Tag: John Stocks

How Teachers Unions Preserve Influence Teachers Union Money Report Three Thoughts

NEA Loses Money

December 19, 2017 11:25 am December 19, 2017

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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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How Teachers Unions Preserve Influence Teachers Union Money Report Three Thoughts

NEA’s $151 Million Influence Spree

November 30, 2017 12:01 am November 30, 2017

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The National Education Association just filed its 2016-2017 financial disclosure with the U.S. Department of Labor — and it is clear that the nation’s largest teachers’ union is spending even more to maintain its influence in education policy. Whether or not it benefits the teachers who are often forced to pay into its coffers is a different story.

The Big Two union spent $151 million on lobbying and contributions to supposedly likeminded organizations during its last fiscal year. That’s a 9.4 increase over influence-buying levels in 2015-2016. This, by the way, doesn’t include another $43.7 million in spending on so-called representational activities in 2016-2017, which almost always tend to be political in nature; that’s six percent less than in the previous period.

As you would expect, NEA put a lot of cash into its Advocacy Fund, the Super-PAC that is part of the union’s effort to back Congressional Democrats. It put $7 million into Advocacy Fund in 2016-2017, a 35.8 percent decrease over the previous year. Given that this an election year, the lower levels of funding isn’t shocking. But you can expect NEA to pour even more money into the Super-PAC next fiscal year — if the U.S. Supreme Court’s ruling in Janus v. AFSCME doesn’t short-circuit those plans first.

The union also spent big on last year’s Democratic National Convention, lobbying delegates and others as they formalized Hillary Clinton’s since-unsuccessful campaign for the presidency. It spent $525,004 in 2016-2017. This included handing $50,000 to the Atlantic Monthly (which was criticized by reformers back in September for receiving money from the American Federation of Teachers), as well as spending $46,000 with pollster Anzalone Liszt Grove Research.

Meanwhile NEA gave $100,000 to Majority Forward, a 501(c)4 affiliated with the Senate Majority PAC, the Super-PAC controlled by J.B. Poesch, a former head of the Democratic Senatorial Campaign Committee and ally of Minority Leader Charles Schumer. It also dropped$100,000 into the coffers of Patriot Majority, another Super-PAC that backs Democratic candidates for the House and Senate. Both donations were made in September 2016, two months before the general election.

Given how poorly Clinton and the Democrats fared last year, the spending didn’t yield any immediate results. But NEA will continue to give. This includes pouring $500,000 into Main Street Advocacy Fund, the affiliate of Republican Main Street Partnership that has been one of its most-important vassals.

While NEA failed miserably at the national level, it spent $11.1 million on ballot initiatives with some success.

The union gave $4.9 million in 2016-2017 to Save Our Public Schools, the Massachusetts coalition run by its Bay State affiliate and its longtime vassal, Citizens for Public Schools, that defeated Question 2, the ballot measure that would have expanded the number of public charter schools in the state. This came on top of the $500,000 NEA gave the committee in the previous year. As Dropout Nation detailed last year, the defeat of Question 2 was a solid victory for the union and its fellow traditionalists while reformers reeled from the loss. NEA also gave $4.2 million in 2016-2017 to Committee to Keep Georgia Schools Local, a coalition featuring NEA’s Georgia Association of Educators that defeated Gov. Nathan Deal’s plan to allow the Peach State to take over 127 failure mills and put them into a statewide district. That was on top of the $500,000 the union gave in the previous fiscal year.

In Maine, NEA gave $1.3 million to Citizens Who Support Maine’s Public Schools, a coalition including the union’s state affiliate; this was on top of the $1 million the union gave to the group in 2015-2016. The group would go on to successfully push for the passage of Question 2, a ballot measure to levy a three percent tax on incomes of greater than $200,000 ostensibly to provide $320 million in new funding to the state’s traditional public schools. But that victory was short lived. Last July, after a three-day shutdown of the state government Gov. Paul LePage convinced legislators to repeal Question 2 and replace it with a plan to provide just $160 million a year in new funding.

Meanwhile NEA gave $225,000 to Educators for Washoe Schools, a group led by its local there that successfully won a ballot measure to levy a half-penny sales tax for new school buildings. The union also burnished its efforts to co-opt progressive groups by giving $350,000 to Arizonans for Fair Wages and Healthy Families, a coalition that featured its Copper State affiliate; it successfully pushed for the passage of Proposition 206, which increased the state’s minimum wage from $8.05 an hour to $12 by 2020, as well as provide mandatory sick leave for all employees.

But the union’s efforts didn’t succeed everywhere. In Oregon, it poured $2 million into Yes on 97, which failed to pass a ballot measure that would have levied a gross sales tax on businesses selling more than $25 million in products annually, as well as allowed the state to collect gross sales taxes on business producing more than $100,000 in revenue a year. AFT, whose teachers’ and nursing affiliates are also big players in the state, also put $1 million into the unsuccessful effort. NEA also failed in Oklahoma, where the $750,000 it gave to Oklahoma’s Children Our Future, which unsuccessfully pushed Question 779, which would have levied a one percent sales tax for additional school funding.

Back on the national level, NEA still spent plenty to co-opt progressive groups. Whether it will work in the long haul — or even if the union can keep up the donations — is an open question.

A big recipient of the NEA’s largesse is the Center for Popular Democracy, a reliable ally in the efforts of the union and the rival American Federation of Teachers in opposing the expansion of public charter schools. It collected $1.1 million from NEA in 2016-2017, double the levels the union gave it in the previous year. This increase isn’t a surprise; besides doing the bidding of traditionalists, Center for Popular Democracy is also a favored recipient of the ever-secretive Democracy Alliance, the outfit chaired by NEA Executive Director John Stocks.

NEA also gave $1.1 million to America Votes, another outfit in the Democracy Alliance network that was cofounded by former Service Employees International Union President Andy Stern. That’s 177 percent more than what the union gave to the outfit in 2015-2016. Of course, it helps to be part of Democracy Alliance as well as count on “partners” such as AFT and the aforementioned Center for Popular Democracy.

NEA made sure to give Democracy Alliance some coin. The union gave it $185,772 while handing another $25,000 to its Committee on States, and $300,000 to the State Engagement Fund. Altogether, NEA gave $510,772 to Democracy Alliance, one-third less than in 2015-2016. Apparently, the union isn’t exactly enthused by the outfit’s lack of results.

As for the rest of the Democracy Alliance network? NEA gave $200,000 to David Brock’s Media Matters for America, unchanged from levels in 2015-2016; $150,000 to the Advancement Project (which helped NEA and AFT in its effort to eviscerate the No Child Left Behind Act) in 2016-2017, slightly less than in the previous year; $150,000 to Progress Now (a 33 percent decrease over 2015-2016); $50,000 to State Innovation Exchange; and $25,000 to Netroots Nation, unchanged from last year. NEA also spent $572,282 with Catalist, LLC, the data-mining outfit for the Democratic National Committee that is a lynchpin in Democracy Alliance’s campaign efforts; that’s 8.8 percent less than in 2015-2016.

On the progressive media front, NEA gave $50,000 to Independent Media Institute, the parent of Alternet; and $50,000 to Center for Media and Democracy, the outfit behind PR Watch and ALEC Watch. The biggest recipient: Race Forward, the parent of Colorlines, which has garnered criticism from reformers for its rather unfavorable commentary on the movement. NEA gave it $155,780. It is also a new recipient of the union’s largesse.

NEA Executive Director John Stocks is learning the hard way that the union’s pay-to-play efforts are yielding few (and scattershot) results.

As for other progressive groups? NEA gave $1.3 million in 2016-2017 to Sixteen Thirty Fund, a endowment developed by former Clinton Administration mandarin Eric Kessler’s Arabella Advisors; that’s more than double the amount it ladled out to the outfit in the previous year. It also gave $300,000 to State Engagement Fund, an outfit run by Anne Bartley, another former Clinton Administration staffer and stepdaughter of one of Bill Clinton’s predecessors as Arkansas governor, Winthrop Rockefeller. It also gave $250,000 to Center for American Progress, which is a reform-oriented outfit, but has been helping traditionalists oppose the expansion of vouchers, a key tool of expanding school choice. The union gave $50,000 to Proteus Action League, an affiliate of Proteus Fund which has played small roles in ballot measures in California, Nebraska and Maine; $50,000 to Tides Foundation’s Advocacy Fund; and $10,000 to State Voices, a coalition of 20 organizations dedicated to voter registration drives and other mobilization activities.

It gave $150,000 to Progressive Leaders State Committee; $50,000 to Good Jobs First (also an AFT vassal); $50,000 to the Chicago-based Community Justice for Youth Institute; $25,000 to economist Dean Baker’s Center for Economic and Policy Research; and $5,000 to Cornell University’s Center for Transformative Action. It also gave $250,000 to Corporate Action Network, a division of the Action Network Fund that aims to “address the imbalance of power between corporations and people” by allying itself with outfits such as NEA, which are just as powerful.

Meanwhile NEA gave plenty to old-school civil rights groups and self-styled outfits willing to do its bidding.

The biggest recipient among that group was Schott Foundation for Public Education’s Opportunity to Learn Action Fund. NEA gave it $125,000 in 2016-2017; it received nothing from the union in the previous year. The union also gave $50,300 to the Congressional Black Caucus Foundation, gaining access to top congressional leaders as well as other influencers at its annual conference. Meanwhile NEA gave $75,000 to NAACP; the better for the once-respectable civil rights outfit to continue opposing the expansion of charters and other school choice options Black families desire. It also gave $25,000 to National Urban League, which is far less reliable.

NEA also gave $25,000 to the U.S. Hispanic Leadership Institute, $20,000 to National Council on Black Civic Participation, $10,000 to National Center for Transgender Equality, $10,000 to Gay, Lesbian and Straight Education Network, and $25,800 to Smithsonian’s National Museum of African American History and Culture. Reaching out to immigration reform groups opposing the Trump Administration’s efforts to deport undocumented emigres, NEA gave $50,000 to National Immigration Law Center. It also handed out $35,000 to United We Dream, which works on behalf of the 760,000 undocumented immigrant children, youth, and adults (including 20,000 teachers) who may be deported thanks to the administration’s move in September to end Deferred Action for Childhood Arrivals.

As for the usual suspects?: NEA gave $50,000 to FairTest (also known as National Center for Fair and Open Testing), the leading outfit in opposing the use of standardized tests, the data from which can be used in evaluating the teachers in NEA’s rank-and-file. The union gave FairTest the same amount in 2015-2016. NEA made sure to pay off Kevin Welner’s National Education Policy Center, sending $250,000 to the outfit in 2016-2017 through the University of Colorado-Boulder’s foundation; that’s also unchanged from last year.

NEA also handed $408,659 to Council for the Accreditation of Educator Preparation, the group that represents the nation’s woeful university schools of education; provided $124,300 to National Board for Professional Teaching Standards; gave $527,542 to Barnett Berry’s Center for Teaching Quality; and handed out $225,000 to the ever-dependable Great Lakes Center for Education Research and Practice. NEA gave $68,400 to Learning First Alliance, and $100,000 to Education Law Center.

Again, it’s good to be NEA. For now. For the teachers who pay into it, often thanks to the compulsory dues laws the union defends, it may not be so good.

Dropout Nation will provide additional analysis of the NEA’s financial filing later this week. 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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