UNIONS THROW OPEN THEIR BOOKS FOR PUBLIC REVIEW
Once a year unions post to the Internet details about how they spent members’ money during their last fiscal year. Generally, these details are not even shared with the national executive board during the year and we know of no unions that go out of their way to mail their Board members copies before the reports are posted for the world to see. Some might consider that a lack of common courtesy while others will see it for an indication that the national officers do not hold Board members in high regard, e.g., the less they know the better. Board members often have to go find the information just like any other web surfer out there. So, as union reports for fiscal year 2015 are becoming available for scrutiny, we thought we would share with all interested readers what to look for when paging through these revelations.
THE WEB SITE– The reports are posted on a Department of Labor web site usually within 90 days of the close of a union’s fiscal year. Once you open that page, scroll through the list of unions on the line titled, “Union Name By Abbreviation.” Click on the one you want. Then move two boxes down to the one titled “Union Type.” There you can choose to focus on just the national/international union’s report, isolate all the locals, select intermediate bodies such as union councils or districts, or even get it all in one dump. If you want a particular local, enter its number in the box titled, “Designation Number.” Although you can search for reports with additional filters, just using those boxes should get you off to a good start.
If you chose a national union’s report, typically the next screen will show the link to the most recent report on file along with some interesting aggregate financial data. However, here is a trick. If you want to see how this year’s numbers compare to previous years, click on the union’s name and you should quickly see the union’s annual reports and financial big picture data for the last 15 years or so. At the bottom of this screen you should also see the link to DOL’s copies of the union’s Constitution and Bylaws.
Now click on the union’s latest report so we can move on with our insider’s guide to these reports. When the report loads nothing in items 1-10 should be surprising to local leaders of the union. However, note that these reports are signed under a penalty of perjury. That is a big deal if there is an error—as in federal investigation big.
MEMBERSHIP-Item 20 reports the number of people the union considers to be members. You will have to probe inside a particular union to see whether that is the total number of people who were members when the report was filed, at the beginning of the FY, at the end of the FY, the average during the FY, etc.
DUES– Item 21 provides the first bit of financial information that might be of broad interest, namely, how much the national union collects in dues each year. That is not likely to be news in those unions that collect a set dollar amount from every member, but where percentages of salary tables or other formula are used to set dues this can be an eye-opener. For example, it enables readers to see how much more or less some members pay than others and, when readers examine other similarly situated unions, it provides a sense of whether the dues rates are competitive, a good return-on-investment, or even efficiently used.
If you are interested in just how much the union collected in total from all the members the last fiscal year, drop down to Item 36 which provides that information.
ASSETS VERSUS LIABILITIES– Items 22 through 35 give you a sense of what is happening with that relationship, e.g., has the union invested its surplus assets or left them in cash, did the investments move with the market over the 12 month period involved, etc. You will find even more details on its investments in Schedules 3 through 5, which appear after the numbered line items end. If the union lists the particular investments funds it has placed money with that will give you a good start for determining the level of risk the union is working with, e.g., conservative, high risk, etc. Schedule 1 can also be an eye-opener if the union owns cars for staff and officers or has invested in land.
Items 36 through 68 put even more flesh on the financial bones of the unions. For example, what income sources did it have other than from dues. Be sure to examine the number in Item 48 if you want even more details on where a union’s money is coming from. But for the real information gold mine for who paid the union what last year, drop down to Schedule 14. It will show how much the union took in from various vendors, insurance companies, etc. that it is affiliated with.
As for outlays, Items 50 through 55 will give you a sense of how the union has prioritized its spending, but the mother-load of spending data is contained in Schedules 15 through 19. At least every local president of a union should scroll through that list to see who is getting a piece of the national union dues and for what. Look particularly at who is being paid rent for union space and equipment. Are they recognized names or is there a mystery about just who is involved in them? Is there a pass-through or middle-man getting a fee to provide a service the union should be able to provide itself? Just as important as those data pieces is an understanding of just how much work the union contracts out that common sense suggests it should be doing itself. The extent of union contracting out is surely something agencies and politicians might examine if the union starts complaining about the contracting out of their members’ jobs. (If you are interested in even more information about how the money was spent check out Part IX of the IRS 990, which is publicly available as explained below. For example, it will show a figure for precisely how much was spent on arbitrations, investment management fees, etc.)
OFFICERS AND THEIR SALARIES– Some unions place the dollar figure of each officer’s salary in the Constitution or Bylaws, others include less clear formula, and still others barely make reference to officer salary and expenses. But Schedule 11 lays it all out in detail, i.e., just who are considered officers, what is their salary, do they get allowances in addition to salary, how much were they reimbursed for business expenses last year, etc. Some folks will watch how much officers receive during election years for travel expenses versus in other years to gauge just how much the union might have indirectly contributed to an officer’s campaign efforts. (Another source of information about payments to officers is the IRS Form 990. These are publicly posted on the Internet, e.g., Guidestar.org provides them to anyone who signs up, which is free. There you will find in Part IV, Items 26 and 28information about money being paid to them. Part VI of the same report lists the compensation of the highest paid officers and key employees. Look not just at column D but also F.)
Although it is almost useless for union leaders, Schedule 11 also shows the percentage of each officer’s compensation that was devoted to Representational versus Political versus Overhead versus Union Administration.
STAFF AND THEIR SALARIES– Schedule 12 can be another mother load of intriguing details. For example, who was on the union staff last year and paid at what level? Did the national union elevate a local official to staff status for even a short period of time? Schedule 12 will tell you the title any temporary staffers carried, but little else about what they did for the compensation. You will find totals at the end of the Schedule which can be used to calculate averages to compare the staff salaries of one union to another. Perhaps you want to know if member’s dues are supporting a staff paid a premium above-the-market rate.
Finally, do not overlook Schedule 20 “Benefits.” Aside from giving you an idea of the “total compensation” of officers and staff, past and present, it also provides a convenient option for splitting the money paid an officer or staff members so that an otherwise very large number does not jump off the page. Another insight might be about how many of the same kind of Benefit programs the union runs. For example, in NAGE’s latest filing it shows it has five different health plans and four different pension plans. That is the type of diversification that may or may not be in the best interest of the union.
For those who cannot get enough details about who on the staff receives special compensation packages, check out Schedule J of the IRS Form 990 for severance payments, deferred comp deals, etc..
Union members have a right to know the information contained in DOL and IRS reports, union officers and voting delegates often have a fiduciary responsibility to be aware of that level of detail about the union’s finances, and agency negotiators will find it very helpful when dealing with union demands for negotiable subsidies, e.g., travel and per diem for bargaining teams, free office space, supplies, etc.. FEDSMILL hopes that this helps all of you.