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The Washington Times
April 23, 2010
http://www.washingtontimes.com/news/2010/apr/23/andy-sterns-debts/
Andy
Stern's debts
SEIU
leader swims away while his organization sinks
By F.
Vincent Vernuccio
Purple
may be the official color of the Service Employees International Union (SEIU),
but Andy Stern is leaving the union deep in the red. Last week, he
surprised the labor community by announcing his resignation as president
of SEIU. Mr. Stern has claimed victories in helping pass health care
legislation and getting President Obama elected, but his impact within
his own organization shows gaping budget deficits and massive
underfunding of pensions.
SEIU has
seen its liabilities skyrocket during the past decade. The union's
liabilities totaled $7,625,832 in 2000. By 2009, they had increased
almost by a factor of 16, to $120,893,259. Meanwhile, SEIU's assets
barely tripled, growing from $66,632,631 in 2000 to $187,664,763 in
2009. A significant portion of SEIU's current assets are from IOUs from
hard-up locals.
SEIU is
$85 million in debt, down from its 2008 high of $102 million, and has
been forced to lay off employees. Mr. Stern has led protests against
Bank of America, calling for the firing of Chief Executive Ken Lewis.
Yet the union owes $80 million to Bank of America and $5 million to
Amalgamated Bank, which is owned by the rival union Unite-Here.
SEIU's
pensions are in even worse shape. Both of SEIU's two national pension
plans, the SEIU National Industry Pension Fund and the Pension Plan for
Employees of the SEIU, issued critical-status letters last year. The
Pension Protection Act requires any pension fund that is funded below 65
percent of what it needs to pay its obligations to inform its
beneficiaries of the deficit.
Many SEIU
local pension plans are in as bad a shape as the national plans - if not
worse. In 2007, well before the financial meltdown, the SEIU Local 32BJ
Building Maintenance Contractors Association Pension Plan was funded at
an anemic 41 percent, the SEIU 1199 Greater New York Pension Fund at 58
percent, the 32BJ District Building Operators Pension Trust Fund at 56
percent, and the Service Employees 32BJ North Pension Fund at 68
percent.
An
underfunded pension plan does not have enough assets to meet its
obligations to retirees in the future. Recovery is difficult if plans
are significantly underfunded, as is the case with the SEIU plans. The
Pension Benefit Guarantee Corp. (PBGC) insures only a portion of
promised benefits to retirees in union multiemployer pension plans. If
one of those plans goes bankrupt, the PBGC will guarantee only up to
$12,870 in benefits.
Do not
worry about Mr. Stern and other high-ranking SEIU officials, though. At
age 59, he has 37 years of service in the SEIU and is entitled to a full
pension and lifetime health benefits. Unlike SEIU's pension plans for
rank-and-file members and union employees, SEIU's officer pension plan,
the SEIU Affiliates Officers and Employees Pension Plan, was funded at
102 percent in 2007.
While
SEIU's pension plans were failing and its liabilities growing, Mr. Stern
seemed more concerned with electoral politics than with the internal
workings of the union. Indeed, politics can account for much of SEIU's
lavish spending in recent years. "We spent a fortune to elect Barack
Obama - $60.7 million to be exact - and we're proud of it," he boasted
to the Las Vegas Sun last year. In all, under Mr. Stern, SEIU spent more
than $85 million to elect President Obama and give Democrats control of
Congress. What has been Mr. Stern's reward?
It is
often said that in politics, personnel is policy. By that measure, SEIU
carries considerable weight within the Obama administration. Patrick
Gaspard, formerly the executive vice president of politics and
legislation for the powerful Local 1199 SEIU United Healthcare Workers
East, is now the political director at the White House.
Craig
Becker, formerly SEIU's associate general counsel and adviser to the
ACORN affiliate SEIU 800 in Chicago, is now on the National Labor
Relations Board (NLRB). Mr. Obama made a recess appointment of Mr.
Becker after he failed to be confirmed by the Senate. This was a
significant win for organized labor. Mr. Becker has hinted at having the
NLRB enact card check without a vote in Congress.
SEIU
Secretary-Treasurer Anna Burger sits on the Obama administration's
Economic Recovery Advisory Board. Mr. Stern himself was appointed by Mr.
Obama to its deficit commission. (Mr. Stern has said he will stay in
that post after he steps down from SEIU.)
Mr.
Stern's abrupt resignation has led many to question his motives and
ponder his next steps. Whatever the answer, one thing is certain: He
leaves SEIU - especially its pension funds - swimming in red ink. Sadly,
it will be the union's rank-and-file members who will be paying for Mr.
Stern's profligacy well into the future.
F.
Vincent Vernuccio is an adjunct analyst at the Competitive Enterprise
Institute and formerly was an official with the Bush Department of
Labor.
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