HERMOSA BEACH (CBSLA.com) — A local school district is facing scrutiny once more after the board had paid for a whole-life insurance policy on its now-suspended superintendent, whose lavish salary was already inflated.
Centinela Valley Union High School District Superintendent Jose Fernandez came under fire when it was revealed he brought in $663,000 in total compensation in 2013 — that’s more than the President of the United States makes annually.
Documents from the school district, obtained by KCAL9 investigative reporter Dave Goldstein, suggest the district is paying an additional amount of over $50,000 each year for a $1,000,000 whole-life insurance policy in Fernandez’ name.
“From what I can tell, the cash benefit here, the cash value would revert entirely to the policy owner, Mr. Fernandez,” veteran insurance agency executive Raymond Arouesty told CBS2/KCAL9’s Dave Bryan.
As opposed to a more affordable term-life insurance policy, which most people have, a whole-life insurance policy allows Fernandez to cash the policy in for over $150,000, assuming the policy’s payments are made on time.
“The insured person could at any time, even in the first year, give these policies — give one or both of them — back to the insurance company, and receive the cash value,” Arouesty said. “Those amounts are guaranteed in the policy.”
If the district were to make payments for the policy, which was taken out in 2010, over the next six years, Fernandez would then be able to cash the policy out for just under $500,000.
Also included in the school districts documents was the paperwork for an additional $750,000 whole-life policy with Fernandez listed as the insured owner.
While it is not yet known whether the second policy was taken out as a replacement for the initial policy, or whether it was taken out as a separate, additional policy, the arrangements for the policy itself appear to be nearly identical.
“I don’t know why an entity would buy a policy that had so much, such a substantial cash value increase, because what it does is just increase the price of the policy” Arouesty said. “If there was a need or desire to provide a death benefit, it certainly could have been done in a cheaper way with a term-life insurance policy.”
Teachers Association President Jack Foreman, meanwhile, calls the policy another way in which Superintendent Fernandez can rack up a huge payout at the expense of the schools.
“This is many, many hundreds of thousands of dollars that is again being spent on Superintendent Fernandez, instead of on the students of our school district,” Foreman said.
Fernandez was placed on administrative leave on April 9, following a sudden, closed-door meeting with the school board. Fernandez’ suspension was announced as an investigation was being planned.