1) Most of NEA's Largest Affiliates
Are Awash in Red Ink. An Education Intelligence
Agency analysis of 2010-11 Internal Revenue Service filings reveals as many
as eight of the National Education Association's 11 largest state affiliates
do not have the financial assets to match their liabilities and total almost
$400 million in combined debt.
The lion's share of the union's debt
comes from employee pension and post-retirement health care liabilities. The
costs of these benefits have
troubled NEA affiliates for many years, causing budgets crises in places
Michigan, Illinois, Pennsylvania and Ohio. Even staff at NEA
made concessions to help ease the strain of post-retirement benefits on
the national union's budget. The latest data show that many affiliates
continue to struggle despite receiving substantial relief in pension
EIA has constructed a table that
lists each of NEA's state affiliates, its budget deficit or surplus for
2010-11 and its net assets, positive or negative, as of the end of the
2010-11 school year. For purposes of comparison, the table also lists the
number of days each affiliate could operate solely on reserves based on its
2010-11 expenditures and net assets.
These latter numbers are important
because while certain state affiliates may have run budget deficits in
2010-11, they may still have more than enough reserves to cover one or more
years of shortfalls. Others, however, continue to add to their mounting debt
and will require some outside force to balance the books.
The New York State United Teachers ran a
$29.9 million deficit in 2010-11, and is a total of $201.1 million short of
assets to pay all liabilities. NYSUT is on the hook for $286 million in
The California Teachers Association is
much healthier, with a small $1.4 million surplus in 2010-11 and net assets
of more than $115.6 million, good enough for 230 days of operation.
The New Jersey Education Association
managed a $1 million surplus after gaining more than $29.3 million in
pension relief. Still, NJEA has more than $38.7 million in red ink.
The Pennsylvania State Education
Association greatly improved its budget picture, but has only $6 million in
net assets, enough for only 37 days of operation.
The Florida Education Association is
similarly situated, with a small surplus and only 53 days of operational
The Illinois Education Association is
still climbing out of a deep hole, finally breaking into the black after
$4.9 million in pension relief, but its net assets will allow for only two
days of operation.
The Michigan Education Association is a
financial basket case, carrying an $11 million deficit in 2010-11, and
falling $113 million short in assets. Believe it or not, the picture could
have been much worse, as MEA managed to generate $31.1 million in pension
The Ohio Education Association is not
much better off. Despite $27.4 million in decreased pension liabilities, OEA
still had a $9.1 million deficit and is $14.4 million short in net assets.
The Massachusetts Teachers Association
cut pension liabilities by $10.1 million, but is still $2.8 million short of
The 2010-11 picture for the Wisconsin
Education Association Council was still relatively good, despite a $2.6
million budget deficit. The union had 168 days of operational reserve.
However, these figures were mostly compiled before
the effects of Act 10 on WEAC's existence. We can expect next year's
numbers to look very different.
I make note of the 11th largest
affiliate simply because its internal money problems have very much occurred
under the radar. The Washington Education Association was able to reduce its
unfunded pension liabilities by $3.2 million and run a surplus, but it is
still almost $18.6 million short of covering its liabilities.
At least six other NEA state affiliates
were able to reduce their pension obligations. Some were able to rescue
their bottom lines, others were not. You can see from the table that the
efforts of Connecticut and Minnesota left them both with a very large
surplus, but affiliates in Iowa, Texas, Virginia and West Virginia were only
able to slightly lighten their red ink.
I need to add that the South Carolina
Education Association has not filed, or has not yet had posted, its
disclosure report for 2010-11.
SCEA was placed under NEA trusteeship in April 2010 and its report would
cover the first year of national oversight of its finances.
It is ironic that the internal
situations of these affiliates are very much, in microcosm, like that faced by state
governments. There are a number of ways out of the red ink: increased dues,
increased membership, and better return on investments on the revenue side,
and reduced staff, reduced benefits, and negotiated relief with employee
unions on the expenditure side. And, like some state governments, unions
could just ignore the problem and hope it goes away. Although NEA would
rather we didn't, we should pay close attention to the measures it uses to
deal with its own runaway labor costs.
2) Last Week's Intercepts.
Intercepts, covered these topics from October 23-29:
Makes Last-Minute Money Dump into State Campaigns. Idaho biggest
Virginia Education Association Staff Reach Tentative Agreement After
Picketing. Internal picket line pressure.
Fordham Produces Much-Needed Reference Work on Union Strength. Some
Updates from Maine, Nevada and Broward. Santeramo whistleblower elected
Data May Put Crimp in Teacher Workday Claims. We all exaggerate.
Quote of the Week.
"I don't want to sound reactionary, but we don't want our members evaluating
one another. That is the job of the district." - Vincent Giordano, executive
director of the New Jersey Education Association, discussing peer review.