In 1935, a provision to provide Unemployment Compensation benefits for workers temporarily unemployed through no fault of their own was signed into law. Effective January 1, 1978, this provision was amended to extend coverage to government agencies. With this extension of coverage came costs to school boards which continue to escalate.

Dr. Dan Tollett, Executive Director of the Tennessee School Boards Association proposed that the TSBA provide leadership in establishing a separate entity to help local school boards to reduce unemployment costs by lowering rates and providing cost management services to local school systems. The TSBA Board of Directors supported the proposal.

On July 1, 1980, Peggy Walters (Maury County), Dr. Merlin L. Cohen (Union City), and Sue N. Puckett (Jernigan) (DeKalb County) signed an Agreement and Declaration of Trust officially creating the Tennessee School Boards Insurance Trust and providing to seven trustees exclusive authority to govern the Trust. The seven school board members selected from the TSBA Board of Directors to become the charter trustees included John Franklin (Chattanooga), Allen Watts (Rutherford County), Peggy Walters (Chairman), Dr. Merlin L. Cohen , Bill Ross (Madison County), Billy Ray Vinson (Hardin County) and Sue N. Puckett. TSBA Executive Director Dr. Dan Tollett was selected by the trustees as Trust Administrator.

The Trust was designed as an umbrella organization under which any type of insurance services to local school boards in Tennessee could be offered as deemed necessary. Of the seven school boards of the charter members of the Tennessee School Boards Insurance Trust, only two, DeKalb County and Hardin County, actually became members of the Trust.

The trustees selected Gates-McDonald, Inc. to help set up the Trust and to provide a series of regional meetings with school boards to explain the new concept to them. Kelly Potter and Woody Hillard of Gates-McDonald joined TSBA staff members, Dan Tollett and Wanda Little, in conducting the sessions.

At the time most school boards in Tennessee were tax-paying boards. Under this plan, the state collected 1½ % of taxable payroll from each local school board and in turn paid all unemployment claims against the board. The Tennessee School Boards Insurance Trust began by immediately reducing the rate paid by local boards, most by 50%, thus significantly cutting the cost to the school boards that became members of the trust.

Thereafter, trustees established a formula for determining individual rates for each member board based upon that board’s unemployment claims experience. In December, 1980 with a membership of 40 systems, the total fund stood at $119,363.59.

Dr. Tollett articulated a vision of a trust which would eventually be able to pay all costs for unemployment from wise investment. Trustees adopted the vision and even though the overall percentage of contributions from boards continued to decline, the board of trustees began to invest the funds held in reserve. The trustees’ commitment to the vision was supported by member boards since premiums were lower than they had been paying before the trust was formed.

As the reserve of the Trust started to grow, trustees considered all options for obtaining maximum returns on trust investments. Bill Peerman, a professional money manager, went to the Department of Commerce and Insurance to investigate the investment options available to the trust. He found there was no prohibition against investing unemployment compensation funds in the stock market. However, there was a prohibition for investment of insurance funds such as worker’s compensation funds that may be established for local school boards. The trustees decided not to bring insurance programs into the Tennessee School Boards Insurance Trust.

Ironically, the first and only program ever offered through the Tennessee School Boards Insurance Trust was unemployment compensation—not an insurance program at all. Therefore, the Trust became known unofficially as the Tennessee School Boards Unemployment Compensation Trust.

The reserve in the UCT had grown substantially to $1,512,449.00. Since the UCT was housed at the TSBA offices, the UCT trustees voted to loan TSBA $180,000 to use in completion of the TSBA headquarters building. In 1985, TSBA repaid $35,000 of the loan and the trustees agreed to convert the remaining $148,000 to a lease whereby TSBA Board of Directors agreed to provide three offices in its headquarters building for the UCT for 99 years . Trustees at the time of that action were: Charles Bridwell (Sullivan County), John Franklin (Chattanooga), Nancy Holland (McKenzie), Sue Puckett-Jernigan (Dekalb County), Dr. William Hoover (Paris), Judy Toombs (Wilson County) and Billy Ray Vinson (Hardin County).

In 1992, the trustees voted to fund the building of a board development center and risk management offices as an addition to the TSBA headquarters. The addition cost approximately $450,000 completely funded by the Unemployment Compensation Trust. Trustees at the time of the vote included Patricia Gruenewald (Haywood County), Roger Greene (Hamblen County), Jim Mansfield (Warren County), James Neely (Huntingdon), Christine Howard (Covington), Becky Jaquish (McMinn County) and Dr. Sam Winfree (Putnam County).

In 1994, Kristi Coleman began to handle financial affairs for the UCT. She worked closely with professional money managers to monitor trust investments. Significant growth of trust funds occurred during this period. Because of the success of the Unemployment Compensation Trust and the growth of the reserve fund due to wise investment, the trustees determined that recruiting additional school boards for membership in the UCT would be disadvantageous to the member school boards that had joined the trust early. At that time, membership had reached 54 school boards including TSBA.

On March 31, 2005, a new Intergovernmental Agreement became effective which officially changed the name of the Trust to the Tennessee School Boards Unemployment Compensation Trust (UCT). That Intergovernmental Agreement also changed the trustee selection process from appointment by the TSBA President to election by the Trust membership. It provided for two trustees to be elected by the members in each of the three grand divisions of Tennessee and a seventh trustee to be elected at-large. The 2005 Intergovernmental Agreement required that each trustee be a member of a school board holding membership in the Trust.

In 2005, in response to a request from TSBA, the attorney general issued an opinion that TSBA may not be a member of the UCT because TSBA was a non-profit corporation, not a governmental entity. A second legal opinion from the trust attorney held that TSBA could no longer receive sponsorship fees from the UCT unless it provided something of value in return to the trust. UCT trustees expressed support of TSBA and generously offered to provide $85,000 annually to sponsor TSBA activities that would relate in some way to school boards’ responsibilities concerning employment, unemployment or personnel management.

The UCT trustees asked the TSBA Board of Directors to provide a list of such activities. However, the TSBA President who was in attendance at the trustee meeting informed the trustees that TSBA had no interest in such sponsorship. He demanded that the UCT pay TSBA $85,000 for the use of TSBA’s name. He was informed that UCT did not use TSBA’s name in any way except to require that members of the UCT be members of the TSBA. At his insistence, the UCT trustees reluctantly dropped that requirement and discontinued the annual $85,000 sponsorship payments to TSBA.

In 2005, David Jones of Hancock County became the first trustee to be elected at-large by a vote of all member boards. Ron Britt of Wilson County, representing middle Tennessee, became the first trustee to be elected by the membership of a region. In 2006, Jasper Taylor, representing West Tennessee, Tammy Baird (Hawkins County) , and Roger Greene (Hamblen County) representing East Tennessee were elected by the member boards in their respective regions.

In 2007, trustees voted to employ a director of Finance and Administration full-time and to establish its own headquarters. The trustees voted unanimously to purchase an office space in Hunt Club between Hendersonville and Gallatin. The new office space would provide an opportunity for the UCT to collect and display information about the history of the UCT and the people who contributed to its success. The UCT trustees held its first meeting in the new facility in October, 2007.

Through the Unemployment Compensation Trust local school boards in Tennessee have been able to maintain stability in unemployment compensation costs by paying low annual rates to the Trust and having all claims paid by the Trust. Through wise investment and sound management practices the Unemployment Compensation Trust has rebated premiums to member systems for eight out of the last ten years, thus bringing significant savings to each participating school board. At the same time, reserves of the Trust have grown significantly.

As of June, 2008 the fund has grown to over $17 million.

The vision of the founders has been achieved.