Can Florida Real Estate Bail Out United Teachers of Dade? Ten years ago, the FBI raided the headquarters of the United Teachers of Dade, bringing to public view the theft of millions of dollars of dues money by UTD president Pat Tornillo. The embezzlement was disguised by a series of late dues payments, bank loans and the collateral of the union’s real estate holdings. When the truth came to light, UTD was placed in the unenviable position of making good on the debts Tornillo left behind.

Since 2003, UTD has been able to avoid the bald-faced larceny that marked the Tornillo years, but it hasn’t exactly been smooth sailing financially, either. It sold its headquarters building for $22 million and has leased space in it since then. Despite the election of reform-minded officers, the union has had more than its share of internal problems.

Today, with the election of a new president, who was the sitting secretary-treasurer, UTD would appear to be poised to finally escape its debt-ridden history and reestablish itself as a major teachers’ union local. But the numbers don’t lie, and UTD is still a ward of its parent affiliates ten years after Tornillo’s arrest.

UTD owes AFT more than $2.4 million of an operations loan, and another $2.1 million in back dues. It also owes the Florida Education Association almost $1.5 million in back dues.

Six million dollars of debt is substantial for a $10 million enterprise, but the picture is worse because UTD continues to budget based on unrealistic membership projections. The 2012-13 budget was crafted with the expectation of 12,000 full-time equivalent members. But the union only has 11,554 FTEs – a shortfall of $365,000 that has to be made up somehow.

Nevertheless, UTD drafted an optimistic 2013-14 budget based on 11,650 FTEs.

UTD can bumble along this way indefinitely, but it will never be able to pay off its debt. And so it once again has turned to dumping property.

The senior housing building the union’s non-profit subsidiary owns is apparently under contract to a seller for $14 million, though there is some controversy over why UTD turned down a more lucrative offer last year. The union still owes money on this building, but has promised to turn any profits from its sale over to its foundation for teaching excellence.

Additionally, though UTD sold its headquarters building on Biscayne Boulevard, it still owns the 71,000 square foot empty lot that sits behind it. UTD recently decided to put that lot up for sale. It has been assessed at more than $2.1 million.

A source tells EIA that AFT was directly involved in the decision to make the sale, suggesting the proceeds might be targeted to loan or dues repayment. Just as with NEA, the national union will naturally intervene to keep its state and local affiliates afloat. But it could become problematic if the number of fiscal basket cases continues to grow.

Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics May 14-20:

*  NEA Offense Looks a Lot Like Defense. Pulling the goalie.

*  Education Song Rejects. These didn’t make Andy Rotherham’s list.

*  Staff Union Strife in Washington State. Maybe it’s the weather.

*  Free Enterprise. Commercialization of schools!

*  More Teacher Union Elections. Update – Rumore wins. Turnout about 33 percent.

Scheduling Note. The next communiqué will appear Tuesday, May 28.

Quote of the Week #1. “Everybody wants to see more spending. That’s what this place is, a big spending machine. You need something? Go over there and see if you can get it. Well, I am the backstop at the end, and I’m going to keep this budget balanced as long as I’m here.” – California Gov. Jerry Brown. (May 15 San Jose Mercury News)

Quote of the Week #2. “Even as Gov. Jerry Brown pledges to chip away at the state’s debt, his budget plan will leave California on the hook for billions more in school funding down the line.” – Los Angeles Times reporters Chris Megerian and Anthony York. (May 16 Los Angeles Times)

NEA Membership Numbers Haven’t Hit Bottom Yet. The National Education Association thinks it sees light at the end of its long tunnel, reporting losses of 38,000 members this year, which is a significant slowing from 2012. The economy has stabilized, if still weak, and it only makes sense that teacher layoffs would level off as well.

Before you get too excited, there are a number of problems unrelated to school district staffing that still exert a downward influence on teacher union membership. In fact, without a countervailing increase in the level of hiring, it is likely that NEA’s total membership will soon fall below 3 million – a level it hasn’t seen since the NYSUT merger in 2006.

The state unions acted quickly in Wisconsin and Michigan in the face of new collective bargaining laws. Many local affiliates were still under contract, or quickly finalized new contracts, which will allow them to hang on to their members for the time being. However, as time passes and those locals feel the effect of the new laws, their membership numbers will steadily continue to drop. As it is, the Wisconsin Education Association Council cut its dues by $27 in an effort to retain members.

Also, NEA’s current numbers do not yet account for the loss of its lone higher education state affiliate, the University of Hawaii Professional Assembly. The 3,000 UHPA members won’t come off NEA rolls until September.

In the meantime, NEA engineered a campaign to get the UHPA board of directors to reverse its disaffiliation vote. The national union organized phone banks and volunteers in an effort to drum up opposition, which has largely fallen on deaf ears. This isn’t necessarily because there was so much support for disaffiliation, but because the average member really doesn’t care one way or the other.

The UHPA leadership cares, though, and it sent an e-mail memo lambasting NEA for interfering in its internal affairs:

On March 18, UHPA President Adrienne Valdez issued a letter to NEA President Dennis Van Roekel requesting that NEA stop direct communications with UHPA members. This request has not been honored. Members continue to receive phone calls and other communications from the National Education Association.

…NEA’s communications are designed to undermine the UHPA elected leadership and the By-laws of our union. The NEA direct communication with members also challenges UHPA’s role as the exclusive collective bargaining representative for the UH faculty through attacks on leaders that do not agree with them. NEA has even begun to circulate a petition in an attempt to rescind the Board’s vote to disaffiliate with the NEA.

…Unfortunately, the NEA tactics make this a battle of winning at all costs. In part this relates to the significant membership and dues loss suffered by NEA since 2010. When NEA President Van Roekel spoke to the UHPA Board in July 2012, he noted that between September 1, 2010 and September 1, 2012, the NEA was projecting to lose 150,000 members. Projections from NEA in 2012 cite an anticipated total loss of 308,000 members by 2014.

UHPA’s membership represents 1/1000 of NEA’s total membership and collectively contributes more than $350,000 in net dues to NEA. With NEA’s declining membership, even UHPA’s decision is a threat to NEA and its bottom line. However, NEA’s foremost concern may be UHPA’s influence on other higher education affiliates to consider independence as an option.

At such a critical time when UH faculty members should be focused on priorities that include legislative issues affecting UH funding and preparing for our new contract negotiations, it is unfortunate the NEA is creating a distraction and seems more concerned with self-preservation than the welfare of its own members.

NEA could learn from AFT that this sort of tactic rarely works out.

With its internal situation in turmoil, the union will increasingly look to external means – increased hiring and funding from state agencies and school districts – to restore its former glory. Expect major initiatives, especially in union-friendly states, centering around class-size reduction and rescinding layoffs, in an effort to bolster membership numbers.

Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics May 7-13:

*  Boo-Hooey. Duncan and the AERA deserve each other.

*  What the AFL-CIO Can Do for Veterans. From underpaid to overpaid in one fell swoop.

*  NEA Names Sen. Patty Murray 2013 “Friend of Education.” Someone has to win.

*  Who’s to Blame for Widmer’s Theft? You can follow the money from either end.

*  Feature or Bug? When did self-promotion become a liability for union presidents?

Quote of the Week. “Do you want to know what kind of person makes the best reporter? I’ll tell you. A borderline sociopath. Someone smart, inquisitive, stubborn, disorganized, chaotic, and in a perpetual state of simmering rage at the failings of the world. Once upon a time you saw people like this in every newsroom in the country. They often had chaotic personal lives and they died early of cirrhosis or a heart attack. But they were tough, angry SOBs and they produced great stories.” – columnist Brett Arends. (May 12 MarketWatch)

Devastating Budget Cuts Still Look Like Increases So Far. The National Center for Education Statistics issued its “First Look” at comprehensive school district revenues and expenditures for the 2009-10 school year. It’s a welcome report, though not exactly a “first look” since it uses U.S. Census Bureau figures available since last fall.

According to the authoritative National Bureau of Economic Research, America’s “Great Recession” began in December 2007 and ended in June 2009. Because of the vast number of agencies involved, it takes years to gather and report definitive public education revenue and spending data. So while we may eventually see figures that corroborate the tales of woe we hear from those quarters, that time has not yet arrived. Quite the contrary, in fact.

Here are a few of the center’s findings:

* School districts reported $599.9 billion in total revenues.

* That was an increase of 0.8 percent from the previous year, in inflation-adjusted dollars.

* Current expenditures per-pupil, however, rose 1.0 percent in inflation-adjusted dollars.

* Some states did experience significant spending cuts – Arizona, Hawaii, Nevada and Utah all had reductions of more than 5 percent. On the other hand, Illinois, Nebraska, North Dakota, Ohio, West Virginia and the District of Columbia all increased spending by more than 5 percent.

* About 61.2 percent of those expenditures went towards employee salaries, and another 21.3 percent to employee benefits. That left about 17.5 percent for just about everything else – student transportation, school books and materials, energy costs, external services, and supplies.

* Outside of current per-pupil spending, we spent $47.1 billion on school construction, $3.3 billion on land and existing structures, $9.4 billion on equipment, and $17.7 billion in interest on school debt.

These numbers are important not just because they highlight the truly awe-inspiring amount we spend on public education, even in terrible economic times, but what we spend it on as well. Whether you think it’s too much or too little, it’s mostly spent on labor, and so the economics and politics of labor have an influence far beyond any focus on curriculum, performance or evaluation. School is big business.

Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics April 30-May 6:

*  Who Cares About Apathy? Lack of member involvement can work to your advantage.

*  Nope, Still Not Worried About Charter School Unionization. Pushing against the tide.

*  Sometimes the Union Is Not at Fault (It’s True!). A taste of IRS bureaucracy.

*  Around the Horn. A farrago of factoids from across the country.

*  Mobile Site No Longer Stationary. Tech problem fixed.

Quote of the Week. “Once they got somebody in there they thought was doing a good job, they let them stay forever. It was like pulling teeth to get people to do any of those (union) jobs.” – Philip Dello Stritto, former Auburn Teachers Association vice president under the late Sally Jo Widmer, who was alleged to have stolen $808,000 from the union. (May 5 Syracuse Post-Standard)

Stealing by Stalling: Dues Transmittal Delays Can Cover Up Theft. Over the past 10 years we have had a string of local teacher union officers committing major theft of dues money: Pat Tornillo in Miami, Barbara Bullock in Washington DC, Pat Santeramo in Broward County, and several others. But these were presidents of large locals, with many members and big budgets. More recent crimes involve officers of small locals.

In Maryland, Denise Inez Owens was the treasurer of the 600-member Worcester County Teachers Association, but she still managed to steal more than $433,000. Last week we learned that Sally Jo Widmer, president of the 400-member Auburn Teachers Association in New York, made off with at least $808,000. This is only possible because of a bug in the dues transmittal system, which is a reasonably efficient method of passing dues up the chain so that parent unions get their share.

In most cases, school districts extract the entire amount of each member’s dues and send it to the local union each pay period. But the local isn’t required to immediately forward the state and national unions’ share. The NEA by-laws spell out the normal procedure:

A local shall transmit to a state affiliate and a state affiliate shall transmit to the Association at least forty (40) percent of the Association dues receivable for the year by March 15 and at least seventy (70) percent of the Association dues receivable for the year by June 1; the percentage shall be based upon the last membership count prior to January 15…

In short, even small locals have large sums deposited for several months before they have to transmit the funds to their state affiliates. It might even be easier for officers of small locals to commit fraud under these circumstances because there are fewer people to enforce safeguards and/or become whistleblowers.

An examination of the 2012 financial disclosure report for the New York State United Teachers (NYSUT) reveals the Auburn Teachers Association under Widmer was behind on its dues transmittal by $36,816 – $18,339 of which was overdue by more than 90 days. That’s not much cash in the overall scheme of things, but in a local of 400 members, it is a significant amount.

There are dozens of legitimate reasons for a local to fall behind on its dues obligations to the state and national affiliates, but the major cases of fraud noted above were almost always accompanied by late dues transmittals (see item#4 here, just prior to the raid on Tornillo’s office).

The handful of teachers’ unions subject to the Landrum-Griffin Act are required to report the status of their accounts receivable, which includes overdue dues transmittals from locals, but they are not required to itemize every single one. NYSUT, for example, was owed money by at least 39 locals in 2012, including more than $19.7 million by the United Federation of Teachers, the largest local in the nation, of which almost $6.9 million was more than 180 days overdue. The local at New York University owed $627,297, all of it more than 180 days overdue.

Smaller locals also had late dues transmittals. The Goshen Teachers Association owed $39,580, much of it 90 days late. The same was true of the East Williston Teachers Association, the Clarence Teachers Association, the Uniondale Teachers Association, and the Rockland Community College Federation of Teachers.

In other areas of the country, the Chicago Teachers Union was almost $2.3 million behind, “various” Michigan locals were a total of $257,473 behind, the Jefferson Federation of Teachers in Louisiana was almost $419,000 behind, and the West Virginia School Service Personnel Association was $225,515 behind. And of course, the United Teachers of Dade (UTD) still owes AFT more than $2.5 million, stemming from the Tornillo scandal. UTD also owed almost $1.5 million to the Florida Education Association.

NEA and its affiliates have some laggards. NEA national was short almost $2.2 million from Florida, $590,000 from Georgia, $557,000 from Alabama, and $1.7 million from the Wisconsin Education Association Council, probably due to sudden membership losses in that state. NEA wrote off an additional $196,000 in fiscal year 2011 dues that it was never able to collect from various state affiliates.

Among those state affiliates, there were more late dues transmittals from locals. In Illinois, Local Education Association of District 300 ($100K), Downers Grove Elementary Education Association ($95K) and District 21 Education Association ($77K) owed money. In Florida, the Big Bend/Central Panhandle Service Unit and the local in Escambia owed a combined $166K and were more than 180 days late.

The list goes on: the Montrose Education Association in Pennsylvania, the Northwest Local Education Association in Ohio, Port Huron and Ionia City education associations in Michigan, and the Minneapolis Federation of Teachers in Minnesota all owed money to their parent affiliates.

There is no way for an outsider to tell – and few ways for insiders – how the national and state unions ensure that dues reach their prescribed destinations, and whether delays are because of legitimate shortfalls and unforeseen circumstances.

The financial structure of the teachers’ unions makes it possible for wealthy affiliates to organize and subsidize poorer affiliates. Consequently, fraud and misappropriations can affect the bottom lines of all associated unions. It’s a rare crook who would steal from a local but leave the state and national funds untouched.

Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics April 23-29:

*  Late Union President’s Astonishing $800K Theft. More than $2,000 per member.

*  Widmer Committed Suicide, Left $50K to Union in Will. Remorse or insult to injury?

*  Big Fish in a Little Pond of Voters. Does this make UFT the ex-teachers’ union?

*  Aberration or Trend? Unusual election outcomes in some NEA state affiliates.

*  NEA Should Have Reconsidered Its Motion to Reconsider. Spanked again by Indiana judge.

Headline of the Week. “Maine lawmakers propose $30 million in additional education funding without revenue to pay for it.” – April 24 Bangor Daily News

Seven Not-So-Fun Facts About the Costs of Public Education. I was in the midst of writing this for posting on Income Tax Day when last Monday’s tragedy occurred.

For many years we have expressed education expenditures as “per-pupil spending.” This is a reasonably good way to frame the numbers, though controversy sometimes arises over what is included and what isn’t. The following is a list of different angles on the same spending. All the figures cited are for 2010, courtesy of the National Center of Education Statistics, the Bureau of Labor Statistics, and the U.S. Census Bureau.

1) Revenues collected by governments for public education in the United States totaled $593.7 billion. About $261.4 billion came from local sources, $258.2 billion from state sources, and $74 billion from federal sources.

2) That’s about $1,922 from each and every American.

3) Or $2,531 from each adult, 18 and older.

4) Or $4,567 from each non-farm American worker on a payroll.

5) That amounts to 11.4 percent of the average worker’s salary, or $2.20 per hour.

6) The average American employee thus works almost one hour every day to fund public schools.

7) It would take the entire salary of 14,842,500 employees to pay for U.S. public schools, equivalent to the entire retail trade workforce.

Public education advocates often speak of school spending as an investment. It’s clear that our portfolio is heavily weighted in the education sector. The shareholders are understandably upset by weak ROIs and incessant margin calls. No wonder they responded by downsizing.

Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics April 16-22:

*  The Evergreen Charter School Unionization Story. There you go again.

*  Hawaii Pays for Performance Pay. That’s a pretty big carrot.

*  Exclusive Video of Chicago Teachers Union Candidate Training. Look, it’s the queen of diamonds!

*  Hedge Fund Hilarity. Fair share.

*  Math Skills Not Required. We’re gonna need a bigger calculator.

Quote of the Week. “We don’t blame the firefighters when there’s a fire, and we don’t blame the police for crime! Why would we? Then why are educators being blamed for the struggles of our public schools? Let’s look at the policies and the policymakers instead of the people doing the work every day.” – Earl Wiman, current member of the National Education Association Executive Committee. (April 12 speech to the Virginia Education Association Delegate Assembly)

We pay firefighters to put out fires. We pay police officers to catch criminals. We pay teachers to educate children. NEA pays Wiman to obscure the issue.

1) Say a Prayer for the Victims of the Boston Marathon Explosions. Horrible news today, but even worse for the group of Newtown, Connecticut parents who were running in the race in memory of the victims of the Sandy Hook massacre.

As I write this, the Boston Police Department is reporting 2 dead and 23 injured. Keep them all in your thoughts and prayers.

UPDATE: Newtown Patch reporting Sandy Hook parents who ran in race are safe.

2) Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics April 9-15:

*  What Happens When You Assume. Rose-colored glasses improve the view, but not the smell.

*  Union Uses PAC Money to Pay School Board President’s Campaign Fine. Is that what it’s for?

*  New Jersey School Stats Stir the Pot. Current vs. total.

*  WEAC Executive Director Stepping Down. New direction or slow descent?

*  A Very Special Episode of “Glee.” No, not the school shooting stuff.

3) Quote of the Week. “We do think it’s paramount… that districts do get restored at least back to their ’07-’08 levels.” –Andrea Ball of the California School Boards Association, voicing some discontent with Gov. Jerry Brown’s school funding plan. (April 10 SI&A Cabinet Report)

1) Relativity and Its Effect on Education Staffing Levels. Don’t worry. This isn’t going to be a treatise of any sort. It’s just that the March 2013 Employment Situation report from the Bureau of Labor Statistics has bad news not just for the U.S. economy in general, but for education employees specifically. Most of these workers, including most K-12 public school teachers, fall under the BLS category of “Local government, education.” That sector lost 2,000 jobs in March, and 24,200 jobs since March 2012.

It continues an interrupted downward trend in the public education workforce since its peak of more than 8.1 million employees in July 2008, as depicted by this simple graph.

That’s a 4.4 percent drop in about five years. While that’s a hardship on everyone involved, it only took the four previous years – from June 2004 to July 2008 – to add those jobs to the public education workforce.

If we take the extreme long view, this decline is hard to notice. The BLS statistics go back to 1955, and this is what staffing looks like over the entire 58-year period.

The staffing numbers for 1955 would obviously be inadequate for the student population of 2013. The same for 1985. But since desires are infinite, and resources are finite, how are we so certain that the staffing levels of 2008 were an optimal use of funding?

The economy will eventually improve. Tax revenues will grow, and lawmakers will find ways to spend them. The pressure will be on to restore staffing to pre-recession levels. Before that becomes mired in the usual political wars, wouldn’t this be a good opportunity to ask why?

2) Last Week’s Intercepts. EIA’s daily blog, Intercepts, covered these topics April 2-8:

*  The Less-Than-One-Percenters. How small does a rally have to get before it’s downgraded to “get-together.”

*  Rhee-actionaries. How lefties deal with racism in the ranks.

*  How Slow Can You Go? Cut to the Chase.

*  New Argument Against Vouchers: Your Kid Might Have to Ride the Bus. Whatever works.

*  There’s No App For That. Low data plan.

3) Quote of the Week. “Money for implementing the new Common Core State Standards and adult education would also be part of the new formula and decided at the local level. That, quite honestly is unacceptable. And CTA has had those conversations with the governor. There must also be accountability provisions in this funding proposal to ensure districts spend the money the way they are supposed to in order to meet student needs. It will be important for educators to get involved and have a say in these local issues, which is why we are recommending that local chapters not rush into settlements between now and when the revised state budget comes out in May.” – Dean Vogel, president of the California Teachers Association, in an April 6 speech to the union’s State Council.