When Teachers’ Unions Fail Their Members
The news reports that the American Federation of Teachers has taken financial control of its affiliate in Broward County, Fla., outside of Miami, certainly has plenty of intrigue. As the Miami Herald reported over the past two weeks, the nation’s second-largest teachers’ union stepped in to take control of the affiliate after the AFT’s audit revealed that its president, Pat Santeramo, had allegedly run up $128,600 in unexplained credit card bills, had reimbursed staffers for $19,500 in exchange for them making campaign donations, and ran up $3.8 million in budget shortfalls over the last three years. Santeramo now faces removal from the affiliate, and the district is being investigated by the Sunshine State’s election commission and Broward County’s state’s attorney for improprieties related to the donations. Rank-and-file members (along with those forced to pay even if they don’t want to be members) must deal with the reality that their union to which they entrusted hundreds of dollars annually in dues have not been wise stewards of their fiscal interests.
One can say that the AFT national offices and its president, Randi Weingarten, have behaved rightly on this issue. One can even note that the AFT has a long record of actually holding its affiliates accountable for doing right fiscally by its members. Unfortunately, this doesn’t happen enough. For all the talk from the AFT and its rival, the National Education Association, about being the defenders of teachers, the two unions aren’t always practicing what they preach.
As your editor reported this week for RealClearPolitics.com, the NEA refused to answer questions about how two former employees siphoned off $227,626 in member dollars over five years and whether it has done all that is necessary to tighten up its fiscal controls to prevent future problems. Dropout Nation discovered on Thursday that the last payment from the two employees came on August 10 of last year. Certainly the union doesn’t have to answer questions from reporters if it so chooses. But the fact that the NEA didn’t even provide any reporting of the discovery to its members — and buried it in an addendum to its 2009-2010 filing with the U.S. Department of Labor — makes clear the union’s disregard for its members and the dollars they are supposed to steward.
But this is not the first time the NEA or its affiliates have not always been fiscally candid with its members.
Last year, when the NEA seized control of its South Carolina affiliate, it only gave official word of the takeover to its members in a column inside Emphasis, the union’s in-house publication. A year before that, the NEA had to take over the once-powerful Indiana State Teachers Association amid the insolvency of the health and disability insurance trust it administered on behalf of teachers and school districts throughout the Hoosier State. As I reported last year for Labor Watch, members were particularly put off that ISTA waited until the day the NEA takeover was announced before disclosing that its mismanagement of the insurance fund — including investing as much as 87 percent of its portfolio in hedge funds — led to the collapse. The fact that members had to pay an additional $40 annually in dues in order to cover the $67 million deficit, the union’s threat to cut off payments to disability recipients who paid into the plan, and the news of the extent of ISTA’s mismanagement, led to a since-dismissed lawsuit from several members as well as widespread dissatisfaction from the rest of the rank-and-file.
Meanwhile the NEA was sued four years ago by two members who figured out that the union’s member benefits affiliate may have collected as much as $2 million from two firms in exchange for peddling an annuity program, NEA ValueBuilder, to the members. Although the suit was dismissed because the lawsuit was filed as federal Employee Retirement Income Security Act claim instead of a securities civil suit, the case showed that the NEA was allowing the firms to charge members fees that were higher than those charged by other annuity peddlers.
The suit also served as a a reminder that the NEA is really good at making money off its members. Through its member benefits unit, the NEA also works with insurance giant Prudential to peddle term life insurance to members as part of its “benefits” package; the unit earned the NEA $3.1 million in 2009-2010. The union’s insurance trust — whose trustees include current secretary-treasurer Rebecca Pringle and Bob Chanin, the union’s former general counsel — generated revenue of $105 million in 2009-2010. Whether or not the union is good at managing those dollars may be a different story; thanks in part to losses in investment income and increases in benefit payouts, the insurance trust lost $24 million over the past two years.
The NEA is also good at paying six-figure sums to its top leaders and staff members. Four hundred thirty-three of the union’s staffers earned more than $100,000 during the 2009-2010 fiscal year. This includes Pringle, who garnered compensation of $340,845 and Elizabeth Daise, the union’s membership and organizing czar, who picked up $189,236 in pay. It also knows how to ladle out the sums to its fellow travelers. Besides its role as the biggest donor in American politics, the NEA also handed out $24,000 to former Clinton administration economist Robert Reich and $7,677 to Bob Kuttner, who, along with Reich, founded the Economic Policy Institute, whose education studies always dovetail nicely with the views of the NEA and the AFT.
The NEA has only been able to generate and spend these vast sums because of the grand bargain it (along with the AFT) made with its members six decades ago. Teachers support the NEA’s political aims and generously paying dues almost wholeheartedly, especially since their main loyalty is not to the national union, but to the locals that handle the day-to-day work of rendering school districts servile to their influence. In return, the union puts out the stops to protect long-serving teachers from layoffs, give teachers a stronger voice in school and district decisions, and assure them of perks such as workdays in which the actual time for teaching children is often less than the eight hours worked. So long as the union could continue to guarantee teaching to be the best-paid public sector profession, members are willing to ignore their high-spending ways.
But given that the NEA, the AFT and its affiliates are no longer the influential forces in shaping education it once was,, its high-spending and high-charging ways may no longer be tolerable. Even the recent rare victory in Ohio in ending the state’s ban on collective bargaining had less to do with it than with unions representing law enforcement, who garner more sympathy from the public than teachers’ unions ever do.
With more states pushing to end collective bargaining, subject teachers to more-stringent private sector-style performance management, and looking to ditch the traditional array of compensation that have led to $1.4 trillion in pension deficits and unfunded healthcare liabilities, the NEA (and the AFT) can no longer justify their existence. As seen in Wisconsin, where the state’s move to end forced dues payments have made joining unions a voluntary activity — and led to the NEA’s affiliate there laying off 40 percent of its staff this year — many teachers likely see no value in NEA membership.
These realities are putting focus on the fact that teachers’ unions have not served their members well at least when it comes to managing dollars. The collapses of NEA affiliates in Indiana and South Carolina have shown light on the fiscally and operationally incompetence of leadership at state and local levels; the Internet has also made it easier for members to pay attention to how the national operation spends money. Scandals and the lack of full disclosure will lead to the weakening of bonds between the NEA and its members, especially younger, more reform-minded teachers. The AFT has been better stewards at the national level. But its affiliates — especially the local in Washington, D.C. — have been beset by scandals of embezzlement, poor fiscal management, and rigged elections. If anything, the scandals at the state and local level are also reminders that the AFT needs to tighten its own oversight of its branches.
This is no small thing. It’s not just members who voluntarily join the unions who are not always being fiscally well-served by their unions. Many NEA and AFT dues-payers are forced by state laws and agreements between unions and school districts to pony up. So they are hurt economically twice, first, by being forced to pay agency fees to unions they aren’t interested in joining, and then, by fiscal mismanagement and the lack of candor.
But the financial issues are just one example in which the union’s interests don’t serve the long-term interests of its many of members. For the younger teachers, who now make up the majority of membership in both unions, the NEA’s and AFT’s defense of degree- and seniority-based pay scales and reverse-seniority layoffs does them no good. After all, they are the ones most-likely to lose their jobs when districts must reduce their staffs, because last hired-first fired rules protect Baby Boomer counterparts regardless of their performance.
The NEA’s and AFT’s continued embrace of the old-school model of employee-management relations — which was never really a fit for the kind of work teachers do in the first place, and definitely not workable in an age in which teacher performance can be measured, quantified and rewarded accordingly — also means the marginalization of the entire profession. Continuing to embrace this old industrial model of unionism has been one of the reasons (along with the degree- and seniority-based pay scales perpetuated by this model, and low quality of teacher training) why few highly-talented collegians, especially math and science scholars, are not interested in joining the profession.
Ultimately, the NEA in particular (and the AFT as well) will have to reckon with the consequences of failing to give good care, fiscally and otherwise, to its members. The good news for the school reform movement is that it will help weaken a status quo that is failure for teachers, taxpayers, and most importantly, all children.