Indiana's secretary of state filed a civil complaint Wednesday against the state's largest teachers union, saying the group violated the Indiana Securities Act when it offered a health care plan for school districts.
Secretary of State Todd Rokita said the Indiana State Teachers Association ran a trust that was to be used for health claims and told school districts that they would earn returns on any reserves. But Rokita said that money was mixed with other funds, and that the teachers' association cannot properly account for $23 million intended for schools.
The complaint filed in Marion County Superior Court also said the association and the trust should have registered as an investment adviser and that it made untrue statements or failed to disclose information about the financial health of the arrangement with schools.
Rokita said an independent party should determine a fair way to distribute any remaining money among school districts owed. The complaint should not disrupt claim payments to disabled teachers, he said.
Association spokesman Mark Shoup said legal staff members were looking into the complaint while the union tries to sort out the issue with school districts.
"We have not walked away from any of these problems," he said. "We're trying to work it out."
The National Education Association took over the state's 50,000-member teachers' association earlier this year after the state Department of Insurance said the ISTA Insurance Trust had a net worth of negative $67 million. The trust paid long-term disability benefits to teachers in about 90 school corporations and health insurance in about 30 districts.
The Indiana State Teachers Association is suing former officials and financial advisers, saying they mismanaged the trust. The association also sold its downtown Indianapolis building to the National Education Association to raise money and laid off at least 40 employees.