When I’m wrong, I’m wrong. But I still can’t believe what I’m reading.
In the May 26 EIA Communiqué I reported that when all was said and done, the National Education Association would find itself compelled to bail out the bankrupt Indiana State Teachers Association’s insurance trust:
Even the union realizes that dropping the bill on the taxpayers of the local school districts, who would be liable for the disability payments if the trust goes under, would be an unmitigated political disaster. So ISTA has resolved to pay its debts, though it cannot. Enter the NEA.
I wrote that NEA didn’t have the discretionary funds to completely cover ISTA’s losses, but retained the financial health to guarantee its liabilities against future revenues. But I clearly underestimated the union’s commitment to its alternate reality.
Yesterday the Associated Press reported that Edward Sullivan, the administrator appointed by NEA to oversee ISTA and its insurance trust, informed Indiana school districts enrolled in the union’s long-term disability plan that there wasn’t enough cash available to cover payments to those teachers currently receiving them. Sullivan wrote:
“I do not anticipate that participants who have filed long term disability benefit claims before August 2009 would be insured through any new pooled insurance coverage arrangement with a major carrier. And, because of the ISTA Insurance Trust’s liquidity problem, there does not at the moment appear to be sufficient cash available in the ISTA Insurance Trust to pay long term disability benefits to pre-August 2009 claimants after July 2009. I am in consultation with government officials and legal advisors about ways to resolve this problem.”
In short, the 650 Indiana teachers who have been drawing long term disability payments from the trust are on their own after next month. Jim Atterholt, the state insurance commissioner, was flabbergasted. “How ISTA and the NEA can wash their hands of the trust and trust liabilities is beyond me,” he said.
Atterholt said Sullivan assured him that this would not happen, but suddenly ISTA is getting very mealy-mouthed about that assurance. “I think what we did was express our hopes,” said ISTA Deputy Executive Director Dan Clark.
Bill Ruthhart of the Indianapolis Star went out and found a couple of the affected teachers:
“I’m shocked that this would happen,” said Brenda Wiley, 52, who taught Spanish in IPS for 25 years until a neurological condition forced her to leave work last year. “They always talked about how careful they were with that money, so I just can’t believe it.”
The worst part is what Sullivan said the union would do for these teachers:
“In this regard, I am prepared to vigorously enforce, through litigation and otherwise, any rights that participants in the ISTA Insurance Trust’s long term disability program may have against anyone involved with the ISTA Insurance Trust. Any recoveries that might be obtained would be used to offset any liabilities that remain outstanding, although I do not know whether sufficient recoveries to offset all of the outstanding liabilities can ultimately be obtained.”
The audacity of that paragraph is breathtaking. From whom, exactly, are these recoveries to be acquired? No one has admitted responsibility, and NEA/ISTA has failed to name anyone responsible. Robert Frankel, the executive director of the trust, was allowed to resign on May 1, and Warren Williams, ISTA’s executive director, resigned on May 14, and is still on the ISTA payroll until the end of the year. What about ISTA President Nathan Schnellenberger, who sat on the trust’s board of directors? Or any of the ISTA members who also sat on the board? Is Sullivan going to help sue them?
What about Richard J. Darko, the trust’s former interim director who as late as April 28 was strongly urging UniServ directors to use every method to keep school districts in the trust’s long term disability plan? What about the UniServ directors who followed his advice?
NEA was willing to spend $3 million to support doomed ballot initiatives in California, but it is prepared to throw 650 disabled teachers under the bus, while pretending no one at any level of their union had anything to do with it. NEA and ISTA are playing chicken with Indiana’s taxpayers, in the hope that the state’s citizens will keep these teachers fed and housed while the unions continue their normal activities, like suing the state.
Let’s hope state and federal authorities aren’t fooled by the unions’ search for the real killers.