The National Education Association's Stagnant Finances
As Dropout Nation reported last week, National Education Association has had to deal with declining rank-and-file numbers as well as prop up affiliates struggling with pension woes and other issues. None of this, by the way, includes the nation’s largest teachers’ union’s own virtually-insolvent defined-benefit pension.
Yet as NEA has shown in its 2014-2015 financial disclosure to the U.S. Department of Labor, it hasn’t done much to reign in its costs even while revenue remains stagnant.
The union reported overall revenue of $389 million in 2014-2015, a one percent increase over the previous year. Dues and agency fee collections barely budged over the previous year, remaining at $363 million. If not for a 31 percent increase in “other receipts” (including vendor rebates and reimbursements by affiliates for using NEA’s software and technology services), the union’s revenue would have declined.
While NEA’s revenue didn’t increase, its expenses certainly did. The union spent $362 million in 2014-2015, a 2.8 percent increase over the previous years (or nearly $10 million more than last year). Much of that increase can be attributed to a 30 percent increase in direct lobbying spending, as well as a 4.5 percent increase in union administration costs. Adding 21 more employees earning six-figure sums also didn’t help the expense line. The union only slightly trimmed its benefits payouts, reducing those costs by a mere 2.3 percent.
Meanwhile NEA spent big on its annual convention at Walt Disney World in Orlando. This included $216,375 for meetings and hotel rooms at the resort’s Swan and Dolphin Hotel, $131,192 at Walt Disney World’s Buena Vista Palace Hotel. Among the other big hotel spends: NEA dropped $39,641 with Kimpton Hotel’s swanky Grand Solamar, spent $54,155 at the Loews Vanderbilt Hotel in Nashville, ran up $57,365 at the MGM Resorts, and put down $70,876 with Hilton’s Minneapolis hotel.
Yet for all the spending, NEA managed to come up with a surplus of $27 million. This is 18 percent lower than the surplus generated in 2013-2014. But a surplus (or profit, as it is known in Corporate America) is still a surplus. The big question is how long can the state of affairs last. As Dropout Nation noted last week, the union defined-benefit pension is virtually insolvent to the tune of $111 million, according to the plan’s 2013 announcement to retirees. This is a 37 percent increase in unfunded liabilities over the previous year, and 82 percent more than liability levels two years ago. The union has $364 million in assets that could be liquidated in order to cover those liabilities today. But with shortfalls increasing at a fast clip, the union may end up in dire straits itself.
These woes come just as the union and its affiliates must deal with the possible aftermath of the U.S. Supreme Court abolishing compulsory dues laws nationally with a ruling next year in Friedrichs v. California Teachers Association. If the court rules in favor of the plaintiffs, as it is likely based on Justice Samuel Alito’s majority opinion in last year’s ruling in Harris v. Quinn, NEA could lose at least a quarter of rank-and-file, taking a $66 million hit to its coffers (based on 2014-2015 dues and agency fee collections). This would mean a dramatic reduction in dollars available to the union both to pay down its pension as well as dole out for influence-spending.
While NEA’s Golden State affiliate has developed plans to deal with the aftermath of an end to compulsory dues, other state units haven’t done so. NEA itself doesn’t seem to have a plan in place at all. Unlike rival American Federation of Teachers, NEA hasn’t taken the step of aggressively expanding into other union-dominated fields such as healthcare and hasn’t done the kind of talent-hiring from unions such as Service Employees International Union that would be helpful in organizing. Also, unlike AFT, NEA hasn’t offered an associate membership category that would allow teachers and others to join the union and pay dues into it. While NEA may hope that the status quo remains ante on this front, it isn’t likely. And refusing to tackle those issues head-on may leave it weaker in the long run.
You can check out the data yourself by checking out the NEA’s latest financial report, or by visiting the Department of Labor’s Web site. Also check out Dropout Nation‘s Teachers Union Money Report, for this and previous reports on NEA and AFT spending.
About the Author: RiShawn Biddle is Editor and Publisher of Dropout Nation — the leading commentary Web site on education reform — a columnist for Rare and The American Spectator, award-winning editorialist, speechwriter, communications consultant and education policy advisor. More importantly, he is a tireless advocate for improving the quality of K-12 education for every child. The co-author of A Byte at the Apple: Rethinking Education Data for the Post-NCLB Era, Biddle combines journalism, research and advocacy to bring insight on the nation’s education crisis and rally families and others to reform American public education. This article originally appeared in Dropout Nation and is republished here with permission from the author.