Published: June 10, 2009 01:43 pm      

Indiana teachers union lays off dozens

ISTA’s insurance trust is under investigation

INDIANAPOLIS — The state’s largest teachers union is laying off dozens of employees in the wake of a financial crisis that spurred investigations of its troubled insurance trust.

Union officials representing two groups of workers at the Indiana State Teachers Association say at least 40 people will lose their jobs after 60 days notice. A third union representative would not comment on how many people in her division will be laid off, but the total number of layoffs is likely to be higher than 40.

ISTA and the National Education Association are trying to scrape up enough cash to pay 650 people receiving long-term disability benefits from ISTA’s insurance trust — which is under investigation as officials determine whether fund managers did something more than make risky investments.

ISTA had 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 Monday that they will find the money to pay the claims.

Aside from the layoffs, ISTA could free up some money by increasing dues for Indiana teachers — currently set at $449 a year. The union could also consider selling its office building across from the Indiana Statehouse.

ISTA President Nate Schnellenberger said Monday that all options are on the table.

NEA Trustee Ed Sullivan met with ISTA leaders from three union groups Tuesday to discuss the layoffs, said ISTA Deputy Director Dan Clark.

The Professional Staff Organization at ISTA covers about 55 full-time and part-time workers — including lobbyists and employees who work directly with teachers on contracts and other issues, said Sandra Steele, president of the PSO. She said eight full-time positions and 10 part-time jobs will be eliminated.

One position was vacant, so 17 people will be affected. Employees with more seniority will be able to “bump” other workers.

“We’re trying to save the organization at this point and meet our obligation to members,” she said. “We’ll work through this. Of course people are disappointed because some of our new hires may lose their jobs.”

The Associate Staff Organization at ISTA, which also covers about 55 people, will lose 24 positions, said ASO president Kathy Hill. One job was empty, so 23 people will be affected. That includes nine positions with the financial services division, which worked with the insurance trust.

Hill said some workers were disappointed to lose their jobs because of the insurance trust’s problems, although she said employees understand that it’s important to pay the long-term disability claims.

A third organization covers workers who help process insurance claims through the trust. A union official declined Tuesday to say how many layoffs would come from that area.

The Indiana Department of Insurance says ISTA’s insurance trust has a net worth of negative $67 million. 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.

ISTA also is investigating and said it could take legal action against those involved with managing the trust.