Broward Money Troubles Shouldn’t Have Been a Surprise

I’m sitting here with a stack of internal Broward Teachers Union documents. None of them mentions the reimbursement for political candidate contributions, which is the most problematic issue for the union right now, but many of them give clear indication that BTU was consistently spending much more than it was bringing in. In their petition to have president Pat Santeramo expelled, four BTU executive board members specifically noted their ignorance of the union’s deficit:

Presently, we are approximately at a 3.8 million dollar deficit. Mr. Santeramo claims to have only known about this deficit a short time before the Executive Board was informed, which was June, 2011. It is our contention that Mr. Santeramo knew several years ago, about a financial urgency. Mr. Santeramo did nothing but exacerbate the situation by spending thousands of dollars on the futures process and training at the Hard Rock every summer for the last several years, along with hiring several new employees from one to three years ago, making our financial picture even worse than it already is.

Leaving aside Santeramo’s culpability, it should have been obvious as early as two years ago that BTU was headed for serious financial trouble. Back in 2007, the union was running a mere $3,000 deficit over the last six months of the year. During the same period in 2009, that deficit had grown to more than $204,000.

In the 2009-10 fiscal year (July to June), BTU took in $9 million in total revenue. Unfortunately, $4.9 million had to be passed up the chain to its state and national affiliates. With $4.1 million left, BTU had expenses for “salaries, other compensation and employee benefits” for its 28-member staff totaling almost $3.4 million. It couldn’t operate on the remainder and ran up a deficit of more than $830,000. It was covered by drawing down 22 percent of the union’s cash reserves.

So by July 2010, the union was already living on the edge. The audit conducted by the American Federation of Teachers carries us through to June 2011, and reveals BTU deficit spending continued apace, running up an additional $710,000 in debt. The audit also cites insufficient safeguards, including checks made out to cash, and credit card expenses lacking documentation. Vacation and sick leave liabilities mounted. In 2009 these payouts totaled $72,000. By 2011 they had ballooned to $255,000.

Internal BTU documents show the executive board was briefed last June on the results of a 2010 audit conducted by Bellows and Associates. The details of the briefing are unavailable, though the board insisted that other possible cuts be examined before proceeding with the planned layoff of four field staffers. An amended budget was passed two weeks later, on a 16-9 vote.

The proposed layoffs did not sit well with the BTU staff union, which filed a grievance on the grounds “the contract has been violated since there is no validation of a financial emergency necessitating the layoff of the above members.” The board voted to deny the grievance.

It’s a failing that’s all too familiar, and certainly not unique to teachers’ unions. The numbers were bad, and progressively getting worse, and if anyone raised questions about it, they were reassured that everything was under control. Denial was so great that even as late as two months ago, BTU employees were not convinced the union had a financial emergency.

Even if it turns out that all of the actions at BTU headquarters were perfectly legal, it still demonstrates quite starkly that bad things that can happen when you spend more than you make – and then pretend it’s OK.