One of the reasons why the American Federation of Teachers and the National Education Association have put so much time into their so-called “Reclaiming the Promise” campaign is because it is good for keeping business — especially since their finances aren’t nearly as robust as they once were. Wisconsin Gov. Scott Walker’s successful move to abolish state laws forcing teachers to become members or pay into coffers, along with similar efforts in Tennessee and elsewhere, have helped reduce the flow of revenues into NEA and AFT coffers. But the bigger culprit lies with the defined-benefit pensions and generous retirement benefits the two unions provide (along with six-figure paychecks) to their own staffers. The very lucrative retirement deals AFT and NEA affiliates they give to their staffers, which are similar to those with states and districts that they defend are doing damage to their own balance sheets. The AFT’s post-retirement obligations increased by 20 percent between 2011-2012 and 2012-2013, according to its disclosure to the U.S. Department of Labor; the NEA paid out $41 million in retirement costs in 2012-2013, a 13 percent increase over the previous year.
The high cost of traditional pensions and other benefits is particularly apparent when one looks at the 2012-2013 fiscal year financial disclosure filed last month with the U.S. Department of Labor by New York State United Teachers, the AFT’s flagship state affiliate. The unit reports that it has accrued $305 million in pension and retired staff liabilities as of this past fiscal year; this includes $188 million in accrued pension liabilities, along with another $117 million in retired staff healthcare expenses that the union must pay down over time. While the retirement obligations are 23 percent lower than they were in the previous fiscal year (more on that later), the union’s pension obligations are 61 percent greater than the $190 million in retirement liabilities reported by the union in 2008-2009. These costs explain why NYSUT paid out $42 million in employee benefits in 2012-2013, 52 percent more than it spent in 2008-2009 (though 10 percent less than the $46 million shelled out by the union in 2011-2012).
It isn’t as if the New York State AFT is gaining enough rank-and-file members to fund those burdens. The union added a mere 9,660 teachers to its forced membership between 2008-2009 and 2012-2013, increasing the size of its rank-and-file by a mere 1.6 percent (from 587,297 to 596,957) in that period; most of that growth came within the last year, as the AFT unit added 3,085 teachers to its group of dues payers. Nor can NYSUT liquidate enough assets to cover those costs if required to today. The AFT unit has merely $102 million in assets against $336 million in liabilities (including retirement costs). With the New York State AFT owing $224 million more than it can ever pay back, the affiliate is virtually insolvent.
Again, the good news for the New York State AFT is that the retirement shortfalls are 23 percent lower than the $376 million reported by NYSUT in the previous fiscal year. How the union managed that trick? Good question. There is nothing in NYSUT’s disclosure that much has changed financially. While NYSUT did sell off $4.3 million in investments and reduced the number of staffers making six-figures by nine (from 294 in 2011-2012 to 285 in 2012-2013), the union didn’t undertake any obviously cost-reduction measures. The union still spent $57 million on payroll in 2012-2013 (versus $59 million during the previous fiscal year). Dropout Nation will look further into how the New York State AFT managed to significantly reduce its retirement obligations.

New York State AFT President Richard Iannuzzi (standing at podium with Big Apple AFT honcho Michael Mulgrew, New York State Education Commissioner John King, and Gov. Andrew Cuomo behind him) may be a big player in Albany. But none of that is doing much for the union’s bottom line.
Certainly these issues would be more manageable if NYSUT, along with other AFT and NEA affiliates, embraced a professional association model that focused less on traditional districts adding new bodies than on advancing teacher quality reforms that would elevate the profession. The affiliate could then charge teachers a membership fee, as well as provide the kind of professional development activities that have helped organizations outside of education such as the Public Relations Society of America thrive during tough economic times. Even with those changes, NYSUT would still bear the consequences of decades of bad decision-making on the financial front. For NYSUT and for teachers’ unions in general, Reclaiming the Promise is a distraction from problems of their own making, especially in defending traditional teacher compensation practices that frustrate younger, more reform-minded teachers within the rank-and-file.
While NYSUT’s Rome burns, its Nero, union president Richard Iannuzzi, was paid $308,817 in 2012-2013, a slight increase over the $305,255. Former Executive Director Pauline Kinsella was paid $240,126 this past fiscal year, a slight drop from the $241,362 handed over to her by the union during the previous year. Guess it was good to be Agrippina. [Thomas Anapolis, who succeeded Kinsella as executive director, earned $204,374 in 2012-2013 as the affiliate’s head of program services, less than the $211,452 he had earned in the previous year.]
But even with such reductions, it isn’t as if NYSUT can survive on its own. That’s where the AFT, along with the National Education Association (with whom the New York AFT is also affiliated) come in. The national AFT subsidized NYSUT to the tune of $12.1 million in 2012-2013, a five percent increase over the previous fiscal year; NEA added another $1.8 million to the union’s coffers last fiscal year, a 10 percent decline over the previous period. The New York State AFT also earned $6.4 million from its member benefits affiliate, which like the national AFT’s controversial operation, peddles annuities and insurance plans to its members, an 18 percent decrease over previous year. NYSUT also earned revenue from its so-called Education & Learning Trust; the affiliate provided the union with $1.9 million in revenue in 2012-2013, a 17 percent increase over the previous period.
As for overall revenue? The New York AFT generated $236 million in 2012-2013, a three percent increase over the previous year. Thanks to the reductions in benefits costs, the union generated a $3.2 million surplus this past fiscal year (versus an $11 million loss in 2011-2012).
Political spending? The New York State AFT spent $95 million on lobbying and other influence-buying activities in 2012-2013; this includes spending for so-called representational activities, which often include political lobbying and contributions to like-minded nonprofit groups. This included pouring $404,749 into the AFT Northeast Organizing Project, which is geared toward generating more unionizing activity; $50,000 to the Education Law Center, the outfit known for leveling equity and adequacy school funding lawsuits; $54,740 to New Yorkers for Fiscal Fairness; and $62,100 to Alliance for Quality Education. Education Law Center and Alliance for Quality Education, by the way, are among the many beneficiaries of NEA and AFT largesse (including that of their affiliates) who are signatories of the Reclaiming the Promise public relations drive. NYSUT also gave $104,000 to Citizen Action of New York, which picked up a $104,000 check, and $50,000 to the Fiscal Policy Institute. The New York State AFT also made sure to support its Big Apple counterpart, the United Federation of Teachers; the nation’s largest teachers’ union local received $14.5 million from the state affiliate during 2012-2013.
You can check out the data yourself by perusing the HTML and PDF versions of the New York State AFT’s latest financial report, or by visiting the Department of Labor’s Web site.