIF is optional, but in 2025 included:
- 74 of 124 (60%) Local Educational Agencies (LEAs),
- 1 of 210 (.05%) public charter schools, and
- 31 of 58 (53%) community colleges.1
Nonparticipants have approved commercial insurance. LEA participation includes all coastal counties. The largest non-coastal participant is Cabarrus County.2
Participation is being dissuaded by independent coverers bundling property insurance into other insurance offerings not provided by the state.3
The impact of Helene
There are six western counties with paid claims from the PSIF for Helene, including Burke, Haywood, McDowell, Mitchell, Watauga, and Yancey.4
$15 million in insurance claims has been distributed thus far, with $10 million pending and more claims rolling in.5
After Helene, underinsured districts were not the issue. The main challenge came from flooding in districts without flood insurance due to low probability, and lack of inclusion in FEMA’s 1% annual risk maps.6
The revenue situation
From 2019-24, the Public School Insurance Fund had on average $22,822,238 in revenue and $36,490,138 in expenditures, an annual average deficit of $-13,667,900.7
Reinsurance is essentially insurance for insurers.
The deficit occurs because reinsurance premiums paid outnumber reinsurance losses by an average amount of $17 million annually.
Specifically, the state paid an annual average of $24,929,809 from 2019-24 in reinsurance premiums while receiving $7,497,517 in losses paid by reinsurance.8
This is strong catastrophic protection, but if reinsurance premiums continue to increase it could drain reserves.
A large volume of claims under $10 million could drain reserves.9
PSIF covers a $10 million deductible from collected funds. There has been an increase in smaller losses below $10 million, which can accumulate over time.10
Premiums for schools could be reduced when the total fund balance is 5% of all insured property value, but that is not possible without increased participation rates.11
Legal requirements, updates, and proposals
According to state law, schools must insure:
- At least 80% of insurable value of flood insurance on property in FEMA 1% annual floodplain risk map, and
- At least 80% of insurable value for property insurance.12
In 2020, the PSIF was transferred from DPI to the OSFM. The motivation behind this transfer was to combine the PSIF with the OSFM’s State Fire Property Insurance Fund (SPFIF). The combined value of these funds is over $70 billion.13 The SPFIF currently mandates state entities to purchase insurance through the OSFM, setting a potential precedent for mandatory enrollment for the PSIF.
In 2024, House Bill 263, the “2024 Appropriations Act,” proposed for the PSIF and SPFIF to be moved to the Department of Insurance for the creation of a new “State Public Education Property Insurance Fund.” It would have, among other proposed changes, established an enterprise fund for supplementation, eliminated reinsurance, and changed the system of rates negotiation with local education authorities.14 It did not pass in 2023-24 session.
In 2025, Gov. Josh Stein requested $20 million in recurring funds and $50 million in nonrecurring funds to the OSFM for the PSIF.15 No funding has been allocated to OSFM for the PSIF as of yet.
To date, $25 million has been allocated through House Bill 1012 to Yancey County Schools to construct new or update existing school facilities. This bill also allocated $31.3 million to DPI for Capital Recovery Funds for the Public School Facilities Program, and $8 million to DPI to disburse as a competitive grant program (maximum award is $500,000) to public school units denied insurance coverage or federal aid to repair public school infrastructure or buildings damaged by Hurricane Helene in the affected area.16
To qualify for these funds, public school units must have been denied insurance coverage and federal aid for the infrastructure damaged prior to receipt of the funds.
An alternative to the PSIF: Henderson County snapshot
Henderson County Public Schools carries private property insurance placed through Surry Insurance, a western North Carolina-based broker. In the aftermath of Hurricane Helene, Superintendent Mark Garrett says the district’s insurer, Liberty Mutual, was responsive, sending adjusters and engineers out quickly to assess damage to school property.
The Helene claims were the first property insurance claims Henderson County Schools has made since Garrett began his tenure in the district in 2022.
The insurer settled the claim and paid the vendor directly its $1.1 million in damage costs to Atkinson Elementary, which Garrett found crucial. He says it would have been a challenge for the district to pay such a large sum up-front and wait for reimbursement.
The district’s finance director, Bernard Sochia, says Henderson County reassesses their insurance coverage options every few years, and there hasn’t yet been a significant price difference in coverage options to justify a move. Their insurer bundles property insurance with other coverage like workers’ compensation and cybersecurity, offerings the PSIF does not have available.
Garrett has found in his experience that “having options and competition for a district’s business is a good thing.” According to him, all Henderson County school facilities are fully insured, but the district is utilizing state funding to cover specific items at two schools that are excluded from its property insurance coverage.
Possible considerations moving forward
- Mandatory PSIF enrollment.
- Self-held policies feature much lower capacities than state-held program ($70 billion). This would reduce the risk of bailout for undercovered districts in event of catastrophe.
- Full participation in PSIF would increase revenue significantly17.
- Economies of scale would likely lower costs for everyone, and benefit may be greater to smaller districts than larger districts.
- A penalty for nonparticipation could be the inability to request legislative funding in event of disaster.
- Increase reporting requirements to Office of State Fire Marshal among nonenrolled LEAs.
- After Helene, NCOSFM was the contact point for FEMA to reach school districts18. A centralized contact point facilitates easier pass-through of resources and communication of needs. Increased reporting to NCOSFM among LEAs would make communication with FEMA more streamlined.
- Mandatory All Other Perils (AOP) insurance coverage.
- This is popular among universities and other state entities, but does not include flood insurance19.
- This could mean improved coverage, but increased deductible occurrence can cause an increase in smaller losses and a decrease in larger ones.
- Revision to laws requiring charter schools be included in all minimum requirements.
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