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November 22, 2010

1) Pension Tsunami Could Flood NEA State Affiliates. Most of us are familiar with the term "pension tsunami" - a phrase used to describe the day of reckoning as more and more public employees retire, with their benefits funded by fewer and fewer workers, and smaller and smaller government budgets.

As an organization that represents public employees, NEA and its state affiliates won't back down from a fight over pensions, but they face a similar financial reckoning over pension benefits for the union's own employees.

Retirement liabilities - both for pensions and retiree health care - threaten to swamp NEA's large state affiliates as current revenues decline along with membership.

Detailed information on affiliate liabilities is hard to come by, but what we have isn't a pretty picture. Each of these unions generates enough income to cover its short-term obligations, but the long-term debt is growing out of control. When investment prices drop, unions must make up the difference in the pension fund's worth with dues dollars.

The Illinois Education Association owed $36 million in pension and retiree health care liabilities in 2009-10. By way of reference, IEA generated $43.8 million in dues.

The Ohio Education Association owed $67.8 million in retirement liabilities ($53.2 million in dues).

The Pennsylvania State Education Association owed $54.6 million in retirement liabilities in 2008-09  ($54.5 million in dues). We can only assume the difference was worse in 2009-10.

The Michigan Education Association stands as the worst of the four, with a whopping $174.5 million in retirement liabilities and only $66.3 million in dues in 2008-09. With a 3,000 member loss this year, MEA may the first to institute austerity measures.

You may recall MEA faced a similar financial crisis in 2003, and ultimately cut 47 staffers while raising dues by almost $112 per year. Union staff reductions this year are inevitable. MEA will no doubt have to deal with member blowback over increasing dues and decreasing services to fund generous benefits for those who no longer work for MEA.

Though we have no documentation, it isn't much of a stretch to suggest NEA affiliates in New Jersey and California have similar concerns. It will be interesting to watch what the state affiliates do in their own houses when compared with what they suggest for state governments.

2) All You Need to Know About Agency Fees. I've spent a lot of time over the years explaining agency fees to all sorts of people - those in states with agency fee laws, those in states without such laws, and those who ask the eternal question, "How much does NEA spend on politics?"

Thankfully, the next time I'm asked about them I can just steer those questions to Darren at Right on the Left Coast. He just received his agency fee reimbursement and explains, in a mere 258 words, what it's all about.

I would add only one thing: Unions want agency fee laws not to collect agency fees (though they can be substantial). The existence of agency fee induces non-members to become full members, rather than accept second-class status.

3) Last Week's Intercepts. EIA's blog, Intercepts, covered these topics from November 15-22:

America Runs on Duncan. If larger class sizes aren't so bad, why did we spend all that money on teacher jobs?

The Newest Champions of Regulatory Relief. AASA, NSBA and NEA say, "Don't touch my junk!"

Putting My Feet Up on Ed Reform Blogging Day. Shouldn't take too long to type "More Money for Me."

Striking. Fewer than 280 votes could send 2,800 Oakland teachers to the picket lines.

Day Destroys the Night. Social networking for school choice.

4) Quote of the Week. "We understand these are public employees, but we don't think that means we should put someone's life in danger like that." - Bill Guy, communications consultant for the California Teachers Association, commenting on an Orange County Register database of school employees and their salaries. Guy believes "some school employees may be victims of stalking, involved in child-custody battles or facing other threatening situations that would necessitate keeping their names and locations private." (November 18 OC Weekly)


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