Loss of Agency Fees Could Ruin NEA Affiliates in Right-to-Work States

January 25, 2016

Loss of Agency Fees Could Ruin NEA Affiliates in Right-to-Work States. Media coverage of the Friedrichs case has mostly focused on how it will adversely affect public sector unions overall. Reduced revenues and reduced membership will lead to a loss of political influence across the board, we are told.

But the way this will develop in the short term is interesting and counter-intuitive. It is likely that NEA affiliates in states without agency fees will feel more immediate and drastic effects.

To understand why, we need a short primer in how NEA finances itself. State affiliates collect dues for their own operations, but a portion of national dues (around 39 percent) is returned to the states in the form of UniServ grants and other aid. UniServ grants help pay the salaries and benefits of the professional labor negotiators and organizers each state affiliate employs.

We can learn a lot about the relative fiscal health of each affiliate by determining how much of its budget consists of NEA subsidies, as opposed to its own sources of revenue. The average NEA state affiliate receives 16.4 percent of its income from NEA.

These affiliates are least dependent on NEA: California, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Ohio, Oregon, Pennsylvania and Washington. They are all agency fee states.

These affiliates are most dependent on NEA: Alabama, Indiana, Louisiana, Mississippi, New Mexico, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah School Employees Association, West Virginia and Wyoming. All but one of these (New Mexico) is a non-agency fee state.

It is sensible to think that the loss of agency fees will only affect the states that have them. They will eventually feel the pain, but they are financially healthy, for the most part, and the revenues they have collected for years will delay the onset. We even have two states to prove it. Michigan and Wisconsin both lost agency fee revenues in recent years, yet Michigan still only gets 9 percent of its income from NEA, and Wisconsin only 16.6 percent.

Agency fee states have been so healthy for so long their members have been propping up weak affiliates in non-agency fee states. When those revenues begin to dissipate, the struggling state affiliates have no reserves on which to draw. They will either begin to fail financially, or NEA will have to devote an increasing share of a decreasing pot of revenues to keep them viable.

The latter choice is the obvious one, but over time it will become more difficult to maintain, as formerly strong affiliates gradually become weak ones – as we will see first with Michigan and Wisconsin.

In short, people who expect some immediate devastation of the California Teachers Association, New Jersey Education Association and New York State United Teachers should the Friedrichs plaintiffs prevail are in for major disappointment. Instead, in places where they have never even heard of agency fees teachers’ unions will go from not being strong to not being able to do much of anything at all.

Rebel Challenge. For those of you who asked, my combined time of 3:00:38 placed me 355th of the 4,542 people who finished both races, and 7th of the 66 Rebel Challengers in my age group.

Recent Intercepts. EIA’s daily blog, Intercepts, covered these topics January 12-25:

Justice Sotomayor’s Ingenious Solution to the Agency Fee Problem. Let’s make NEA and AFT company unions!

One Voice? The union speaks for the majority of teachers, except when it doesn’t.

Who Represents Detroit Teachers? Exclusive representation is playing the field.

Former Teacher Union Chief Convicted on Fraud Charges. Federal trial still to come.

South Dakota Unions Try to Swim Upstream. I have an idea: agency fees!

Arizona Education Association’s Finances. Melting.

Close Enough for Government Work Quote of the Week. “In an interview with former Obama staffer David Axelrod, [SEIU President Mary Kay] Henry said about 64 percent of the union’s public-sector members identify themselves as conservative. (SEIU later told Morning Shift that its most recent data show that the actual number is around 36 percent).” – from the January 8 Politico.