INDIANAPOLIS – The Indiana State Teachers Association and National Education Association have agreed to pay $14 million to end a lawsuit alleging the groups defrauded Hoosier teachers out of more than $27 million.
The proposed settlement would stop an October civil trial scheduled.
All 27 school corporations affected must agree to the settlement before it can be finalized. The Indiana Secretary of States Office declined to say which districts are involved.
That office filed the complaint in 2009, saying the states largest teachers union violated the Indiana Securities Act when it offered a health care plan for school districts.
A news release said ISTA offered teachers and other school employees a medical plan that allowed school corporations to invest their excess balances to offset future health care costs. In the complaint, the office alleged that ISTA didnt invest the money but instead used the money to cover significant shortfalls in its long-term disability plan. ISTA continuously issued quarterly and annual statements to schools misrepresenting fund balances.
The complaint also said the association and the trust should have registered as an investment adviser and that it made untrue statements or failed to disclose information about the financial health of the arrangement with schools.
This is the right result for teachers and schools, Indiana Secretary of State Connie Lawson said. The tentative amount puts roughly 50 cents for every dollar lost from this mismanagement back to the school corporations.
While $14 million is a significant amount, it does not cover ISTAs nor the NEAs full financial obligation to the school corporations. We remain confident in our case, but took the leadership step to get this money in hand for schools as soon as possible.
The money will be distributed to the school districts.
I feel like the settlement is very fair to all parties – to the state, the ISTA and the school systems involved, said Teresa Meredith, president of the ISTA.
She clarified that the insurance trust was a separate entity from the union representing the teachers.