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Teachers Union Reaches $14 Million Settlement

By Brandon Smith

Posted August 13, 2013

The state's largest teachers union has agreed to a preliminary settlement of $14 million that would be given to 27 different school corporations after the Indiana State Teachers Association and the National Education Association allegedly defrauded Hoosier teachers out of over $27 million.

The suit, which the state securities commissioner filed in 2009, claims the ISTA offered school employees a medical plan that allowed school corporations to invest their excess balances to offset future health care costs, but instead of investing the money, they allegedly used the money to cover significant shortfalls in their long-term disability plan.

More than two dozen Hoosier schools will recoup some of their losses after the state and the Indiana State Teachers Association reached a settlement in a lawsuit over what the Indiana Secretary of State calls a "Ponzi scheme" involving the union's failed health insurance fund.

The schools lost $27 million, meaning the settlement will pay back about 50 cents on the dollar, but Secretary of State Connie Lawson says schools have been waiting long enough.

"We heard from schools that they wanted to get their money back but also they were needing the money as soon as possible," Lawson says.

ISTA spokesperson Mark Shoup says the settlement is the fairest resolution for all parties involved.

"Our goal all along was to make sure that school employees – school districts and the school employees – who were a part of this recovered payments and this allows that to happen," he says.

All 27 school corporations will have to agree to the settlement for it to go through.

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