It appears LAUSD was under the impression that the school was already paying for property insurance for the facilities occupied by Palisades High School under the Sole Occupancy Agreement. Brandon Cole (Gallagher Insurance) clarified that the district historically maintained blanket coverage. The school’s 2026/27 budget includes $855,000 for insurance costs. The cost of purchasing $50 million in coverage as well as Business Interruption Insurance and Extra Expense of $15 million would add an additional $499,251to the budget.
Although the appraised value came in at $140 million, the administration recommended
using $50 million to limit the cost of adding the insurance while still providing coverage
for the buildings. Obtaining $100 million in coverage would require a policy premium
of $850,000. Because the policy is layered, the school has the option to secure $50
million in coverage initially and add capacity later, though the requirement for a finalized
policy remains urgent.

Trustee Jane Davis reported on behalf of the Budget & Finance (B&F) Committee. The
Committee declined to take formal action on the item but instead brought a the
item forward to the full Board for a vote. Davis expressed the Committee's concerns
regarding a perceived lack of transparency on the issue. She highlighted the critical
nature of the timing, noting that the item was presented just two days prior to the
expiration of the current policy term, risking a lapse that could leave the school’s
buildings entirely uninsured. B&F Chair Sara Margiotta added that the Committee
strongly desired more time to make an informed decision with more comprehensive
information including advice from counsel.

Trustee Ben-Cohen stated that while she was aware of impending changes to the SOA,
she had not anticipated a financial commitment of this magnitude from the school.
Additionally, it was noted that EDP Magee had not been provided with the necessary
property appraisals. Melissa Hollingsworth (Deputy Chief Risk Officer, LAUSD) and
Sarah Coleman (Pali Counsel, YM&C) have been actively involved in the situation.
Trustee Davis recommended that the school secure an initial policy insuring up to $50
million. She emphasized that this demonstrates a clear good-faith effort by the school to maintain proper coverage, protecting the institution from any claims of bad faith by LAUSD that could potentially jeopardize the school's charter status and negotiations of the Sole
Occupancy Agreement.

The proposed expenditure is $499,251. This includes a deductible of $250,000 providing  $50 million in property coverage, which includes  Business Interruption and Extra Expense (EE) insurance coverage of $15 million.  The Administration will return to the Board with formal recommendations for any increases to the coverage limits after the SOA is finalized and Gallagher Insurance provides final quotations. The Board explicitly noted a reservation of rights to seek full reimbursement from LAUSD if it is subsequently determined that the legal obligation to cover any insurance costs rests with the school district. To accommodate this unexpected expense, a non-essential spending freeze will be implemented until the school's financial outlook stabilizes. In response to inquiries from Trustee Monahan regarding fall spending, Sara Margiotta clarified that the status of the "hold harmless" agreement should be known within the next few days which will provide more clarity regarding the fiscal outlook for the 26/27 school year.