Betsy DeVos’ Deliberate Ignorance

Between 2002 and 2015, the years under which George W. Bush and Barack Obama presided over federal efforts to spur systemic school reform that included the now-abolished No Child Left…

Between 2002 and 2015, the years under which George W. Bush and Barack Obama presided over federal efforts to spur systemic school reform that included the now-abolished No Child Left Behind Act, the number of functionally-illiterate fourth graders, those reading Below Basic on the National Assessment of Educational Progress, declined by 172,078 children. In that same period, the percentage of functionally-illiterate Black fourth-graders declined by 12 percentage points in that same period (from 60 percent to 48 percent) while the percentage of Latino fourth-graders struggling with literacy declined by nine percentage points (from 43 percent to 34 percent), and a 10 percentage point decrease in the number of fourth-graders on free- and reduced-priced lunch programs reading Below Basic (from 54 percent to 44 percent).

The percentage of fourth-graders reading at Proficient and Advanced levels — essentially at and above grade level — increased by five percentage points between 2002 and 2015. This included a five percentage point increase in the number of Black fourth-graders reading at and above grade level, a six percentage point increase among Latino children, and even a four percentage point increase among children on free- and reduced priced lunch programs, the poorest children in America.

Meanwhile the percentage of functionally-illiterate eighth-graders  on free and reduced-priced lunch plans declined by three percentage points within this period, while there was also a nine percentage point decrease in the number of Latino eighth-graders struggling with literacy. At the same time, the percentage of Black eight-graders reading at Proficient and Advanced levels increased by two percentage points in that same period while the percentage of Latino eighth-graders reading at and above grade level increased by five percentage points. Even better, the percentage of low-income eighth-grade students reading at Proficient and Advanced levels increased by three percentage points within that period.

These improvements resulted in part from No Child’s Adequate Yearly Progress provision, which required states to meet their obligations under their own constitutions to provide children in public schools with high-quality education and hold districts and other school operators accountable for failure mills and dropout factories they run. Suburban districts could no longer continue to commit educational malpractice against poor and minority children. School operators had to focus on achieving measurable results instead of damning kids to low expectations. Data became critical to providing all children with high-quality teaching, curricula and cultures.

As Thomas Ahn of the University of Kentucky and Duke University’s Jacob Vigdor determined in a study of North Carolina schools released last year, No Child’s accountability measures have helped the Tar Heel State improve achievement and even helped families in failing schools move into better-performing ones. On average, a North Carolina school failing AYP for the first time improved its math performance by five percent of a standard deviation. A poor-performing Tar Heel State school under Needs Improvement for a fifth consecutive year (and forced to develop a restructuring plan) improved reading performance by six percent of a standard deviation, while math achievement improved by nearly three percent of a standard deviation.

Under George W. Bush and Barack Obama, fewer children were functionally illiterate and more went on to success in adulthood. This is unlikely to happen during the Trump era.

The improvements in education didn’t come just through efforts in traditional districts. As part of their reform efforts, the Bush and Obama administrations continued the effort first began under Bill Clinton to provide more children with opportunities to attain high-quality education they need and deserve. This includes the opening of 4,179 charter schools between 2002-2003 and 2014-2015, according to the U.S. Department of Education, as well as the launch of school voucher programs in Florida, Indiana and Louisiana.

Thanks to high-quality charter schools in urban communities, children in those schools gain 58 additional days of learning in math and 41 additional days of learning in reading compared to peers in traditional districts. More importantly, as seen with charter school operators such as the Knowledge is Power Program, charters have improved the chances of poor and minority children graduating from traditional colleges, community colleges, technical schools and apprenticeship programs (usually run through community colleges) that make up American higher education.

The point in citing these facts? That contrary to the assertions made yesterday by U.S. Secretary of Education Betsy DeVos, the reform efforts led by Bush and Obama (and their education secretaries) that began with the passage of the No Child Left Behind Act and accelerated with Race to the Top achieved measurable and quantifiable results that improved the lives of so many of our children.

From the accountability provisions that forced states to focus on achievement gaps, to the expansion of charter schools, vouchers and other forms of choice, to support for implementation by states of Common Core reading and math standards first developed in the first decade of this century, to the efforts under the Obama Administration to end the overuse of out-of-school suspensions and other forms of harsh school discipline (as well as criminalization of youth), both Bush and Obama spurred reforms (including the charters and vouchers supported by DeVos herself in her previous role as a school reform philanthropists) that have helped more children gain the knowledge they need to succeed in adulthood.

This is not to say that the efforts were unqualified successes. Nothing done by man will ever be. No Child’s focus on basic literacy and numeracy, a reflection of the mission of the school reform movement for most of its modern history, no longer suffices in an age in which some form of higher education is critical to economic, social, and political success. The Obama Administration’s No Child waiver gambit, which began the evisceration of accountability that continued with the passage of the Every Student Succeeds Act two years ago, was arrogant policymaking and sloppy implementation that has harmed systemic reform. Just as importantly, as Dropout Nation has consistently pointed out and as exemplified by the latest edition of the Trends in International Mathematics and Science Study, the need to continue systemic reform remains paramount.

Yet the data (along with the long history of  proves beyond a shadow of a doubt that the Bush and Obama administrations successfully embraced the federal government’s necessary, constitutional and life-affirming role in ensuring that every child, especially poor and minority children served poorly by American public education, get a chance at high-quality education. The administrations achieved measurable results that are important steps in helping all children succeed — if DeVos and the Trump regime (along with congressional leaders and those at the state level) bother to do their parts.

Barack Obama didn’t always get it right on education policy. But his administration got it right a lot of the time. Which is saying something.

DeVos’ sophistry, however, isn’t shocking. After all, she gave her speech at an event held by the American Enterprise Institute, whose education czar, Rick Hess, has long opposed focusing on stemming achievement gaps and has generally been, to say it kindly, not all that interested in building brighter futures for the poor and minority children harmed the most by the failures of American public education.

More importantly, DeVos’ dismissal of the need for a strong federal role in education policy and protecting the civil rights of Black and Brown children is reflective of that of the administration in which she serves.

As we already know, President Donald Trump spent the last week doubling down on his White Supremacist rhetoric when he called several African nations which account for the bulk of immigrants to the United States (as well as Haiti) “shitholes”, expressed his preference that the nation bring in more emigres from Norway and other European (White) countries, and dismissed concerns from the Congressional Black Caucus, whose members represent Black and Latino children (as well as their communities) on Capitol Hill.

The statement, which came during a meeting over an increasingly-unlikely deal to stop the deportation of 760,000 youth, young adults and classroom teachers previously covered under Deferred Action for Childhood Arrivals, once again highlights the reality that the Trump Administration’s long-term goal is what can best be called low-grade ethnic cleansing against immigrants and Native-born Americans who aren’t Caucasian.

DeVos, along with erstwhile school reformers working at the Department of Education, have been willing collaborators in the administration’s war against poor and minority communities. This includes moves to weaken and end Obama-era efforts to stem overuse of suspensions (as well as use of restraints and seclusion practices that harm children condemned to special ed ghettos), to supporting the expansion of 529 college saving accounts for K-12 expenditures that does little for poor and middle class families.

Meanwhile her unwillingness to condemn Trump’s rank bigotry and demagoguery demonstrates that she has little concern for the most-vulnerable children her agency is charged with protecting. Her allies will argue that her past record of advancing school choice proves otherwise. But her record since her nomination for the nation’s top education policy job makes lie of those claims. This is even without considering her general unfitness for her role.

One thing is ultimately clear: Neither Betsy DeVos nor her boss will be the champions for children their predecessors were. For that, and their general indifference to facts and truth, they should both be ashamed.

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Best of Dropout Nation: A Call to Revolutionize American Public Education

On this rebroadcast of a Dropout Nation Podcast from 2012, RiShawn Biddle calls upon reformers to remember the need to build brighter futures for all kids – and take the…

On this rebroadcast of a Dropout Nation Podcast from 2012, RiShawn Biddle calls upon reformers to remember the need to build brighter futures for all kids – and take the time in the new year to advance systemic reform.

Listen to the Podcast at RiShawn Biddle Radio or download directly to your mobile or desktop device. Also, subscribe to the Dropout Nation Podcast series. You can also embed this podcast on your site. It is also available on iTunesBlubrry, Google Play, Stitcher, and PodBean.

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A Holy Call for School Reform

Truly He taught us to love one another, His law is love and His gospel is peace. Chains he shall break, for the slave is our brother. And in his…

Truly He taught us to love one another,
His law is love and His gospel is peace.
Chains he shall break, for the slave is our brother.
And in his name all oppression shall cease.
Sweet hymns of joy in grateful chorus raise we,
With all our hearts we praise His holy name.
Christ is the Lord! Then ever, ever praise we,
His power and glory ever more proclaim!
His power and glory ever more proclaim!

John Sullivan Dwight’s translation of the third verse of Placide Cappeau’s and Adolphe Adam’s O Holy Night. As reformers, we must embrace these words by helping children and their families break the chains of illiteracy and innumeracy, as well as end the oppression of educational failure.

On this Christmas Eve, let’s commit ourselves once again to building brighter futures for all our children.

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The Integration Mirage

If the Century Foundation and other advocates for socioeconomic integration are believed, Cambridge Public School in Massachusetts is supposedly the model for harmonious, high-quality educating of all children regardless of…

If the Century Foundation and other advocates for socioeconomic integration are believed, Cambridge Public School in Massachusetts is supposedly the model for harmonious, high-quality educating of all children regardless of background. This is because “73 percent of schools were balanced by race in the 2011–2012 school year” and 64 percent of them were “balanced” by socioeconomic status (including percentage of kids on free- and reduced-priced lunch plans). Declares Century in its lullaby to the school: “Cambridge remains a leader in school integration”.

Yet a Dropout Nation analysis of data from the U.S. Department of Education offers a much different story than what Century and others want to promote. If anything, the rationing of opportunity for high-quality education is as much a problem in Cambridge and other districts considered successes of integration as they are in the nation’s most-highly segregated traditional districts.

Just 8.5 percent of Cambridge’s 577 Black high school students — 49 of them, to be exact — took Advanced Placement courses in 2013-2014. This is four times lower than the 34. 5 percent of White peers (226) taking the college preparatory coursework. [Sixteen-point-four percent of Latino high schoolers took AP that year.]

It gets only slightly better when it comes to access to calculus, trigonometry and other forms of advanced mathematics. Twenty eight-point-four percent of Black high schoolers took college-preparatory math in 2013-2014. But that still trailed the 48.4 percent of White peers who took those course. [Some 35.2 percent of Latino high school students took calculus and advanced math.]

The numbers got slightly better when it came to physics, a critical gateway course for science, technology, engineering and math careers. Thirty three-point-four percent of Black high schoolers took the course compared to 35.9 percent of White peers. But only 28.7 percent of Latino high schoolers took the course.

Meanwhile there is another form of denying opportunity that is pernicious within Cambridge — in the form of who gets put into its special ed ghettos. One out of every four Black children in Cambridge’s district — 25.9 percent of Black children in its care — are labeled special ed cases, as are 25.4 percent of Latino peers. This is almost double the (also far too high) 14.2 percent of White children placed into special ed. Based on those numbers, a Black or Latino child in Cambridge has a one-in-four chance of being denied the high-quality teaching and curricula they need for lifelong success.

Districts such as Stamford Public Schools are touted as examples of success in integration. But the data proves that illusory.

Even worse, the Black kids condemned to special ed are more-likely to be subjected to out-of-school suspensions and other forms of harsh traditional school discipline that ensure that they have a one-in-six chance of graduating from high school. Cambridge meted one or more out-of-school suspensions to 9.7 percent of Black children and 8.9 percent of Latino peers in Cambridge’s special ed ghettos; this is three times higher than the 3.5 percent out-of-school suspension rate for White peers.

For all of Century’s talk about Cambridge representing the success of socioeconomic integration, the data on equality of opportunity doesn’t support it. But this should be no surprise — especially to otherwise-sensible outfits such as the Center for American Progress (which released its own call for integration this week). Because integration has never proven to be the solution for the nation’s education crisis and its damage to the futures of poor and minority children that its proponents claim it to be.

Take the Jefferson County district in Louisville, Ky., another district that has been touted by Century and others for efforts on integration. Back in October, the foundation bemoaned an effort by the state legislature to end its “controlled choice” effort and allow families to send their kids to neighborhood schools. Just 11 percent of the district’s Black high schoolers and 18 percent of Latino peers accessed AP courses in 2013-2104, versus 28.5 percent of White high school students. Only 12 percent of Black high school students and 14.2 percent of Latino peers took calculus and advanced mathematics; this is lower than the 21.5 percent of White peers who accessed those courses.

Meanwhile the denial of high-quality education in the form of sending kids to special ed ghettos remains a problem. Fourteen-point. six percent of Black children are put into special ed, slightly higher than the 12.3 percent of White peers. [Only 6.4 percent of Latino children are condemned to special ed.] Yet Black children in special ed will suffer even worse than White peers when it comes to out-of-school suspensions and other forms of harsh school discipline. Jefferson County meted one or more out-of-school suspensions to 17.7 of Black children, compared to just 7.1 percent of White peers (and 10.2 percent of Latino students). Even when Black and White children are equally condemned to educational failure, they are not harmed in equal ways.

Another ‘model’ for integration is the Stamford district in Connecticut, which has been credited by Century for “remarkable success maintaining racially and socioeconomically desegregated schools”. Yet only 14 percent of Black high school students and 17 percent of their Latino peers took AP courses in 2013-2014, compared to 40.5 percent of White peers. Just 15.1 percent of Black high schoolers and 14.3 percent of Latino counterparts took calculus and other advanced math, two times lower than the 32.2 percent participation rate for White peers.

Meanwhile 19.1 percent of Black children and 12.6 percent of Latino peers were condemned to Stamford’s special ed ghettos. Only 9.2 percent of White children were denied high-quality education. Within those ghettos, Stamford meted one or more out-of-school suspensions to 13.3 percent of Black students and 6.6 percent of Latino peers. Just 3.3 percent of White students — 16 in all — were suspended one or more times that year.

Your editor can go on and on with each of the nine examples Century touts as models of success in socioeconomic integration — as well as point out other examples such as Clinton Separate School District in Mississippi. But that would be piling on. What the data points out is that for all the claims advocates make, socioeconomic integration doesn’t address the underlying issues that keep poor and minority children from receiving the high-quality teaching, curricula, and cultures they need for lifelong success.

Socioeconomic integration doesn’t deal with the reality that mixing Black and Latino faces into White spaces doesn’t address the myriad ways traditional districts deny opportunities to them. This includes the gatekeeping by school leaders, teachers and guidance counselors of gifted-and-talented programs that are the first steps towards kids attending AP and other college-preparatory courses, the low-quality instruction and curricula in regular classrooms that keep Black and Brown kids off the paths to success, and even selective high schools such as those of New York City, which Contributing Editor Michael Holzman has shown to be forms of “segregation by another name”.

Oddly enough, the magnet schools and other “controlled choice” models integration-as-school reform advocates often tout are among the worst offenders. One reason? Because they are as much used by districts as tools for luring and keeping White families at the expense of poor and minority children as they are mandated by courts for integration. [By the way: The power to use choice and high-quality education as a political tool is one reason why traditional districts oppose the expansion of charter schools in the first place.] Basically, magnets and controlled choice deny our most-vulnerable children access to high-quality education in the name of socioeconomic balance. Even worse, the approaches are no different in practice than the kinds of “curated segregation” that take place in many cities today.

There is a reason why charters have become the choice of so many Black families: Because of the opportunities for children to have their cultures and lives affirmed.

Integration also doesn’t address the failure to provide poor and minority children with teachers who are subject-matter competent and also care for them regardless of their background. As Dropout Nation noted last month, far too many Black and Brown children are taught by teachers who subject them to the not-so-soft-bigotry of low expectations, harming their chances for high school graduation and college completion. Nor does integration address the need to overhaul how we recruit, train, and compensate teachers, deal with the need to bring more talented Black people (including midcareer professionals ready to work with kids) into classrooms, or even the near-lifetime employment rules (in the form of tenure) and teacher dismissal policies that keep so many low-quality teachers in classrooms often filled with the descendants of enslaved Africans.

Addressing those underlying issues requires undertaking the kinds of teacher quality overhauls reformers have been pushing for the past two decades, ones that integration-as-school reform advocates often oppose. Put bluntly, it is difficult for your editor to take integration advocates seriously when they refuse to deal honestly with the consequences of policies and practices that allow educationally-abusive teaching to fester.

Meanwhile integration fails to address the restrictions on opportunity for poor and minority children that result from the traditional district model as well as the zoning policies and property tax-based finance systems on which it is sustained. Integration does absolutely nothing to address how districts use their dependence on property tax dollars to oppose the ability of poor and minority families in other communities (who finance those schools through state and federal dollars). Nor does it stop districts from using school zones and magnet schools as tools for denying opportunity to the Black and Brown families who live within them. And it definitely doesn’t stop White communities seeking to secede from integrated districts from doing so.

It’s long past time to break the ties between educational opportunity, property taxes and housing policy. This means moving away from a model of public education built upon districts and school boundaries (which integration merely overlays) to one in which states finance high-quality opportunities from which all children and families of all backgrounds can choose.

Finally, what integration advocates fail to admit is that their approach is patronizing to the very Black and Brown families for which they proclaim concern. This is because throughout American history, integration (along with its kissing cousin, assimilation, about which American Indians know all too well) has always been based on the racialist idea that Whiteness is superior, that White people are better, and that if it isn’t close to White or attended by White, then it is inferior, and by implication, should be destroyed.

Anyone who has gone to a Historically Black College and University, or been to a rural White school knows this isn’t true. Even worse, it is unconscionable and immoral for anyone to believe it or embrace it or perpetuate it. But the fiction remains as pernicious and destructive now as it was during the heyday of integration in the 1960s and 1970s when schools in Black communities were shut down instead of being provided with the resources they needed to serve children properly. If allowed to re-emerge, that thinking will damage the new efforts Black and Latino people are doing now to help their children succeed on their own terms.

For Black and Latino families who just want and deserve high-quality schools in the communities in which they live that also affirm their cultures, where their kids also go to schools with kids who look like them, where they know that they can succeed (even when they are told otherwise), integration remains what Charles Ogletree once called a false promise. Based on the data, their feelings are justified. They are also tired of having their children being forced to teach White people’s children how to treat them with respect, and exhausted with negotiating with White people for the resources their children are supposed to get by law. Those feelings are also well-deserved. Integration does nothing to affirm the people it is supposed to help.

If we want to build brighter futures for all children, especially those Black, Brown, and poor, we have to get to continue to overhaul the policies and practices that keep them from getting the knowledge they deserve. Focusing on integration as the solution merely papers over the hard work that must be done.

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NYSUT’s $544 Million Financial Problem

Over the past few months, New York State United Teachers got a lot of flack over the fact that its now-former Secretary-Treasurer, Martin Messner, was still teaching in the classroom…

Over the past few months, New York State United Teachers got a lot of flack over the fact that its now-former Secretary-Treasurer, Martin Messner, was still teaching in the classroom even as he also oversaw its woeful finances. Of course in reality, Messner had spent most of his three-year tenure as the union’s financial overlord at its headquarters in the Albany suburbs, and only began teaching again this past September after his leave-of-absence expired. [There’s also the presence of an actual staff of finance people who do the day-to-day work of balancing books.] But that brief period of double duty made for some laughs at the union’s expense.

The reality of the union’s financial condition, however, is not a laughing matter. As a Dropout Nation analysis of its latest filing with the U.S. Department of Labor shows, the union’s pension and retiree healthcare woes continue to keep it in virtual insolvency.

NYSUT reported that it accrued $544 million in pension and retiree health liabilities in 2016-2017, a 7.9 percent increase over levels in the previous year. While the union reported that pension liabilities decreased by 13.4 percent (from $288 million in 2015-2016 to $249 million in 2016-2017), retiree healthcare costs increased by 36.5 percent, from $215 million to $294 million within the same period.

As you would expect, NYSUT doesn’t have enough assets to cover those insolvencies. The union’s pension had $285 million in assets as of 2016, according to its filing with the U.S. Department of Labor. If you took that number, that still leaves $259 million in retiree pension and healthcare costs (along with other liabilities on the books), none of which would be fully covered by NYSUT’s $142 million in assets.

As with defined-benefit pensions run by states, districts, and the National Education Association (to which NYSUT is affiliated along with its status as the largest state unit of the American Federation of Teachers), NYSUT’s pension assumes an overly optimistic annual investment rate of return of 6.5 percent. Even in years in which those numbers can be made, NYSUT’s generous retirement age levels, under which an employee can head into retirement as young as age 55 with 10 years of service, adds additional strain onto finances.

The good news for NYSUT is that it is having greater success than other AFT and NEA affiliates in increasing rank-and-filers paying into its coffers. It added 35,381 rank-and-filers in 2016-2017, increasing its ranks by 5.4 percent to 686,975. This included a 7.2 percent increase in the number of classroom teachers and other school employees as well as a 2.6 percent increase in the number of retirees paying dues.

Former NYSUT Secretary-Treasurer Martin Messner got laughed at for both running the union’s finances while briefly teaching school. But the AFT affiliate’s woes are no laughing matter.

As a result of those increases, NYSUT generated $138 million in dues in 2016-2017, a 3.8 percent increase over the previous year. Overall revenue was $260 million, barely budging from last year. As you would expect, national AFT made sure to subsidize the affiliate; the $10.4 million it paid to NYSUT in 2016-2017 was 11.9 percent less than in the previous period. NEA provided $2.1 million last fiscal year, slightly less than in 2015-2016. NYSUT collected $1.8 million from its Teaching & Learning Trust, slightly more than in 2015-2016, while it garnered $6.6 million from its Member Benefits affiliate (which peddles annuities to the rank-and-file), a 5.7 percent decline.

The union did manage to hold the line on expenses. General overhead expenses of $6.4 million in 2016-2017 were three percent lower than in the previous period, while benefits costs of $43 million were just 1.4 percent higher than a year ago. As a result, NYSUT generated a surplus of $13 million, 8.5 percent lower than in 2015-2016.

Of course, NYSUT’s top honchos did fine for themselves. Andrew Pallotta, the ally of United Federation of Teachers President Michael Mulgrew who now runs NYSUT, collected $273,153 in 2016-2017, a 5.3 percent increase over the previous period. His predecessor (or, to be more-appropriate, former puppet) Karen Magee walked away with $346,080 in compensation, a 17.4 percent increase over 2015-2016. The aforementioned Messner was paid $285,684 in 2016-2017, an 11 percent increase over his compensation in the previous period. As for Executive Director Thomas Anapolis? He was paid $180,004, a 27 percent decrease over 2015-2016.

NYSUT has no interest in paying down its pension and retiree health liabilities. But it does have plenty of desire to buy influence. The union spent $97.4 million in 2016-2017 on on lobbying, contributions to like-minded groups and spending on almost-always political “representational activities”. That’s lower than the $99.6 it spent in the previous year.

The union gave $30,000 to Alliance for Quality Education, one of its longstanding vassals, in 2016-2017. That’s less than half what NYSUT doled out to the group in the previous year. NYSUT gave another of its dependents, Citizen Action of New York, even less; the $28,500 it gave to the group is 53.1 percent less than what was given in 2015-2016. The union doubled its giving to Education Law Center, handing over $100,000 in 2016-2017, while giving $250,000 to Strong Economy for All Coalition, unchanged from the previous period. NYSUT also made sure to give Labor-Religion Coalition of New York State $111,000 last fiscal year, an 11 percent increase over 2015-2016.

Advertising and messaging were the big spends for NYSUT. The union spent $296,315 with Visuality on social media efforts, dropped $21,950 on ads with Facebook, bought $5,152 worth of ads on Twitter, and put down $19,800 on ad space with Politico‘s Pro magazine to reach politicians and other players. The union spent another $84,565 on outdoor ads and public relations. Another $146,732 was spent on commercials with five outlets — public radio stations WAMC, WYNC and WXXI, as well as television stations WNYT and WWNY, which are dominate players in Upstate New York. NYSUT spent $39,150 with NGP Van, and dropped another $23,975 with Catalist, both key to the efforts of Democratic Party players.

Meanwhile NYSUT made sure to subsidize the UFT, the New York City local of AFT which effectively controls the state affiliate. NYSUT financed UFT to the tune of $14.5 million in 2016-2017, a 6.5 percent decrease from the previous period. UFT also owes NYSUT $10.8 million in accounts receivable, of which $4 million has been due for the past 90-t0-180 days. Too bad NYSUT isn’t doing much for the local in East Ramapo, whose district has been beset by a regime focused on damaging the futures of the kind of poor and minority children the union and its national parents claim to proclaim concern. The local there only received $17,240 in 2016-2017, less than the meager $17,732 it got in the previous period.

You can check out the data yourself by perusing the HTML version of the New York State AFT’s latest financial report, or by visiting the Department of Labor’s Web site.

Featured photo: Andrew Pallotta (left, with United Federation of Teachers player Shelvy Young-Abraham and AFT President Randi Weingarten), now runs NYSUT all on his own.

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NEA Loses Money

As Dropout Nation readers already know, losing money and financial woes has tended to be the norm for a good number of National Education Association’s affiliates. The Big Two teachers’…

As Dropout Nation readers already know, losing money and financial woes has tended to be the norm for a good number of National Education Association’s affiliates. The Big Two teachers’ union’s affiliates in Michigan, Illinois, and Wisconsin, along with the affiliate it controls with American Federation of Teachers in New York, have been virtually-insolvent for years thanks to unfunded defined-benefit pension liabilities, underfunded employee healthcare costs, and loss of rank-and-filers who pay the bills.

But NEA has managed to stave off such losses — until now. An analysis of its latest financial report reveals that the nation’s largest teachers’ union lost money in its last fiscal year. This can be blamed on several proverbial paper cuts that may get worse is a Supreme Court ruling hits its finances and ability to preserve influence.

NEA  lost $662,383 in 2016-2017, according to its filing with the U.S. Department of Labor. This is versus a $1.4 million surplus in 2015-2016, and a whopping $27 million surplus in 2014-2015. The loss is small compared to that of many of its affiliates (including the $4.7 million loss suffered by its Michigan unit and a $1.5 million loss for its Ohio division). But it may be a harbinger of problems to come for the national union.

One reason for the loss: A 15.6 percent increase in benefits costs (from $54 million in 2015-2016 to $63 million in 2016-2017). Contributions to NEA’s retiree healthcare trust, which covers health benefits, doubled from $7.5 million in 2015-2016 to $15.8 million in 2016-2017. The healthcare trust’s liabilities increased by 25.8 percent over the past year (from $193 million in 2014 to $243 million in 2015), according to its most-recent form 5500 filing; it only has $117 million in assets available to cover those costs if it had to close shop today.

A 6.7 percent increase in pension payments (from $20.7 million to $21.1 million) has also added to the union’s fiscal burdens. These cost increases offset a 4.3 percent decline in general overhead and 5.8 percent decrease in union administration costs. Considering that the pension expects benefit payouts to increase by 16.5 percent (from $58 million to $68 million) between 2018 and 2025, NEA’s own pension costs will increase dramatically. Especially since the pension itself is in bad shape. It doesn’t have enough assets to cover $140 million in unfunded liabilities — and it has at least $21 million in unfunded commitments to hedge funds and other private-equity investments, according to the plan’s filing with the Department of Labor. The $140 million in unfunded liabilities, by the way, is a 54 percent increase over insolvency levels in 2014.

None of this is surprising to NEA’s own staffers. Last year, the National Staff Organization, which represents the union’s workers, announced that a memorandum of understanding with NEA over fully funding the pension was suspended because “troubling challenges have developed that are making it more difficult to reach full funding by December 31, 2021”. The challenges that plague defined-benefit pensions run by states and districts that NEA wants to keep in place and keep effective control over — including overly optimistic rates of return on investments and the decline in current workers paying into the plan compared to retirees — are also a problem for the union itself.

Of course, as with AFT, NEA now offers its own defined-contribution plan, which has some $172 million in assets. But the defined-benefit pension’s woes will loom over the union’s finances for decades to come.

Meanwhile NEA isn’t growing its rank-and-file numbers enough to offset these costs. The union added 18,985 rank-and-filers and agency fee payers to its ranks in 2016-2017, according to its disclosure to the U.S. Department of Education. That equates to an anemic six-tenths of one percent increase over levels during the previous year. Anemic as those numbers are, at least NEA can say that it has increased its ranks for a second consecutive year.

Much of that growth can be credited to NEA’s joint affiliate with AFT in Florida, the Florida Education Association. Rank-and-file numbers increased by 2.8 percent (from 128,485 in 2015-2016 to 132,055 in 2016-2017). Another growing affiliate: The Ohio Education Association, which increased its rank-and-file by 1.4 percent (from 121,782 to 123,453). Growth for both affiliates offset nonexistent increases for other affiliates as well as the continued woes of NEA’s Wisconsin unit and the Michigan Education Association (whose rank-and-file numbers declined by 2.8 percent over the same period). Thanks in part to the growth, NEA collected $370 million in dues last fiscal year. That’s a nine-tenths of one percent increase over 2015-2016.

But trouble looms over the horizon. If the U.S. Supreme Court strikes down compulsory dues laws (and the ability of NEA and other public sector unions to force employees to pay into its coffers even if they don’t want to) as expected in Janus v. AFSCME, the union and its affiliates will lose big. Based on earlier analysis, Dropout Nation determines that NEA could lose at least 25 percent of rank-and-filers, or 768,710 teachers and other school employees. That would equate to a $92.5 million decline in dues payments, which would cripple the union’s ability to finance its influence-buying.

This reality is one reason why NEA is already advising affiliates and locals to come up with new schemes to keep the dues flowing even if compulsory dues laws are struck down. This includes forcing rank-and-filers to sign membership renewal documents that will allow affiliates to automatically deduct from payrolls for years to come unless they opt out in writing; this is being done by the union’s Education Minnesota affiliate. Other affiliates may try to write similar agreements into collective bargaining agreements, a tactic tried by the Michigan affiliate that was struck down by state courts a few years ago.

Of course, none of these steps have anything to do with actually providing services that teachers need in order to do their jobs, something that NEA and its affiliates should be doing in the first place. The fact that teachers mostly contact their locals for help when necessary means that in many cases, the locals could simply cut out NEA national (along with the state affiliates) and operate on their own. The NEA affiliate in Clark County, Nevada, which has had woes related to its busted voluntary employee benefits association, may end up being one of the first of many locals that leave the NEA fold; the union’s former Memphis local did so earlier this year.

As for overall revenues: NEA generated $385 million in 2016-2017, a slight drop over revenue levels in same period last year. One reason for the decline: A 33 percent decline in dividends it collected from its investment portfolio (from $1.5 million in 2015-2016 to a $970,223 last fiscal year). Mike Antonucci goes into detail about NEA’s investments in Corporate America. But it suffices to say that it could do better on that front.

Another factor in NEA’s revenue decline: NEA Member Benefits, the financial scheme the union runs to peddle annuities to its rank-and-file and get kickbacks from Wall Street. NEA collected just $2.3 million from Member Benefits in 2016-2017, a 72 percent decline from the previous year. [As for NEA Member Benefits?It generated $97 million in 2016, a 1.4 percent decrease over revenue in the previous year, according to its tax filing with the Internal Revenue Service; while it continued to sell annuities at a brisk pace, the decline can be attributed to a 19.6 percent decline in investment income.]

The good news for NEA’s staffers is that the leaders took pay cuts. The union’s president, Lily Eskelsen Garcia, collected $348,732 in 2016-2017, a 47 percent decrease over compensation levels in the previous year. Garcia’s second-in-command, Becky Pringle, took home just $331,022, a 24 percent decline in pay. Princess Moss, who oversees NEA’s finances, was paid $310,841, a 29 percent decline over last year. Altogether, the union’s top three leaders took home $990,595, considerably less than the top three leaders at the rival AFT.

The union also had 384 staffers earning six-figure sums, a decrease from the 403 top-paid staffers on board in 2015-2016. Executive Director John Stocks collected $375,942, a 20 percent decline from 2015-2016, while Alice O’Brien, the union’s general counsel, picked up $257,266 in 2016-2017, slightly more than in the previous period. Michael McPherson, NEA’s Chief Financial Officer, was paid $285,360, a 1.3 percent decrease over 2015-2016, while Jim Testerman, who is in charge of organizing and increasing rank-and-file for the union, was paid $257,948, a slight decline over last year.

But not everyone took a hit to their wallets. Marcus Egan, NEA’s chief lobbyist, got a raise; he was paid $208,702 in 2016-2017, a 7.9 percent increase over the previous year. Rocio Inclan-Rodgriguez, the senior director in charge of the union’s efforts to portray itself as a social justice group (and co-opt progressive and old-school civil rights groups), also got a raise. She was compensated to the tune of $259,250 last fiscal year, an 11 percent increase over the previous period.

You can check out the data yourself by checking out the HTML and PDF versions of the NEA’s latest financial report, or by visiting the Department of Labor’s Web site. Also check out Dropout Nation‘s Teachers Union Money Report, for this and previous reports on NEA and AFT spending.

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