There is little good news these days for the New York State United Teachers, the financially-strapped state affiliate of the American Federation of Teachers and National Education Association.
Last week, the Empire State’s education department announced that it wouldn’t bow to the union’s demands to reduce time for the battery of reading and math exams from three to two days, defeating its long-term goal of getting rid of the objective data that can be used to measure school (and eventually, teacher) performance. Earlier this month, a judge in Erie County ordered NYSUT to explain why it was violating state campaign finance laws when it gave $700,000 to New Yorkers for a Brighter Future, a political action committee whose treasurer is longtime union top executive Andrew Pallotta, to help Democrats in their unsuccessful effort to capture a state senate seat — and end Republican control of the legislative body.
Meanwhile the union’s effort to bolster its influence over education policy in the Empire State — one that has succeeded in the past couple of years — was blunted as other candidates it backed for the state senate such as Adam Haber, a school board member running for an open seat, lost big time. With Republicans retaining control of the upper house, NYSUT will have to hope that Gov. Andrew Cuomo — whose desire and willingness to advance systemic reform has waned significantly since embarking on his second term — can continue to do its bidding.
But NYSUT has bigger problems on its balance sheet — and, as it reported yesterday in its annual filing with the U.S. Department of Labor, it starts with its ever-growing pension and retirement liabilities.
The union reported that it accrued $503 million in retirement liabilities in 2015-2016, a 31 percent increase from the $383 million it reported in the previous fiscal year. This includes $288 million in pension liabilities (a 23.6 percent increase over 2014-2015), and $215 million in retiree health obligations (an increase of 43 percent over the previous fiscal year).
If NYSUT were to land in bankruptcy, the union would have just $125 million in assets to cover $415 million in liabilities. Essentially, it would owe $290 million more to its retirees and other creditors than it could ever pay back. Put bluntly, the union is virtually insolvent.
Certainly NYSUT’s retiree obligations are covered by some $24.5 million in investments and U.S. Treasury securities. But that doesn’t even cover a tenth of its insolvency. More importantly, like state and district-run defined-benefit pensions that NYSUT, along with other AFT and NEA affiliates, defend, the capital markets have been in the doldrums; the value of the investments barely budged from levels in 2014-2015. So there’s no way that NYSUT can grow its way out of bust.
The good news for NYSUT is that it added 11,176 rank-in-file in 2015-2016 (to 651,594), a 1.7 percent increase over the previous year. But as with last year, the good news comes with some dark clouds. Most of the growth came in the form of retirees who no longer work in classrooms; the number of retirees paying into the union increased by 2.9 percent in 2015-2016 versus a two percent increase in so-called in-service (or working) rank-in-file. Since retirees pay less into NYSUT coffers than classroom teachers, this means the union is garnering less money. Meanwhile the growth in those categories was offset by a 15 percent decline in rank-in-file from “special constituency groups” and an 8.2 percent decline in agency fee payers, whose dollars are used by the AFT affiliate for its political activities even though they are technically not supposed to be.
Partly as a result of the growth, stilted as is was, NYSUT’s dues collections increased by 5.6 percent over 2014-2015 to $133 million. Overall revenue for 2015-2016 was $258 million, a 4.9 percent increase. The national AFT provided $11.8 million in subsidies to the affiliate, a 15 percent increase over 2014-2015, while NEA subsidized the union to the tune of $2.2 million, a 10 percent increase over the previous year. NYSUT also generated $1.7 million from its Teaching & Learning Trust, a 19 percent decline over 2014-2015; while its Member Benefits affiliate, which like the one operated by AFT, peddles annuities and insurance plans to its members, generated $7 million in revenue, a nine percent decline over the previous fiscal year.
As for the bottom line? NYSUT generated $14.2 million in surplus in 2015-2016, a nearly four-fold increase over the $3.8 million in surplus generated in the previous year. This is the fourth straight year NYSUT has been in the black despite spending slightly more in 2015-2016 than it did last year. Those subsidies from AFT and NEA, along with a 2.8 percent increase in dues paid by classroom teachers to the state affiliate, definitely helped the bottom line.
Since NYSUT isn’t putting much of its money toward paying down its pension liabilities, it is spending it on influence-buying. The union spent $99.6 million in 2015-2016 on lobbying, contributions to like-minded groups and spending on almost-always political “representational activities”. This is a 1.8 percent decrease over the previous fiscal year.
Among the beneficiaries of NYSUT’s largesse: Alliance for Quality Education, which has long been a reliable vassal of the affiliate and the parent national union. It collected $67,500 from the union last fiscal year, little more than half of what it received in 2014-2015. Citizen Action of New York, another key vassal, received even less from NYSUT; the $60,720 it received in 2015-2016 is 78 percent less than what it received in the previous year. Strong Economy for All Coalition, which counts Citizen Action and AQE as key players, garnered $250,000 from the union (or half of the money it got in 2014-2015), while Education Law Center picked up $50,000 (or 50 percent less than its subsidy from the union in the previous fiscal year).
As for the Working Families Party, the progressive political outfit whose standardbearer, Zephyr Teachout, strongly challenged Cuomo during his re-election bid two years ago? It collected $50,000 from the union, a 20 percent increase over the previous year. The Fiscal Policy Institute, another NYSUT vassal, collected $146,000 from the union in 2015-2016, a 14-fold increase over the previous year.
As in 2014-2015, most of NYSUT’s political spending went to advertising and messaging. It spent $232,500 with Visuality on ads and social media activity, spent another $1.5 million with Shorr Johnson Magnus, and dropped $124,733 with Lamar Companies on billboards. Working the national AFT’s ties with both the Democratic Party and the ever-secretive Democracy Alliance, the union also spent $33,150 with the coalition’s data outfit, Catalist LLC.
On the public relations front, NYSUT spent $16,350 with flack outfit City& State, and $14,000 with Campbell & Associates. Both spends are considerably less than in 2014-2015. NYSUT’s biggest public relations spend was on the United Federation of Teachers’ Teacher Union Day reputation-repair effort; the union gave $1.4 million to the campaign.
The Teacher Union Day effort was part of NYSUT’s $15.5 million in subsidies to the Big Apple local; this is a 13 percent increase over 2014-2015. The increase proves that UFT’s effective takeover of the affiliate last year, in which it ousted longtime president Richard Iannuzzi and replacing him with the more-agreeable Karen Magee, is working well for the nation’s largest local and its ambitious president, Michael Mulgrew. NYSUT also helped AFT national meet its goals by pouring $436,429 into its Northeast Region Organizing Project.
Oddly enough, as part of its political activities, NYSUT also spent $137,543 with temporary staffing outfit TrueCorps, which works with progressive outfits to provide campaign workers without putting those people onto payroll (and thus, avoiding full-time hires and their healthcare costs). This should go down really well with other unions and activists who have pushed against the use of temp staffing by private-sector firms looking to avoid full labor costs.
As for the honchos: NYSUT President Karen Magee collected $294,729 in 2015-2016, a 2.4 percent increase over the previous year, while Pallotta, who essentially controls the union on behalf of UFT, collected $259,351, a 1.4 percent increase. Executive Director Thomas Anapolis was paid $245,548, a 3.6 percent increase over his compensation in 2014-2015.
NYSUT’s political fortunes are okay for now even as it remains virtually insolvent. But that may not last for long. Donald Trump’s successful campaign for the American Presidency portends the likelihood of a U.S. Supreme Court appointee who will likely rule in favor of ending the ability of the affiliate and its parent unions to forcibly collect dues from teachers regardless of their desire for membership. There is already talk of a revival of a tort similar to the Friedrichs vs. California Teachers Association, which became moribund earlier this year after the death of Supreme Court Associate Justice Antonin Scalia led to a split-decision by the panel. If this happens, NYSUT will have to actually convince teachers to finance its operations. And that will bring its pension woes even more to the forefront.
Featured photo: NYSUT President Karen Magee (at July’s Democratic National Convention) presides over an AFT and NEA affiliate facing financial and political uncertainty.