-By Larry Seale

The once mighty, 50,000 member strong, Indiana State Teachers Association (ISTA) has been brought to its knees, seemingly humbled not by “criminal” activity but by the avarice and incompetence of its officers and “wildly speculative” investments by the directors of the ISTA Insurance Trust.

ISTA’s parent union, the National Education Association (NEA), placed the local in trusteeship less than a month ago and trustee Ed Sullivan is now running the show, replacing ISTA president Nate Schnellenberger after he had notified the NEA that the ISTA insurance trust had liabilities of $86 million and assets of only $19 million. The trust had provided disability payments to 650 disabled Indiana Teachers and provided health care coverage for half the states teachers.

It is reported the union was already having financial difficulties and there were “warning” signs as early as 2006, which must have been ignored with a typical gambler mentality – “One big win and and I’ll be rolling in clover”. As all gamblers must eventually realize, doubling up to catch up only results in larger losses and the mentality of the the ISTA officials running the trust has to be questioned. The FBI and state of Indiana have announced investigations into the ISTA financial affairs.

(former) ISTA president Schnellenberger has stated that “No one receiving a check has missed a payment and because of this partnership, no one ever will”. We hope he’s correct but trustee Sullivan paints a different picture, as reported by journalgazette.net, in a June 2nd memo where he wrote that the trust would not have enough money to make disability payments after July. Schnellenberger didn’t bother to mention that ISTA is going to lay-off at least 35 of the union’s 150 employees and that a ISTA due’s increase is likely in an attempt to refund ISTA.

Indiana Insurance Commissioner Jim Atterholt is quoted as saying:

“How are these 650 teachers from across the state who are currently on disability supposed to feed their families until the lawyers sort everything out years from now?” Atterholt asked. “The honorable thing for the NEA and ISTA to do is to continue to pay claims until they recover the money from the bad actors.”

Recovery is an interesting thought but I doubt the “bad actors”, Schnellenberger and other ISTA officers and trust board members, have $70 million or so laying around. Perhaps it’s Morgan Stanley’s David Karandos, the trust’s broker, who deserves to wear the black hat. It’s reported that he made some 4000 rapid fire trades, of the trust’s assets, in a volatile nine month period.

The story is on-going and it will be months, perhaps years before the investigations are complete and the total damage is reveled. I can’t help but wonder why there is so little outrage and coverage of the debacle; my local newspaper, the Denver Post, has not even mentioned the crisis that affects literally thousands of teachers in Indiana. A Google search of “Indiana State Teachers Association Trust” turns up fairly extensive local cover but little reporting at the national level and seemingly little or no interest on the part of the Obama administration, Labor Secretary Solis, the Congress or the NEA.

Perhaps all the named parties are too busy trying to revive the horribly misnamed Employee Free Choice Act (EFCA) and just can’t be bothered when a few thousand Indiana teachers get the rug yanked out from under their feet.

Given the ISTA crisis, the Department of Labor Multi-employeer Critical and Endangered Pension list (which doesn’t mention the ISTA Insurance Trust) and the perhaps total depletion of union coffers to elect President Obama and pass the EFCA, it’s evident that unions need more oversight and not less as Obama as promised as payback for massive election contributions.

Where is the public outrage?

Larry Seale is semi-retired and a former dues paying member of Amalgamated Transit Union Local 1001 located in Westminster, Colorado. He maintains First Transit Employee Rights Blog, his personal “rant” and Union Disclosure Blog listing required union disclosure filings.

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