State files securities complaint against ISTA [Pharos-Tribune, Logansport, Ind.]

Dec. 3--Indiana's secretary of state echoed the opinions of local educators Wednesday when he filed a civil complaint against the Indiana State Teachers Association.At least four Hoosier school districts, including Caston and Delphi, were considering joining a class-action lawsuit, seeking millions of dollars in health insurance credits owed to them by the ISTA.Caston superintendent Dan Foster said the corporation's employees have accumulated an estimated $1 million in credits that accumulated when their claims did not add up to the premiums they paid into the health insurance program.Secretary of State Todd Rokita said the ISTA ran a trust that was to be used for health claims and told school districts they would earn returns on any reserves. But Rokita said that money was mixed with other funds, and the teachers' association cannot properly account for $23 million intended for schools.Rokita's complaint alleges the group violated the Indiana Securities Act when it offered a health-care plan for school districts."I can't say that I am surprised by it, because there were rumors that the investigation was going on," Foster said. "But, I don't know a whole lot about it."The complaint filed in Marion County Superior Court 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.Foster said Caston has not received any official information regarding its trust since August 2008. He has sent letters to the state and the school district's attorney has contacted the state but Foster said the corporation is not receiving any feedback.Scheduled meetings with ISTA representatives have continuously been canceled for about three months, Foster said."That's dollars to our employees that use our insurance plans," he said.The complaint from Rokita confirms that Foster and Caston schools are not alone."It means several people all over the state are in the same position probably," Foster said. "We knew there were definitely some others in that same boat."Rokita said an independent party should determine a fair way to distribute any remaining money among school districts owed. The complaint should not disrupt claim payments to disabled teachers, he said.Association spokesman Mark Shoup said legal staff members were looking into the complaint while the union tries to sort out the issue with school districts."We have not walked away from any of these problems," he said. "We're trying to work it out."The National Education Association took over the state's 50,000-member teachers' association earlier this year after the state Department of Insurance said the ISTA Insurance Trust had a net worth of negative $67 million. The trust paid long-term disability benefits to teachers in about 90 school corporations and health insurance in about 30 districts."The whole thing's just unfortunate," Foster said. "The idea and plan behind it was a good idea, but it appears a handful of people made poor decisions."I have no idea what happened."The Associated Press contributed to this story.To see more of the Pharos-Tribune or to subscribe to the newspaper, go to http://www.pharostribune.com.Copyright (c) 2009, Pharos-Tribune, Logansport, Ind.Distributed by McClatchy-Tribune Information Services.For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.