Indiana’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 out of a staff of 150 employees.
The ISTA and the National Education Association, its national parent organization, are trying to scrape up enough cash to pay 650 people receiving long-term disability benefits from the ISTA’s insurance trust, which is under investigation.
The Indiana association 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 last week that they will find the money to pay the claims.
Indiana’s is the first state affiliate to request a trusteeship from the NEA, allowing the 3.2 million-member national organization to take over operations as investigators determine whether insurance-trust managers did something more than make risky investments.
NEA President Dennis Van Roekel, who was in Indianapolis last week to reassure Indiana members that long-term-disability claims would be paid, said members of the NEA in other states won’t be affected and dues in other states will not rise because of Indiana’s problems.
The state union will have to repay the NEA over the long term, but the national union wants its state affiliates to succeed, Mr. 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.”
Aside from the layoffs, the Indiana state affiliate could free up some money by increasing dues for teachers, which are set at $449 a year. The union could also consider selling its office building across from the Indiana Statehouse.
The Indiana Department of Insurance says the association’s insurance trust has a net worth of negative $67 million. Dan Clark, the deputy director of the ISTA, 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 Mr. Clark said the office had issued subpoenas for two former ISTA employees who made decisions about the trust. One has since retired and another has resigned, although the reasons behind the personnel changes were unclear. The investment firm Morgan Stanley has said that it has handled the ISTA’s trust since 2008 and that it would fully cooperate with investigators.
The Indiana State Teachers Association also is investigating and said it could take legal action against those involved with managing the trust.
A version of this article appeared in the June 17, 2009 edition of Education Week