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Indiana Teachers Union Will Reimburse School Districts

The Secretary of State will announced later today which school systems will benefit from a settlement announced earlier this year with the Indiana State Teachers Association.

The tentative $14 million settlement made with the ISTA in August was almost half the $27 million that Secretary of State Connie Lawson says was lost by 27 school districts in what she and then-State Securities Commissioner Chris Naylor called a "Ponzi scheme" involving the health plans sold by the ISTA.

Naylor sued the ISTA and its parent, the National Education Association, in December 2009 over the health trusts. The program, which Naylor says was heavily marketed by the union to teachers and schools, allowed school districts to build surpluses which would be held in reserves and invested by ISTA.

Instead, the state says the union mixed the money in with it‘s long-term disability fund and perhaps other money. The disability fund subsequently lost money, and Naylor says the union tried to recoup the funds by making "risky investments" with much of the remaining money.

The NEA was also sued because, prior to the lawsuit‘s filing, the national union bailed out the ISTA due to the state union‘s financial problems. Naylor says it also became clear that the NEA had some oversight over the labor representatives that promoted the health plans. The NEA asked to be absolved from the suit, but a federal judge refused.

ISTA spokesman Mark Shoup says with the settlement in place it is time to move past the finger pointing.

"It‘s not a good time to send verbal bric-a-back (sic) back and forth between the folks who came together to make this settlement happen," Shoup said.

The school districts who lost money could not be named until after the settlement was finalized.

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