Indiana school districts could recover half in union deal

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Indiana school districts which invested in a failed union health insurance plan will be getting back roughly half of the money they lost under a settlement reached between the state and Indiana's largest teachers union.

Secretary of State Connie Lawson announced Tuesday that 27 school districts would split $14 million if they approve the settlement. The settlement ends four years of legal wrangling between the state and the teachers union.

The Indiana State Teachers Association and National Education Association agreed in August to pay $14 million to school districts which had enrolled in the union's now-defunct health insurance plan. The state has estimated the union lost $27 million amid the 2009 collapse of the health plan that it had sold to 27 school districts around the state.

Central Indiana school districts include Washington Township, which will get $987,475; Perry Central Community - $376,166; and Center Grove - $597,037.

See a list of school districts and the amounts they will receive under the settlement.

Lawson said Tuesday that the settlement had been finalized. The $14 million settlement will go to the school corporations to compensate for their lost investments.

ISTA and NEA were accused of using the money from the health plans to cover funding shortfalls and risky investments instead of investing on the schools' behalf, Lawson said.

"In the next ten days, school corporations will see a recovery four years in the making. Teachers and administrators alike can finally put this lawsuit behind them," said Secretary Lawson. "They will receive 50 cents on the dollar for the money ISTA and NEA misappropriated. We strongly believe our case supported full repayment by ISTA and NEA, but we knew they were willing to spare no expense on endless litigation. This settlement gets these school corporations a much needed, immediate financial boost."

All legal fees were paid with fines collected from violators of Indiana's securities laws. To maximize the recovery to schools, Secretary Lawson waived the right to levy fines against ISTA and the NEA and to seek repayment of attorneys fees.

Lawson released a graphic showing the "money trail." Click here to see it.

ISTA statement:

Despite the political rhetoric used by Secretary of State Connie Lawson in her news conference this morning, it's clear that the information is both inaccurate and contrary to the state's pleadings in this case and in the final settlement.

The state agreed in this settlement to expressly recognize that neither  ISTA nor NEA admitted any liability in this case.

No members' dues were used to fund this settlement. To protect the interest of school employees, ISTA and NEA funded litigation to sue those actually responsible for the collapse of the ISTA Insurance Trust.  That litigation generated settlements in excess of $14 million, which are the sole source of the funds being used to resolve the state and school districts' cases.

ISTA regrets that the Office of the Indiana Secretary of State has decided for political reasons to misrepresent the resolution of this case. ISTA is grateful that this litigation has been resolved on terms that are fair to the school employees  involved.

ISTA and NEA have always done the right thing and stood by their members since the outset of this matter and are proud to continue to do so.