As readers know by now, Dropout Nation determined in research released last October that National Education Association and American Federation of Teachers spend roughly $700 million per year on advocacy. This report undermined the unions’ preferred narrative that they are scrappy underdogs fighting for public schools. As you would expect, especially on Twitter, NEA’s and AFT’s highly-paid spokespeople were none too happy about this inconvenient fact. One such executive, AFT’s Kombiz Lavasany, asserted that the report was “sadly dishonest [because the] vast majority of union dues support things universally supported,” such as “work to represent and work for better pay, work conditions, professionalism.”
Since these claims were repeated and rebroadcast by other union officials and their allies, they deserve a brief fact-based review. Unfortunately, they fail to hold up under even light quantitative scrutiny.
Yes, the teachers’ unions’ really spend $2.2 billion per year overall: Some critics looked at the revenues of the main unions’ national operations, and saw budgets in the hundreds of millions (not billions). NEA, for example, only reported revenue of $385 million to the U.S. Department of Labor; since the NEA represents two thirds of the nation’s teachers, looking only at national IRS filings would imply a revenue total of less than $600 million.
This math, however, excludes most of the unions’ budgets, which formally stay at the level of states and localities. A teacher in Chicago, for instance, pays dues averaging $1,000 per year, but 60 percent of those dues go to the local Chicago Teachers Union. The remaining 40 percent is split between the national AFT and the statewide Illinois Federation of Teachers. These local dues to CTU give it a formally independent budget of roughly $30 million. New York is another example; the UFT spends $100 million per year.
Any national analysis of union financial clout must therefore consider the dues collected by state and local affiliates and the filings they make with the Department of Labor and the Internal Revenue Service. Altogether, this adds up to $2.2 billion.
This number seems shockingly high. But you must look at this in context. The $2.2 billion number implies that the national unions represent about 30 percent of the total unions’ revenues. This makes sense given that the national unions play a quarterbacking role for organizations primarily working at the state and local levels. The number also suggests that annual dues amount to roughly $660 per teacher, which is just around one percent of the U.S. average teacher salary of $56,000.
As with other matters when it comes to the Big Two, the $2.2 billion union budget is only surprising for those who have not yet reviewed the basic math of American public education.
Yes, the unions really spend a third of their resources on advocacy: Lavasany and other union spokespeople argue that unions spend less than $700 million in advocacy because “most” of their money is spent in member services. Unpacking this claim requires a detour into union dues, how they are collected, and how they are classified.
The starting point is 1977, when the U.S. Supreme Court ruled in Abood v. Detroit Board of Education that union officials could compel all teachers to pay union dues as a condition of employment. The Court held that such “compulsory dues” harm teachers’ First Amendment rights, as they compel teachers to pay for political speech. So long as the compulsory dues are used only for advocacy related to collective bargaining, however, the Court held them to be permissible.
As an outgrowth of the Abood decision, most teachers around the country have union dues deducted automatically from their paychecks. Union officials calculate which portion of those dues are related to collective bargaining (so-called “chargeable” expenses), and which dues are unrelated (so-called “non-chargeable” expenses which teachers may opt out of paying).
As the Supreme Court itself noted last year — and as Dropout Nation has noted — the decades since 1977 have revealed two practical problems with the Abood framework. First, the question of chargeable vs. non-chargeable is notoriously thorny, and remains the subject of ongoing litigation to this day. Many kinds of laws can be called related to teachers’ collective bargaining, including parent choice rules, teacher evaluation frameworks, and even a state’s overall levels of taxation and spending.
Second, the classification system is rife with conflicts of interest. The union officials who benefit directly from these revenue allocations have day-to-day responsibility for deciding which expenses are chargeable vs. non-chargeable. Every year, union staffers and their paid accountants make thousands of individual determinations about how to classify their time and expenses. From these classifications, the unions can essentially create as much revenue as they think they need. Even if every union staffer is a saint, their belief in their cause gives them a constant incentive to err on the side of higher compulsory dues.
This framework allows the accounting results to exactly match the public relations claims. Consider the response to last year’s Dropout Nation report from the AFT spokesman Lavasany that “vast majority of that money is spent on supporting members, not on politics.” Sure enough, this matches up with the 2013 audit report signed by the AFT’s accountants, which duly allocated 71.5 percent of the AFT’s revenues to “chargeable” expenses related to collective bargaining. Those overseeing the audit included AFT’s Secretary-Treasurer Loretta Johnson, a longtime AFT negotiator and officer, and Calibre, a certified public accountancy that specializes in serving the interests of labor unions.
A 2014 audit report AFT filed in California, writing to reflect an arbitrator’s decision between objecting teachers and the union’s United Teachers Los Angeles unit, made a slightly more conservative estimate of 66 percent of the revenues going toward “chargeable” expenses. Either way, the unions admit that between 25 percent and 33 percent of dues are allocated to political activities unrelated to collective bargaining and workplace issues.
Here’s the funny thing: Even if you take the union officials’ numbers at face value, the result actually confirms the thrust of Dropout Nation’s analysis. The pro bono consultants who went through the unions’ published national, state, and local tax returns estimated based on their research, interviews, and sampling that roughly one third of the unions’ efforts went toward political advocacy. This is what drove the $700 million estimate: one third of $2.2 billion is slightly more than $700 million. If the 2014 auditor’s report is correct, and that result applies to union spending allocations across the country, then it serves as independent confirmation, rather than rebuttal, of what Dropout Nation turned up.
Indeed, if even the unions’ auditing numbers say that one third of their expenses are not chargeable, the reality is probably a much higher number. This has been borne out by Dropout Nation in five years of reports on NEA and AFT spending: Often times, the two unions and their affiliates list what often turns out to be political spending under the category of “representational activities”. If anything, the $700 million estimate probably underestimates the amount of money NEA and AFT and their units spend on politics.