Teachers Union Takes County to Court over Vendor Reduction

June 9, 2009 (PLANSPONSOR.com) - The Minnesota District 861 school board may now wish it had heard employees' grievances over the reduction in vendors offered in their 403(b) plan.

The Winona Post reports that district officials learned that the teachers union and paraprofessionals union have filed a joint lawsuit in Winona County District Court seeking to compel them to go to arbitration over a decision made last year regarding 403(b) investment offerings. Former school board chair Brian Neil told the unions in January that the matter is not open to arbitration or grievance because it is an issue not governed by union contracts (see Unions Told They Cannot File a Grievance over 403(b) Changes ).

The district created a bid process for the accounts in which investment advisers had to apply for consideration by the board. In July of 2008, the board adopted an administrative recommendation that reduced the number of allowable 403(b) vendors from 23 to five.

In the complaint, according to the Post, union officials say the district must accept a grievance regarding the interpretation of any terms in the contract. In part, the union’s argument is that the contract says contributions to a 403(b) plan will continue until the teacher notifies the district that he or she wishes to alter it, the news report said.

Industry experts and 403(b) sponsors expected some backlash over K-12 sponsors’ choices to pare down vendors, and those expectations have been realized (see 403(b) Summit: Overcoming Hurdles in the K-12 Market and Chicago Teachers Union Opposes Move to Central Recordkeeper ).