The Washington Times-Herald

December 6, 2013

Area school systems see settlement in lawsuit

By Mike Grant Times Herald
The Washington Times-Herald

---- — A $14 million dollar settlement in a lawsuit between the Indiana State Teachers Association and the Secretary of State’s office will be putting money into some area school systems. The schools had invested in an ISTA health insurance plan that folded after it was mismanaged. In all 27 school systems lost money in the plan that collapsed four years ago. The settlement won’t recover all of the lost funds.

North Daviess is one of the school systems involved in the settlement. “We’re receiving 50 cents on the dollar,” said North Daviess Superintendent Bob Bell. “That’s a lot more than I ever thought we would receive.”

North Daviess at one time had one million dollars sunk into the ISTA health trust. “When it hit in ‘09 it really hurt us,” said Bell. “The good part is that we had pared that amount down to about half-million right before the problems surfaced.”

The North Daviess share of the settlement is $286,499.92. “It’s all signed off,” said Bell. “We should be getting the check next week.”

Some other school systems in the area will also be seeing those checks. Southwest Sullivan will receive more than one million dollars, Vincennes Community Schools $316,000, and Shoals $94,000. The largest payout of $3 million will go to the Crown Point School Corporation in northern Indiana.

Indiana Secretary of State Connie Lawson lauded the agreement, but ISTA Executive Director Brenda Pike panned the lawsuit. Pike claims the suit only delayed an agreement that had been reached years ago. “It’s politically motivated,” said Pike. “There is no missing the fact that next year is an election year.”

In making the announcement Lawson claimed the ISTA leadership at the time purposefully fooled investors as part of a scheme to funnel money to an under-funded long term disability plan. “What makes this case particularly disturbing is how ISTA blatantly lied to participating school corporations by sending them phony financial statements,” she said.

Republican State Representative Mark Messmer of Jasper, who represents Shoals, also applauded the agreement, but expressed disappointment with the ISTA and the problems the failed fund created. “While I am pleased to see our local schools receive a portion of their money back, I am still deeply troubled that the ISTA and NEA (National Education Association) are not completely repaying Shoals Community Schools for the money they deliberately mismanaged,” said Rep. Messmer. “Innocent teachers were victimized by these organizations who were more concerned about their own bottom line than the best interests of the educators they serve. Our local schools deserve to be refunded in full.”

The mismanaged fund did leave some local school officials with a sour taste. “This was someone we trusted,” said Bell. “After it happened most of us would have bet we weren’t going to see nearly that much money.”

When the money does arrive North Daviess has some plans for it. About $20,000 will go immediately to legal fees.

The rest will go into a fund to help defray costs for staff members in the current health insurance plan. The money will help put the school system in compliance with a new state law. “It’s really a relief to get this over,” said Bell. “This is going to help both our staff and our budget.”

ISTA officials say the money to pay the school systems back is equal to the amount of money it has recovered through its own settlements with investors and others who they say caused the plan to collapse.