School District Wins Fight over 403(b) Vendor Change Arbitration

A Winona County (Minnesota) District Court judge has ruled against two unions that sued the Winona school district over the reduction of the number of vendors serving the district's 403(b) plan.

The Winona Post reported that Judge Mary Leahy denied the unions’ motion to compel the district to go to arbitration in the dispute. Leahy noted the unions’ contracts contain language involving health care coverage that specifically states coverage shall not be altered unless through mutual agreement between the union and district; however the contracts only address enrollment in the 403(b) plan and are silent on the issue of vendor selection or retention.

Leahy said the lack of language in the contract means the vendor reduction is not a matter about which one can address in a grievance or deal with through arbitration, according to the news report.

The district narrowed the number of vendors from 23 to five last summer through a bidding process because new Internal Revenue Service regulations force employers to more actively manage their 403(b) plans. District officials said the move drove down the costs of maintaining the accounts and the costs for employees, but unions claim the change limits employees’ choice in who controls their accounts and the brokers they work with.

The district told the court the decision was made by a committee that included representation from each union (see “Minn. 403(b) Vendor Dispute Awaits Judge’s Ruling”).

The teachers union and paraprofessionals union filed a joint lawsuit in May seeking to compel district officials to go to arbitration over the decision. 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 “Teachers Union Takes County to Court over Vendor Reduction”).