Follow the labor money
Financial transparency is needed on the public labor front.
- Friday, October 19, 2007
Attention public-employee union members … Ever wondered what your union officials spend your dues on? Odds are you probably have, and you still don’t know. But wouldn’t you like to?
In 2006, Nevada resident Kay Joy Andrews, a former bookkeeper for Carpenters Local 1780, was sentenced to five years probation, including six months home confinement for embezzling union funds totaling $55,765.75.
In 2003, Tim Egan, former Nevada business manager and secretary and treasurer of Bricklayers Local 3, pled guilty to failure to maintain union records, and making false statements and omissions in union financial disclosure reports. Egan failed to document his personal use of cash generated from union dues and his personal use of union credit cards. In 2004, the court mandated Egan to fork over $19,363.43 in restitution and forced him to undergo treatment for gambling and drug addiction.
These crooks were apprehended thanks to the oversight of the U.S. Department of Labor, which enforces the federal Labor Management Reporting and Disclosure Act (LMRDA). Under the LMRDA, federal and private sector unions are mandated to annually disclose financial information to their membership and to the federal government.
Unions that represent government employees (including teachers, fire fighters and police officers), however, are exempt from LMRDA guidelines. It’s up to each state legislature to enact laws that hold public-sector unions to the same standards that the private sector unions currently operate under.
Most rank and file union members are completely oblivious to how their dues are spent because union officials aren’t required to divulge that information. As self-proclaimed “stewards” of the public workplace, public-employee union bosses should feel obligated to shed more light on their spending habits, by opening up their books to members and the public by disclosing financial reports to the government on an annual basis.
For the most part, workers pay their required dues without blinking an eye, assuming their union officials are spending their hard-earned money in good faith to improve workplace conditions. But many workers overlook the fact that their union also spends their dues to shape public policy, politics, and ballot measures — taking positions not every member can agree with.
Today’s workforce is more educated than at any other time in history. With advancements in technology, workers are better equipped to analyze information and make decisions regarding their workplace representation.
But workers are prevented from making well-informed and intelligent choices by an ignorance of how their union bosses spend their dues. By increasing transparency and setting stringent financial disclosure rules for public-employee unions, membership will be able to hold their respective union accountable for funds entrusted to them.
Of course, union officials will claim this type of transparency places a huge financial burden on the union, and spending money on disclosure is a waste of union resources. Unions operating under the LMRDA are required to submit annual financial statements, LM-2’s, to the US Department of Labor. According to the Wall Street Journal, “Originally, the AFL-CIO said detailed disclosures were too expensive, citing compliance costs in excess of $1 billion. The final bill turned out to be $54,000…” Regardless of the cost, workers deserve the right to know how their union bosses are spending their money.
There are 13 states that require public-employee unions to disclose financial information to their membership in one way or another. For instance:
- In Alabama, all labor organizations with 25 members or more file annual reports with their members and the Department of Labor. These reports are required to contain, among other things, a “complete financial statement” including an “itemized list of all disbursements.”
- In California, each public-employee union is required to keep an “itemized record of its financial transactions” and to provide a “detailed written financial report” of its transactions annually to members of the bargaining unit.
- Florida requires public-employee unions to submit financial reports as part of the yearly registration process. The reports are required to include the sources of all receipts during the year as well as some information on expenditures.
Public sector union bosses claim that they create the best possible working environment for their membership. By disclosing financial reports, they will embolden union members to take personal ownership of their union. The more information available, the more members will feel as if they have a direct “seat at the table.”
It is time for public employee union officials to leave the depression-era mentality behind and turn a new page, altering its power structure to allow members to guide the collective from the bottom up instead of the top down. Nevada lawmakers should follow examples set by other states and pass legislation requiring labor organizations representing public employees and any political subdivision thereof, including school districts, to disclose financial information annually to membership and with the appropriate state and federal agencies.
Ryan Harriman is the coalitions manager & labor policy analyst for the Evergreen Freedom Foundation, an Olympia, WA-based public policy organization. He is also a policy fellow of the Nevada Policy Research Institute. He can be reached at firstname.lastname@example.org.