Education Intelligence Agency

Public Education Research, Analysis and Investigations

 
     
Home
Blog
Communiqué
Archives
Video Intercepts
School District Spending
Declassified
Dead Drop
About EIA
Contact
   

 

May 5, 2003
EIA Exclusive: The Tip of the Iceberg – The Story Behind the United Teachers of Dade Scandal

Last week’s communiqué noted curiosities about the finances of the Florida Education Association (FEA) and the United Teachers of Dade (ref. “What’s Behind Sudden Florida Dues Hike?” April 28 EIA Communiqué). Calling it “half a story” that needed “a piece of information to tie it all together,” EIA promised to deliver the rest as soon as possible.

It didn’t take long.

Fourteen hours after the communiqué was dispatched, the FBI and Miami police raided UTD headquarters with a sealed search warrant, removing financial records concerning long-time union boss Pat Tornillo. Published reports suggest the investigation concerns misappropriation of union dues for personal benefit – the same type of scandal that rocked the Washington Teachers Union (WTU) earlier this year. Tornillo’s position as a political insider and power broker in the city will ensure his case receives the full attention of the Miami media. But as important as the Tornillo story may be, it might actually help to further obscure the hidden story: the union “culture of secrecy” that conspired to avoid true financial accountability and disclosure.

EIA has obtained three confidential union memos that indicate Tornillo’s FBI problems are just one element of an ongoing internal feud involving UTD, FEA, and the American Federation of Teachers (AFT). While they were at each other’s throats in an atmosphere of mistrust and half-truths regarding financial health and oversight, the unions were completely in accord on one point: the need to hide the truth from the rank-and-file members and the public at large. The memos reveal that UTD’s financial problems originated in the 2000-01 school year, and that the Miami union has been in dues arrears since February 2002.

The first memo is dated January 23, 2003 from Bob Lee, FEA’s vice president for financial affairs, and Aaron Wallace, FEA’s chief of staff, to members of the FEA Executive Cabinet. It explains the timeline of UTD’s dues problems. The second is a confidential April 21, 2003 memo from Tornillo to Wallace, which was cc’ed to the executives and board members of UTD, FEA, AFT, and National Education Association President Reg Weaver. The third memo is a response to the Tornillo memo by FEA President Maureen Dinnen, which was cc’ed to all the recipients of the Tornillo memo on April 24. Note that all these memos pre-date the FBI raid on April 29. 

The Chronology

EIA will now recount the story chronologically, drawing on details from all three memos, as well as previously held information that now fits into the picture.

The situation seems to have been triggered by a dispute over how many members UTD actually had and, consequently, the amount of dues the local union was supposed to be passing up the chain to FEA and its national affiliates. According to Dinnen, “In 2000-01 and 2001-02 Dade paid the state on only a portion of the members from whom dues were collected. This number was supposed to increase every year until it was strictly accurate.”

Tornillo believes that his own membership numbers for the last two years have been overstated by FEA, and is demanding an audit of those numbers retroactive to 2000-01. He admits to losing 3,000 members over the last two years, blaming a long list of people for the losses. “We have been under attack by two right-wing organizations, TRAC [Teachers Rights Advocacy Coalition] and PEN [Professional Educators Network],” Tornillo wrote. “Their objective is to destroy UTD, not take over collective bargaining and representation rights.” He also faulted the former Miami schools superintendent, the current school board, the oversight board, the Miami Herald, and Miami’s TV Channel 10. As for the current superintendent, Merrett Stierheim, “He has been a disaster in almost everything he has touched as it relates to UTD and our unions,” wrote Tornillo.

FEA and UTD officers met frequently to try to resolve the dispute. Dinnen noted that at one meeting, “President Tornillo responded to questions about the threats of TRAC and PEN in Dade by saying that they were not a major problem.”

Nevertheless, Tornillo does not deny that he and the other UTD officers made an agreement in February 2002 to make up an undisclosed deficit in dues payments to FEA. UTD made an immediate payment of $1.9 million, and committed to partial payments of $160,000 per month until June 2002. UTD would then make a final balloon payment to erase the remainder of the debt. At about this same time, UTD took out a $1 million loan from the Bank of America.

UTD made its March payment, but failed to make its April and May payments. The problem came to a head in June 2002, when FEA was forced to dig into its own coffers to pay UTD’s national dues, so that UTD delegates could be seated at the 2002 AFT Convention in Las Vegas. At the very same time, the Washington Teachers Union faced a similar threat because of non-payment of national dues. As we now know, WTU President Barbara Bullock overcharged WTU members $144 each to make up those back dues, leading to the exposure of her misappropriation of funds.

After the convention, UTD made its outstanding payments for April and May, but soon returned to form, failing to make any further payments until September. At this point, UTD and FEA reached a new agreement. UTD made an immediate $160,000 payment to cover June, and agreed to make good its July and August payments -- a total of $320,000 – in three installments over September, October and November. In addition, UTD still owed the undisclosed balloon payment.

As complicated as the arrangements were getting, it didn’t really matter because UTD failed to make any further payments through January 2003. At that point, FEA made the unprecedented move of bypassing UTD and requesting the local union’s membership figures from the Dade school district. As is usual procedure elsewhere in the country, the Dade school district deducts union dues from teachers’ paychecks, then transmits the money to UTD, which is supposed to keep its share and pass the rest to FEA, which is supposed to keep its share and pass the remainder to NEA and AFT. The only reason for FEA to request membership figures from the district is because it didn’t trust the information it was getting from UTD. 

FEA’s Own Problems

While all this was going on, FEA was experiencing money problems of its own, only partially due to the lost UTD revenue. “Some local leadership believe the reason FEA is having financial problems is because of UTD’s per capita [dues] problems,” Tornillo wrote in his April 21 memo. “This is incorrect. FEA’s financial problems began the first year of the merger when we continued to operate as two separate unions and with two separate budgets. It continued the second year when adjustments were made to UniServ subsidies and we focused on the political arena. It continued this year with the McBride Campaign, and borrowing $2 million, and spending more than FEA took in in per capita’s… about $2 million more.”

Interestingly, Dinnen didn’t disagree with this assessment. “As every member of the Governance Board knows, FEA has experienced financial problems caused by a variety of reasons,” she wrote. “FEA has made it exceedingly clear that the UTD dues/per caps arrearage problem was not the only cause of FEA financial problems. However, the non-payment of dues/per caps by UTD has been part of the problem. Yes, FEA underestimated the spending we would do to make merger work.”

In addition to the missing UTD funds, Dinnen claims that FEA incurred more than $1 million of UTD’s financial obligations. Still, Dinnen felt obligated to lay the blame for some of her own union’s problems on “our horrible state government.”

But the overall tone of Tornillo’s memo and Dinnen’s response consists of finger pointing at each other. Tornillo stated that “all we have heard is rhetoric and no help from our State affiliate leadership and very little from our National affiliates.” He added that “...we felt at times as if our state affiliate was our biggest enemy.”

Dinnen declared she needed to respond to Tornillo’s memo “in the interest of factual accuracy.” She wrote that FEA has taken every step to work with UTD. “To say that FEA has been uncaring and impatient, even obsessed, is just plain untrue,” Dinnen stated.

What happened between January and April 2003 is not clear, but during the first week of April UTD had yet another payment discussion with FEA, agreeing to pay $1 million within 10 working days. In order to meet the deadline, Tornillo attempted to sell the property UTD owns at 1814 Brickell Avenue. But, according to Tornillo, the sale required 30 to 60 days to close. To add to his difficulties, on April 15 American Bank and Trust called in a $1 million loan it had made to UTD “after repeated late payments.”

With the roof about to cave in, UTD missed its dues payment deadline yet again, at which point FEA declared the Dade union to be an affiliate “in bad standing.” The only immediate effect of this move was to deny UTD delegates any participation or votes in the upcoming FEA Delegate Assembly, to be held this weekend. But it appears it wasn’t voting rights that concerned Tornillo. Bad standing status, he wrote, would “serve our organizational enemies, TRAC and PEN, with further ammunition to destroy UTD. ‘We have met the enemy and it is us.’”

Tornillo blamed the latest delinquency on AFT’s “procrastination” in co-signing a loan (AFT says it wanted to examine UTD’s financial documents before making a commitment). The delay prompted Tornillo to obtain a new $1.5 million bank loan on his own, which naturally had higher costs. He immediately transmitted $1 million of this money to FEA. The state union then restored UTD to “good standing.”

Having dodged this latest bullet, Tornillo decided to send his defiant memo to FEA. He proclaimed UTD “solvent” and with “substantial reserves,” noting the Brickell Avenue property, the UTD Towers complex, and the collateral provided by the union’s new $16 million headquarters building, which some union insiders claim started the downfall of UTD’s finances.

“We are still fighting the war for the survival of UTD and we shall prevail,” wrote Tornillo, telling FEA that although UTD is still losing members, that it would stop the bleeding “with your help or without it.”

Dinnen responded that “it is not fair to expect one local to pay dues/per caps while another local is exempt.” Still, the public response was playing on her mind. “Basically, FEA has tried very hard to avoid any bad publicity for UTD or FEA yet follow Governance Board policy and fulfill our duty to be financially responsible with all our FEA members’ dues,” she wrote. 

The Raid

On the surface, that is where matters stood until the morning of Tuesday, April 29. At around 9:30 a.m., FBI agents and Miami police appeared without warning at UTD’s headquarters building with a sealed search warrant. The agents searched Tornillo’s office and that of UTD Secretary/Treasurer Shirley B. Johnson. In addition, the agents removed documents from specific computers and storage areas. According to the Miami Herald, which eventually obtained a copy of the warrant, the search was targeted at Tornillo and his personal financial and real estate dealings. There is no indication that the investigation involves the union itself in a broad way, except perhaps as a victim of Tornillo’s alleged misappropriation of funds.

In recent days, some Tornillo supporters have expressed suspicion about the timing of the FBI raids, some claiming that the school board, Republican legislators, Gov. Bush, or even the White House decided to get back at Tornillo for his years of political hardball. Indeed the timing was suspicious, but the circumstantial evidence suggests Tornillo was done in by his own union, not some cabal of right-wingers.

The Herald account of the raid offers some tantalizing clues. “Sources familiar with the probe said the investigation had just begun, based on a tip from within the school system,” read the Herald’s April 29 story. One investigator said the FBI had received “a financial road map” that triggered the request for the warrant.

EIA believes the “within the school system” statement is deliberately nebulous. Who else but a union official could provide “a financial road map” of Tornillo’s alleged misappropriation of union dues? Whatever the source of the information, the actions of FEA and AFT in the immediate aftermath of the raid are telling.

Despite everyone’s professed shock at the raid, it seems curious that a situation that had dragged on for at least 14 months suddenly engendered swift and decisive response from UTD’s parent affiliates almost before the FBI agents had left the premises. Tornillo, who weeks ago claimed he had turned UTD’s day-to-day operations over to Johnson in anticipation of his retirement in 2004, immediately took a (paid) leave of absence. Johnson, Tornillo’s hand-picked successor, was named acting president. Almost simultaneously, Dinnen petitioned AFT to establish a voluntary trusteeship over UTD, which would involve appointing an administrator, just as the national union did in Washington, DC. Though UTD is an affiliate of both NEA and AFT, it seems as though NEA is being kept largely out of the loop.

All parties claim these actions were completed in consultation and agreement with each other, but with an acting UTD president, another UTD president on paid leave, and an AFT administrator pending, who is really in charge of the United Teachers of Dade? Whoever it is, the parent organizations lost no time in pulling up the drawbridge, ensuring that the only people who could make a substantial change in the operations of a dysfunctional union – the rank-and-file members – were instead presented with a palace coup and a fait accompli

Tornillo Goes, Woes Remain

Once the raid was made public, many of UTD’s financial troubles began to bubble up to the surface. The $1 million American Bank and Trust loan that had been called in on the 15th was about to default. Hours before the bank was to seize UTD dues in the hands of the Dade school district, the union wired a payment of $450,000, with an agreement to pay an additional $480,000 by May 16. Though it seemed that UTD had escaped yet again, the FBI raid prompted Bank of America to call in the $1 million loan it had made in early 2002. As of this writing, UTD has failed to make a payment to Bank of America, and the Dade school district has essentially frozen the UTD dues in its possession (this amount is roughly $500,000 every two weeks).

According to the Herald, UTD is still seeking that AFT co-signed loan in order to repay Bank of America. One doesn’t have to be a forensic accountant to see that UTD cannot continue to borrow new money to pay old loans. Asked if UTD was going under, union Chief Financial Officer James Angleton said: “I can’t even answer that question right now.”

The extent of UTD’s problems cannot be overstated. Even after substantial membership losses, it is one of the largest teacher union locals in the nation, with more than 12,000 full-time equivalent members. Its share of the $843 it collects from every full-time teacher is more than $500 – probably the highest local dues in the nation. Nevertheless, UTD’s annual dues income is still under $7 million – with a payroll approaching $5 million -- making its million dollar bank loans, property payments, and dues arrears all the more staggering.

 It also bears noting that UTD policy gives members only 30 days to pay their delinquent dues before they are terminated. 

Tornillo, Bullock and Union Complicity

On January 21, 2003, in the aftermath of the Washington Teachers Union scandal, EIA reported: “The lack of oversight, whistleblowing, accountability, or even routine reporting, displayed by union officials, staff, staff unions, and elected representatives over a six-year period cannot be dismissed as an aberration. It too often is standard operating procedure, making cases like that of WTU not only predictable, but likely.”

In DC, WTU member Nathan Saunders was unsatisfied with AFT’s internal remedy and filed suit to get a court-appointed monitor over the Washington Teachers Union. During testimony last week, U.S. District Judge Emmet G. Sullivan commented on AFT’s fiscal oversight. “It seems everyone in a responsible position fell asleep at the switch,” he said. At least in DC, AFT can profess to have had no reason to believe that its local affiliate officers were robbing members blind. After what happened in DC, how could AFT officers look at continued delinquent dues payments from Dade with anything but suspicion? And why didn’t they do anything for months before the raid?

Here’s a suggestion: When a local is more than one month delinquent in its dues payments to the state and national affiliates, notify the members of that local. How many UTD members knew their union was in arrears? How many FEA members know their union underestimated the costs of merger? How many of them knew they were subsidizing Tornillo’s delinquency? How many AFT members know they will be subsidizing the bailout of two (or more?) mismanaged local unions in other states? How many NEA members even know what happened in DC and Miami?

For all the talk about respect for teachers, many unions continue to treat them as bleating sheep, unable to subsist on anything but selective happy talk about union operations, membership and finances. Professionals who can handle children, parents, administrators, curricula, standardized tests, fundraisers and time management must surely have some suggestions for how to deal with tin-plated despots who use union coffers as their personal piggy banks. Come clean with the members when there are problems and they might surprise you with solutions. Even if they don’t, you may find that all those difficulties with member involvement and union leadership development will start to go away.

Keep the members in the dark, and there will be more Bullocks, more Tornillos, more delinquent dues, and more FBI raids. And sooner rather than later. 

Epilogue

UTD will hold an emergency meeting of its Council of Stewards tomorrow night. FEA will hold its delegate assembly in Orlando over the weekend. One item on the agenda will be a $10 state dues increase. “In light of our difficulty in reaching agreement on grants, subsidies, reimbursement for services and our current situation as described in this memo, the leadership of UTD does not believe we can support the increase. Therefore, we will recommend to the UTD delegate caucus a no vote,” wrote Tornillo.

   

Copyright Education Intelligence Agency. All rights reserved.