Teachers union seeks way to pay disability claims-WEB ONLY

ISTA previously said it didn’t have enough money to cover the long-term
disability claims, which could cost $45 million to $65 million over the next 15
to 20 years. But ISTA and NEA officials said yesterday that they will find the
money, although they didn’t have specifics on exactly where the cash will come
from.

ISTA union dues for Indiana teachers – currently set at $449 a year – could
go up. The union could lay off some of its 150 employees, or consider selling
its office building across from the Indiana Statehouse.

“Everything is on the table,” said ISTA President Nate Schnellenberger.

ISTA’s Representative Assembly will meet June 20 and could make decisions
about raising dues or reducing the budget.

However, NEA members in other states won’t be affected and dues in other
states will not rise because of Indiana’s problem, said NEA president Dennis Van
Roekel, who was in Indianapolis yesterday to reassure Indiana members that
long-term disability claims would be paid.

The NEA has more than 3.2 million members nationwide. Indiana is the first
state affiliate to request a trusteeship from the NEA, Van Roekel said, allowing
the national group to take over operations as investigators determine whether
insurance trust managers did something more than make risky investments.

The state union will have to repay NEA over the long term, but the national
union wants its state affiliates to succeed, Van Roekel said.

“The whole purpose of having a union is that we all come together,” he said.
“When one is in need, we provide the necessary assistance.”

Long-term disability payments would cost about $8.5 million for the first
year, said Trustee Ed Sullivan, and that yearly figure would decline over time.
It’s unclear how much the NEA and ISTA will each pay.

“I’m not certain yet on how we’ll do it, but we know that the financial
commitment’s there and the resources are there to make sure the money is given
to the trust,” Sullivan said.

It will be much easier for NEA, with its budget of about $355 million, to
absorb the costs than for ISTA, which has an annual budget of $20 million to $22
million and represents about 50,000 teachers and others.

But Schnellenberger said ISTA would emerge a stronger organization after
getting out of the insurance game.

ISTA’s insurance trust had been looking for an insurance carrier to take over
its long-term disability plan starting Aug. 1. But no company was interested in
taking over the program, officials said yesterday, so school corporations will have
to find their own long-term disability coverage. About 90 school districts used
the long-term disability plan offered through ISTA’s Insurance Trust, although
that number has likely decreased as school districts have sought new plans.

The 650 people already receiving long-term disability claims will continue to
get paid through the trust because of ISTA and the NEA contributions.

“No one receiving benefits from the trust has ever missed a check,”
Schnellenberger said. “Because of this partnership, no one will.”

ISTA has already worked out a deal with UnitedHealthcare to take over its
medical health insurance plan, which was in better financial shape than the
long-term disability plan.

The Indiana Department of Insurance says ISTA’s insurance trust has a net
worth of negative $67 million, and that too much was put in private investments
that are not publicly traded. ISTA Deputy Director Dan Clark said last month
that allegations had been made of “inappropriate fees and inappropriate trading
as well as inappropriate investments.”

The Indiana secretary of state’s office has declined to say whether it is
investigating, but Clark says the office had issued subpoenas for two former
ISTA employees who made decisions about the trust. One has since retired and
another resigned, although the reasons behind the personnel changes were
unclear. Investment firm Morgan Stanley has said it has handled ISTA’s trust
since 2008 and that it would fully cooperate with investigators.