Whoa! We Owe, We Owe!

by

Mike Antonucci reviews the financial health of the National Education Association after its dreamy promises to its own staff union members in the74million.org.

More money would normally be good news for the union, but it comes with more problems. As revenues have increased, NEA and its affiliates have promised its own employees more and better benefits. Now those future obligations are devouring an increasingly larger share of their current revenue.

If NEA and all of its state affiliates were to sell off everything they own — every investment, building and paper clip — they would be more than $128 million short of what they need to cover what they owe, primarily to their current and retired employees’ pension and health care systems.

But 12 state affiliates are accumulating liabilities at an astounding pace. While unwise, this could continue almost indefinitely as long as there is assured and growing income from teacher dues each year. The problem is the specter of falling membership in the wake of an adverse ruling in Janus v. AFSCME, which would free teachers and staff of the obligation to pay dues or fees to their unions.

NYSUT isn’t alone. The Michigan Education Association has negative $248 million in net assets. The New Jersey Education Association has negative $83 million, the Illinois Education Association negative $45 million, and the Washington Education Association negative $37 million.

Even the healthy affiliates are sinking in the same quicksand, albeit much more slowly. Ten years ago, the California Teachers Association devoted 12 percent of its revenue to staff and retiree benefits. That has risen to 19 percent. NEA national headquarters used to spend 8 percent of its income on those costs. Now it’s 13 percent.

“One important indicator of an organization’s financial strength is its net assets (the difference
between total assets and total liabilities). Net assets should be a positive balance, sufficient to support future growth, and stabilize an organization in troubled times.”

That’s a quote from the NEA secretary-treasurer in the annual financial reports she distributes to union delegates.

Should agency fees disappear and membership tumble, who could deny that NEA would face troubled times? How much more would the remaining members have to pay in order to stabilize the organization?

The education world has focused on what NEA will have to do politically to maintain its influence. That won’t matter much if it can’t reform itself financially.

 

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