The case against two former Munster school administrators accused of engineering a scheme to overpay themselves $850,000 largely in retirement annuities may be headed for a civil trial.
In a 3-0 decision, Indiana Appeals Judge Nancy Vaidik wrote last week that former Superintendent William Pfister and Assistant Superintendent Richard Sopko’s contracts were “unambiguous” and didn’t “allow for compounding” — a practice where their annuity payments snowballed over time. State law allowed the Indiana Attorney General’s office to recover the money, she ruled.
There were “still questions of fact left for the fact-finder to decide, such as whether malfeasance, misfeasance, or nonfeasance has been committed and whether the funds were misappropriated, diverted, or unaccounted for,” Vaidik wrote.
Her decision reversed Judge Marissa McDermott’s ruling in July 2024 that dismissed the case. Vaidik ordered it back to a lower court for trial.
Dyer attorney Jeff Carroll — representing both men — said he would appeal.
Sopko died in October 2022. Pfister and Sopko’s estate are among those named in the suit.
Back in 2014, the School Town of Munster announced it was running an $8 million budget deficit — partly blaming then-Gov. Mitch Daniels’ changes to Indiana’s education funding formula.
Then, a Munster school lawyer contacted the Indiana State Board of Accounts in 2015 to do a formal audit after new school board officials discovered the alleged overpayments. During the time in question, the previous school board signed off on the financial vouchers — contained in a “43 to 72 page” Accounts Payable Voucher Register at board meetings — that included the compounded retirement pay.
Vaidik wrote that the Pfister and Sopko’s contracts had “provisions” that paid 4% and 3% worth of their salaries to annuities. Instead, they compounded and ended up worth 38% of Pfister’s and 36% of Sopko’s salaries.
In their 2016 audit report, the State Board of Accounts concluded Pfister and Sopko were improperly paid $463,000 and $377,000, respectively. They also asked the men to repay the money, plus $10,000 for the audit’s costs.
The audit period covered 1999 to 2014. Pfister retired in 2012. Sopko replaced him and retired in 2014.
After the audit report, former Indiana Attorney General Curtis Hill sued the men in 2017.
A representative from Indiana Attorney General Todd Rokita’s office was not immediately available. Munster Superintendent Matthew Hicks did not respond to a request for comment.
Munster School Board President Ingrid Schwarz Wolf said in an email she couldn’t comment on a pending lawsuit, but added the school district had “made significant strides in strengthening financial oversight and transparency.”
Carroll, the defense lawyer, denied the Attorney General Office’s accusations of the men’s wrongdoing, saying the school board approved the funds.
“In the early 2000s, my client William Pfister negotiated with then-School Board President Larry Kocal to modify the language in his and assistant superintendent Richard Sopko’s employment contracts to fund their retirement accounts precisely as occurred,” Carroll wrote in an email.
“Neither man is guilty of any wrongdoing, whatsoever,” he said. “In fact, the Office of the Attorney General, in briefing in this case, has basically acknowledged this — its position is that Mr. Pfister and Mr. Sopko simply violated a “duty” to ensure they were not overpaid, pursuant to their written contracts.”
“(E)mployees should not bear the burden of picking through their paychecks each period or else potentially face the wrath of the Office of the Attorney General, decades down the road,” he later added.
Today, Schwarz Wolf said, there is a “more robust system of checks and balances” at Munster that included more staffing in the district’s finance department “to ensure appropriate separation of duties,” she wrote.
The School Town of Munster has since hired a chief financial officer, Bill Melby, to “provide expert financial leadership” and a “detailed financial report” each school board meeting.
School board members get a “comprehensive monthly financial statements” before every meeting — for “thorough review and informed oversight,” she wrote. “Every dollar…is documented, tracked and available for review.”
The school district uses financial firm Baker Tilly “to support budget planning, debt issuance, risk management, and long-range financial planning.”
She also noted the district’s bond rating improved in 2023 to an A+.
Indiana School Boards Association Executive Director Terry Spradlin said their organization provides a range for training and materials to help school board members. Many are elected without deep knowledge of school finance.
Last year, his organization released an updated budgeting and financial oversight guide and partnered with IU Bloomington to create a “microcredential” school finance program for school board members, he said in an email.
“It is incumbent on each school board to avail themselves to consume these resources and ensure full capability to provide good fiscal stewardship of the finances of their school corporation,” he said. “If they are well prepared to govern, this will ensure situations like those involved in the court case you are examining can be avoided.”
