Have the six to ten million dollars that Sen. Johnston was hoping to raise to fund his billion dollar tax increase been blown up by a pseudo-Ponzi scheme?

Earlier this month, the State of Indiana reached a $14 million settlement with the NEA and its affiliate, the Indiana State Teachers Association on a fraud case that goes back more than four years.  Eighty-eight percent of ISTA assets were invested in what the Indianapolis Star called “high risk investments in hedge funds and private equity.”

Worse yet, it is alleged that many of these investments were completely misappropriated, as officials at the ISTA took money from teachers intended for use in a medical plan and, instead, bolstered their struggling long-term disability plan.  Officials, then, literally falsified account statements to give the appearance of a solvent trust fund.

So, back to Colorado.  How does this impact our state?

It turns out that the ISTA did not have the money to pay the settlement to the State of Indiana, so the NEA will step in to satisfy the judgement.  Even a powerful lobby such as the NEA does not just have $14 million available to send a check to a plaintiff, according to HotAir.

This money is going to come out of dues from the NEA’s national membership, and from cutting back on NEA staffing and programs.  HotAir‘s Mike Antonucci carefully explained that this will not impact any campaigns:
“There will have to be some financial tap-dancing to pay for this settlement, which means program cuts and/or more layoffs. As always, I need to emphasize that grants to affiliates and campaign spending all come out of segregated funds and will be unaffected by hits to NEA’s operating budget.”

Just one catch.  Advocacy for ballot measures typically falls under grassroots activities, and dollars spent on grassroots activities are looked at by the IRS as “primary purpose” funds (not segregated funds), so there may be no firewall between this settlement and any dollars that would be spent in Colorado to support the tax increase.

So, will the $14 million settlement with the State of Indiana impact the NEA’s spending in Colorado this year?  In the past, Colorado has been the largest recipient of direct dollars from the NEA of any state in the union.  According to FollowtheMoney.org, the NEA has spent nearly $7.5 million since 2000 in the state.  Of funds given to all states in the same time period, 93.42% has been given to underwrite ballot initiatives, like Initiative 22, aka the “billion-dollar tax increase”.

Sen. Michael Johnston told Ed News Colorado that he’s shopping around for six to ten million dollars to fund his billion dollar tax increase.  The possibility exists that the dollars earmarked for this effort may take a haircut before this race ends, but as we all know, funds for leftist causes seem to flow freely where unions are concerned.