For the last three years I have watched delegates to the National Education Association Representative Assembly debate endlessly over the prudence of spending $3,000 here or $1,400 there on various new business items. During that time I also sat through three strategic budget open hearings and three floor debates over the budget. I have heard scores of questions on the union’s finances asked and answered. But not once have I heard any individual ask a single question about how NEA Properties, Inc. is performing and whether it turned out to be a smart use of dues money.
What is NEA Properties, Inc.? It is the tax-exempt real estate holding company created by NEA in July 2009 as the means to bail out the Indiana State Teachers Association, which was in danger of financial collapse due to the spectacular failure of its insurance trust. In essence, the national union purchased properties owned by ISTA to cover its shortfalls, and have since rented the space to the Indiana affiliate.
It is expected – even desirable – for the national union to take action to ensure the solvency of one of its state affiliates. But how has this particular action turned out? The most recent NEA financial statement recaps events since the formation of NEA Properties, Inc.
“On March 31, 2010, NEA loaned the Indiana State Teachers Association (“ISTA”) $3,060,745. In August 2010, NEA increased the aforementioned note balance to $5,386,031.
“…During the fiscal year 2011, NEA provided $7,768,653 in additional support and monies to ISTA which increased the outstanding note balance to $13,154,684. As of August 31, 2011, NEA has recognized a $6,000,000 allowance for doubtful debt against this note.”
Doubtful debt isn’t bad debt – yet. But to plan for almost half the debt to go unpaid is an acknowledgement that NEA might be stuck with the ISTA headquarters building for a very long time.
Well, that’s water under the bridge, right? It might be, except NEA Properties, Inc. itself reported a loss in the 2010-11 fiscal year, with $1,663,502 in gross receipts against $1,774,581 in total expenditures – despite the fact that it doesn’t have to pay any employees.
With ISTA’s membership numbers looking the way they are, there isn’t much hope this is going to turn around soon. What will happen when the next state affiliate has a crisis?