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Limiting Charter Growth by Any Means Necessary

Teachers unions in Chicago and Massachusetts are doing their darndest to stop the spread of charter schools.

Amazingly, the Chicago teachers’ strike didn’t come off.  Less than 10 minutes before a midnight strike deadline on October 10th, the district and union cobbled together a deal, pending approval by the rank-and-file. One of the more contentious issues was the so called “pension pick-up.” Teachers in the Windy City are obligated by law to contribute 9 percent of their salaries to their retirement. But in fact, for 35 years the Chicago Public School district has been picking up 7 of the 9 percent. Existing teachers will continue to receive this taxpayer-hosing perk, but teachers hired in 2017 and beyond will have to pay the full 9 percent. (But then again, the newbies will get a salary bump and won’t feel the pinch.) No one yet really knows what the fiscal ramifications of the pension pick-up – or any of the other contract particulars – will be.

One thing that jumped out in the agreement is a stipulation that there will be no new charter schools opened for the duration of the new 4-year contact. You would think that in a city where just 25 percent of 8th graders are proficient in math and 24 percent are in English, that charters would be welcome. According to the Illinois State Board of Ed, attendance in the public schools of choice has doubled in the last five years – primarily in low-income areas – and now has almost 59,000 kids enrolled. The University of Chicago Consortium for School Research reports, “charter school students account for 25 percent of the city’s high school graduates but account for almost half of the students who will enroll in college.” But educating kids, you see, is not a priority for the Chicago Teachers Union.

And then there’s Massachusetts, where on Election Day, Question 2 will ask voters if they support giving the state the authority to lift the cap on charter schools. As it stands, no more than 120 charter schools are allowed to operate in the Bay State. The referendum, if successful, would give the Massachusetts Department of Education the authority to lift the cap, allowing up to 12 new charter schools or expansions of existing charters each year.

Most of us would not consider 12 new charter schools a year a radical move, but then again, most of us are not members of the Massachusetts Teachers Association. With an assist from some local school boards and 275 district superintendents, the union’s main arguments against the proposition are their usual ones – charters drain money from traditional public schools, charters cherry-pick their students, yada, yada, yada.

The union’s blather is not going unchallenged, however. According to a Manhattan Institute study, while charter-school enrollment does reduce the net amount of state aid school districts receive in Massachusetts, “it increases per-pupil spending in the 10 districts with the largest number of charter-school students.” The report’s author, Max Eden, explains that while charter enrollments cost district schools over $400 million a year, after the state’s “unique reimbursement” – which he claims is one of the most generous reimbursement plans in the nation – districts are getting paid a significant amount of money for students they no longer teach. In other words, the traditional public schools have fewer students, but more money to spend on those students.

Regarding the union’s cherry-picking mantra – bad idea to use this talking point in Massachusetts. Boston is acknowledged to have the best charter schools in the country. Many use lotteries to determine which students can attend. As researcher Thomas Kane writes, “Oversubscribed charter schools in the Boston area are closing roughly one-third of the black-white achievement gap in math and about one-fifth of the achievement gap in English—in a single school year!”

The good news for the pro-charter forces in Massachusetts is that they have money flowing into the campaign, including $240,000 from former New York City Mayor Michael Bloomberg and $1.8 million from Wal-Mart heirs Jim and Alice Walton. As a result, the unions and their fellow travelers, which are being outspent, are forced to dredge up their time-honored whine about the evils of “outside money” and “dark money.”

The outside money line is amusing because the National Education Association, parent of the Massachusetts Teachers Association and headquartered in Washington, D.C., has sent $4.9 million in “outside money” to the Bay State to oppose Question 2.

The “dark money objection” is even more two-faced. In 2014, the American Federation of Teachers was outed after making an illegal $480,000 ad buy that helped propel Martin Walsh to a Boston mayoral victory over John Connolly, a longtime adversary of the teachers unions. AFT’s dark (and illegal) money groups got dinged to the tune of $30,000 for “failure to organize as a PAC, failure to disclose finance activity accurately, contributions made in a manner intended to disguise the true source of the contributions, receipt of contributions not raised in accordance with campaign law, and use of wire transfers.” (After illegally and successfully spending almost a half-million dollars, a measly $30K fine barely qualifies as a slap on the wrist.) And this “dark money” gambit was hardly a one-off for the unions.

Massachusetts legislators didn’t think much of the AFT chicanery, and in 2014 tried to pass laws requiring more transparency. The Massachusetts Teachers Association balked at the legislation, and citing “technical issues,” tried to kill it. But this past August, after two years of legislative wrangling, H.543 became law, much to the consternation of the unions.

To sum up, in Massachusetts, Chicago and a host of other places around the country, the teachers unions’ mission to limit charter growth or kill them outright goes on unabated. But, please keep in mind, they are, of course, doing it for the children. (Hey – I’ll stop saying it when they do.)

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Labor Union Day

Labor Day has become little more than an opportunity for union leaders to puff out their chests and make grandiose statements about the glories of organized labor.

As a way to build their brand, union leaders typically pit management against labor, portraying the worker as David fighting greedy entrepreneurs and corporate Goliaths. This is especially true on Labor Day which, courtesy of organized labor, has morphed into “Labor Union Day.”

No one is better at union puffery than American Federation of Teachers president Randi Weingarten, who proclaimed on her union’s website last week, “Unions still matter.” Her Goliaths-du-jour are the Koch brothers and the Waltons, “and the politicians they’ve bought, (who) think they can paint us as the problem, and they’re doing their best to do just that.”

But there is a huge horsefly in her ointment. According to recently released numbers by the Center for Responsive Politics, half of the nation’s top organizational donors in 2014 were unions, with the National Education Association weighing in at #3 and Weingarten’s AFT at #7, while the Koch Brothers were #14. It looks like the unions have traded their slingshots for AK-47s.

Another standard union ploy is to pump themselves up by taking credit for the five-day work week and the eight hour day. But this too is fantasy. The credit for that goes to noted capitalist Henry Ford who, thinking it was a good business move, instituted that change in the 1920s. (The United Auto Workers didn’t come into being until 1935.)

The unions also make sure to take time out the first Monday of September to assure its members that without the union they would be living in Dickensian poverty. Actually there is no truth to this assertion either. Debunking various union claims, Manhattan Institute’s Diana Furchtgott-Roth cited recent Bureau of Labor Statistics data,

Unionized workers are more heavily concentrated in urban and northeast regions, where both the costs of labor and living are higher. BLS data show that 26% of New York workers belong to unions, compared to 3% of South Carolina workers. Yes, New Yorkers earn more, but a nationally averaged $100 bill buys $87 worth of goods in New York and $110 in South Carolina, according to the Bureau of Economic Analysis.

Furchtgott-Roth also points out that that union membership has been declining all over the country and this is worrying Labor Secretary Thomas Perez. So worried in fact that the White House will be convening a Summit on Worker Voice on Oct. 7 to, in Perez’s words, “highlight the value of collective bargaining.” I guess not too many workers are seeing that “value” as the share of workers belonging to unions declined from 20 percent in 1983 to 11 percent in 2014. The percent of private-sector union members is now a measly 6.6 percent and union leaders are mum on the issue. Other than worker dissatisfaction with unions, the main reason is that companies can’t bear the bloated salaries and perks that its leaders demand. As a result, unionized companies begin to lose market share to nonunionized firms and then, to stay solvent, move their manufacturing to foreign lands. Using the auto industry as an example, Furchtgott-Roth writes,

In 1987, Volkswagen closed what was then its only assembly plant in America, which was located in New Stanton, Pa. During its 10 years of operation, workers went on strike several times, halting production lines and forcing the company to pay higher wages. Volkswagen moved its production to Mexico and Brazil to take advantage of lower wage rates. Last year, auto workers at the VW plant in Chattanooga, Tenn., voted against joining the United Auto Workers.

My guess is that Weingarten and her cronies never came to understand the simple rudiments of capitalism. Or do they…? As Deroy Murdock points out, when unions become management, they act just like any company trying to protect its bottom line, and the hypocrisy is stunning.

  • For 13 years, Jim Callaghan wrote speeches and newsletter articles for the United Federation of Teachers (Weingarten’s New York City AFT local.) He told the New York Post that when managers sacked one of his colleagues without cause, he decided to organize the UFT’s 12 in-store, non-union writers. He was fired for his efforts.
  • “We’ve got to downsize,” a United Auto Workers source said. As its membership shrank from some 500,000 in 2008 to 431,000 in 2009, the union fired 120 of its own staffers “to balance its budget,” the Detroit News noted.
  • Private companies often complain that union labor is too expensive and it seems that the powerful International Brotherhood of Teamsters agrees. When constructing their union hall in Houston, they refused to employ union workers because they were too costly.

I can only hope that on Labor Days to come, we celebrate the contributions of the American worker, who – along with entrepreneurs and capitalists – made the country what it is. The unions with their colossal hubris, hypocrisy and heavy-handed ways have done nothing to deserve a “Day” of their own.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Acquiescent Teachers and Their Undemocratic Unions

Teachers who are not satisfied with their union must make their voices heard. 

Are Unions Democratic? The Internal Politics of Labor Unions and Their Implications, a report just released by the Manhattan Institute’s Daniel DiSalvo, examines unions – specifically the public employee variety, with an emphasis on teachers unions.

Addressing the democracy issue, he writes:

Unfortunately, much evidence suggests that unions are, in the vast majority of cases, only superficially democratic. A review of the existing literature shows that:

  • Very few members vote in standard union-leadership elections (turnout is often below 20 percent; in one recent New York City public-sector union election, turnout was 4 percent).
  • Those who do vote are not representative of the membership as a whole (with older workers voting at higher rates, thus skewing, for example, union policies on the importance of pensions relative to wages).
  • Incumbent leaders often go unchallenged for long periods, sometimes “anointing” chosen successors (who then anoint another generation) instead of fostering genuine contests.
  • Unions, especially at the state and national level, often take political positions with which a substantial number of members disagree (thus forcing those members to pay, with their dues, for the advocacy of policies that they do not support).

DiSalvo ends by pointing to reforms that unions should adopt which would bring the “practice of union democracy in line with the values of American society and the spirit of the law.” The following are his recommendations for federal, state, and local governments:

  1. Require unions to publicize electoral procedures and report election returns. In particular, unions should report the names of the candidates for various offices; whether members voted in person, by phone, electronically, or postal mail; and the number of members who voted, both in absolute numbers and as a percentage.
  2. Require unions to adopt online voting systems, thereby eliminating cumbersome barriers to voting (such as traveling to the union hall to cast a ballot); improving transparency; speeding the dissemination of election results; and reducing the costs of holding elections.
  3. Stop requiring union members to pay for advocacy that they do not support. Specifically, public-sector unions need to formalize their political decision-making by holding referenda to gauge their members’ policy preferences more precisely. The results of these referenda should be made public.

The irony of these proposed legislative actions is that they are unlikely to see the light of day because the unions throw their considerable political heft around and effect legislation locally, on the state level and in D.C. And even if his first fix was to become a reality, I’m not sure it would accomplish much. Information like this would get buried in an email that few would read. His second suggestion is certainly reasonable and in fact has been adopted by the United Teachers of Los Angeles.

Number three gets into some interesting territory. DiSalvo says the union should hold referenda to gauge the political preferences of its rank-and-file. (The unions will counter that this is not necessary. The California Teachers Association’s political decisions are made by their State Council, an elected governing body, though in reality few members ever know exactly who is running, what they stand for and where and when the elections are.) DiSalvo also says that the results of the referenda should be made public. In fact, there is information along those lines that is readily available. Former National Education Association president Reg Weaver on more than one occasion has said publicly that his union breaks down as one-third Democrat, one-third Republican and one-third “Other.” Mike Antonucci reports that a 2005 NEA survey, consistent with previous results, found that members “are actually slightly more conservative (50%) than liberal (43%) in political philosophy.” And at a panel in which I was a participant in 2013, CTA president Dean Vogel claimed that his union membership is 65 percent Democrat and 35 percent Republican.

Granted none of the above numbers constitutes referenda, but the union elites are well aware that a significant percentage of their members are not on the left and clearly they don’t care. Almost all union spending goes in that direction. NEA spends money on Democrats at a 14:1 ratio. And the American Federation of Teachers is even more one-sided: it spends zero on right-of-center candidates.

Here in the Golden State, CTA is no better. Between 2003 and 2012, the union sent $15.7 million to Democrats and just $92,700 to Republicans – a ratio of well over 99 to 1. In toto, CTA spent over $290 million on candidates, ballot measures and lobbying between 2000 and 2013 and just about every penny of it went in a leftward direction.

Which brings us to the unions’ ATMs: their teachers. As DiSalvo reports,

… in a national survey of 3,328 teachers who were asked about their participation in union affairs, about half said that they were ‘not at all active’ or ‘not very active.’ Other research shows that the typical union member hardly participates in union activities … Such evidence suggests that few public employees exert pressure on their organizations in any significant way. (Emphasis added.)

And just what is the best way to exert that pressure?

The best thing a right-of-center, independent or apolitical teacher can do to make a statement is to stop paying the political share of his or her dues, resigning from the union to do so. They will have to give up a few minor perks, but those can be easily be recouped by joining a professional organization like the Association of American Educators. The new “agency fee payer” will get a refund for the monies that the union claims it spends on politics. I know many in the profession are afraid to emerge from the union womb, but they need to rise above it and make their dissatisfaction known.

Sadly, very few teachers have taken advantage of the agency fee payer alternative. While CTA claims that 35 percent of its 300,000 or so members are Republicans, only about 10 percent of its members withhold the political share of their dues. That means there are 75,000 Republican union members who are paying for causes and candidates they are opposed to. The NEA numbers are even worse. Only 88,000 of its 3 million members (2.9 percent) withhold the political portion.

Those disgruntled teachers who insist on staying in the union should go to meetings and make their views known. They’ll find other members who agree with them (more than you might think) and can run for positions of power within the union.

Granted, withholding more political money and raising hell at union meetings may not achieve all or even most of the results that DiSalvo seeks. But millions of dollars less to spend on their pet causes and an active militant minority might just make union leaders – all of whom have become all-too-comfy with their all-too-compliant members – more responsive to those they purportedly represent.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues.

The Poor Teacher Canard Redux – Part I

“Mid-and Late-Career Teachers Struggle With Paltry Incomes” is the latest flawed study to claim that American teachers are underpaid.

Leave it to the left-leaning teacher-union-friendly Center for American Progress to come out with a flatulent report lamenting the allegedly lousy state of teacher pay in the U.S. Even worse, much of the acolyte media dutifully bought the study hook, jive and half-truth. A writer for Huffington Post, tightly clutching a moist hanky, whimpered,

While the report recognizes that low teacher pay is not news – especially when it comes to low entry-level salaries – researchers were interested in seeing if the salaries of mid- and late-career teachers ‘were high enough to attract and keep the nation’s most talented individuals.’ However, in a profession where teacher turnover costs up to $2 billion annually, the results they found are quite depressing. 

Where to begin?!

Let’s start with Andrew Biggs, American Enterprise Institute researcher and scholar, and Jason Richwine, a senior policy analyst at the Heritage Foundation, who released a study in 2011 in which they found that teachers are actually overpaid. What their study includes – and the Center for American Progress’ conveniently omits – are the perks that teachers typically receive as part of their compensation package, like excellent healthcare and pension packages that aren’t counted as “income.” Armed with data, the authors make a solid case. They find,

Workers who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent, while teachers who change to non-teaching jobs see their wages decrease by approximately 3 percent.

When retiree health coverage for teachers is included, it is worth roughly an additional 10 percent of wages, whereas private sector employees often do not receive this benefit at all.

Teachers benefit strongly from job security benefits, which are worth about an extra 1 percent of wages, rising to 8.6 percent when considering that extra job security protects a premium paid in terms of salaries and benefits.

Taking all of this into account, teachers actually receive salary and benefits that are 52 percent greater than fair market levels. (Emphasis added.)

Needless to say, this was beyond the pale for American Federation of Teachers president Randi Weingarten. She promptly bashed the report, insisting that it’s full of “ridiculous assertions” and countered with half-truths and threw in a little class warfare as red meat for her members:

The AEI report concludes that America’s public school teachers are overpaid — something that defies common sense — and uses misleading statistics and questionable research to make its case.

If teachers are so overpaid, then why aren’t more 1 percenters banging down the doors to enter the teaching profession? Why do 50 percent of teachers leave the profession within three to five years, an attrition rate that costs our school districts $7 billion annually?

Kim Anderson, advocacy director at the National Education Association, ignored the data and went for the lachrymose,

Talented individuals turn away from this rewarding profession because they are forced to choose between making a difference in the lives of students and providing for their families.

Actually, the AEI report wasn’t the first to explode the “poor teacher” myth. Back in 2007, researchers Jay Greene and Marcus Winters, then with the Manhattan Institute, found:

Education policy discussions often assume that public school teachers are poorly paid. Typically absent in these discussions about teacher pay, however, is any reference to systematic data on how much public school teachers are actually paid, especially relative to other occupations. Because discussions about teacher pay rarely reference these data, the policy debate on education reform has proceeded without a clear understanding of these issues.

This report compiles information on the hourly pay of public school teachers nationally and in 66 metropolitan areas, as collected by the U.S. Bureau of Labor Statistics (BLS) in its annual National Compensation Survey. We also compare the reported hourly income of public school teachers with that of workers in similar professions, as defined by the BLS….

Among the key findings of their report:

  • According to the BLS, the average public school teacher in the United States earned $34.06 per hour in 2005.
  • The average public school teacher was paid 36% more per hour than the average non-sales white-collar worker and 11% more than the average professional specialty and technical worker.
  • Full-time public school teachers work on average 36.5 hours per week during weeks that they are working. By comparison, white-collar workers (excluding sales) work 39.4 hours, and professional specialty and technical workers work 39.0 hours per week. Private school teachers work 38.3 hours per week
  • Compared with public school teachers, editors and reporters earn 24% less; architects, 11% less; psychologists, 9% less; chemists, 5% less; mechanical engineers, 6% less; and economists, 1% less.
  • Compared with public school teachers, airplane pilots earn 186% more; physicians, 80% more; lawyers, 49% more; nuclear engineers, 17% more; actuaries, 9% more; and physicists, 3% more.
  • Public school teachers are paid 61% more per hour than private school teachers, on average nationwide.
  • The Detroit metropolitan area has the highest average public school teacher pay among metropolitan areas for which data are available, at $47.28 per hour, followed by the San Francisco metropolitan area at $46.70 per hour, and the New York metropolitan area at $45.79 per hour. 

Of particular interest to Golden Staters, the California Policy Center (publishers of UnionWatch) has posted Transparent California, a valuable website which is “dedicated to providing accurate, comprehensive and easily searchable information on the compensation of public employees in California.” From it we learn that the average full-time teacher in California made $84,889 last year, and about 34,750 teachers were paid more than $100,000 in total compensation. It’s important to note that CPC includes all income in its reporting – base pay, overtime, health and pension benefits and other forms of compensation, while again, the CAP study misleadingly includes only base pay.

Despite unassailable research, the “poor teacher” myth is still widely believed, in large part due to those who benefit from spreading it. Most notably, the teachers unions exploit this falsehood as a tactic to con teachers into believing that the union is their only avenue for salary enhancement. The unfortunate truth for teachers is that unions actually prevent them from earning more money. Look for more on this in an upcoming post.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues.

gRANDIosity

Ms. Weingarten gives her enemies a breather as she jets off to Kiev to “promote democratic values.”

American Federation of Teachers president Randi Weingarten has been on a tear lately, working diligently to build up her long and growing enemies list. As reported by The Wall Street Journal’s Allysia Finley,

The American Federation of Teachers issued a report last year blacklisting money managers who support nonprofits that advocate for school and pension reform. This month the union published a second edition with some notable additions and deletions.

The report’s goal is to muzzle hedge fund and private-equity managers who sit on the boards of and contribute hefty sums to union betes noire like the Manhattan Institute, StudentsFirst and Missouri’s Show-Me Institute. The union singled out these three because their donors also manage billions in public pension investments.

Of the referenced money managers, the most prominent is Dan Loeb who runs the very successful Third Point hedge fund. Loeb is not only on the boards of the conservative Manhattan Institute and StudentsFirstNY (the New York State wing of the organization founded by another Weingarten foe, Michelle Rhee), he is the chairman of the board of Success Charter Schools, which are run by yet another Weingarten nemesis, Eva Moskowitz. Randi has had it in for Eva ever since 2003 when the former was president of New York City’s United Federation of Teachers. Moskowitz, then a New York City councilperson, held hearings to examine the negative impact of union contracts on school operations and infuriated Weingarten by reading part of the union contract at a city council meeting. She accused Moskowitz of “demonizing teachers.” Moskowitz, of course, was doing no such thing.

Ms. Finley continues with the latest entry to Weingarten’s enemy list:

This year, the union has added “Illinois Is Broke” to its blacklist because the group helped spread public awareness about the state’s pension debt. This is notable because the union’s stated goal last year was to target groups and money managers who supported “privatizing” pensions (i.e. 401(k)s). The union claimed that endorsing defined-contribution plans while managing public pension assets represented a conflict of interest. Never mind that money managers are actually performing a fiduciary duty by promoting reforms that make teacher pensions more secure.

Not mentioned in Finley’s piece was Weingarten’s recent attack on Gina Raimondo who, as Rhode Island treasurer, has done an admirable job reforming the state’s broken pension system. But from Weingarten’s standpoint, Raimondo needs to be taken to the woodshed for being a bad girl.

Her misdeed? She had the temerity to contract with Loeb’s Third Point, which happens to be the state’s top-performing hedge fund, as a way to bring cash into the pension fund’s sagging coffers. Two years ago, the Rhode Island State Investment Commission “shuttled $50 million to Third Point in a broader push to meet the commission’s target of a 7.5% return on investment.”

… Third Point yielded 24.7% over the last year while the retirement system returned 14%. Hedge funds as a class averaged 17.1%. If anything, the commission ought to be sending more money Mr. Loeb’s way, and retired state workers ought to send him champagne. (Emphasis added.)

Sad to say, Raimondo – who is running for governor – buckled, and said good-by to Loeb and his money-making hedge fund.

Then last Thursday, Weingarten popped up in Kiev, telling FoxNews that she went to Ukraine as part of a delegation of teacher union leaders from five nations (including the United Kingdom, Poland, Denmark and Bulgaria) as an act of solidarity and to “promote democratic values.” The cost of the trip was shared by AFT’s 1.5 million members and the Trade Union of Education and Science Workers of Ukraine. (I wonder how many teachers, most of whom are forced to pay union dues, are happy to see a part of their paychecks used to subsidize Weingarten’s European grandstanding.)

… “It’s always been a part of who we are,” said Weingarten. “I decided it was important enough to go, and the most important thing I’ve learned during this trip is that the Russian propaganda about how the Ukrainian government is fragile and destabilizing is totally and completely wrong.

Maybe instead of planning her ego-trip to Kiev, Weingarten should have been at a rally in Albany the week before, which was organized in response to New York City mayor Bill de Blasio’s assault on charter schools. In actuality, she wouldn’t be caught dead there.  Weingarten is hardly a fan of charters and worse, the rally was organized by the dreaded Eva Moskowitz.

Ironically, Weingarten’s version of “democratic values” is really nothing more than collectivism which would eventually undermine the very government she claims to be supporting. For example, if she sincerely believed in “democratic values,” she would back a move to stop requiring teachers in most states to pay union dues for the right to teach in a public school, and at the same time stop forcing them to collectively bargain. And she would fight to get rid of the ridiculous industrial-style “step and column” method of paying teachers which treats them as interchangeable widgets and she would acknowledge that great teachers are worth more and should be paid more than their less talented brethren. And she would take a stand that seniority and tenure are arbitrary, unfair and even cruel methods (for both teachers and kids) to make staffing decisions. And she would ….

But no, making sure kids receive a good education and acknowledging teachers as true professionals are not priorities for Weingarten. She is much more interested in promoting her brand of collectivism and punishing political enemies. So although Ted O’Neil, spokesman for the Michigan-based Mackinac Center for Public Policy, suggested that instead of globetrotting, she would be better off trekking to Detroit and getting involved with the school district there, I’m thinking that a long stint in Kiev might be a better idea.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

Putting “Teeth” in Right-to-Work

Having been involved in discussion regarding Right-To-Work legislation in Indiana and Michigan, I can attest to the tireless efforts of grassroots movements – by local businesses in Indiana and concerned United Auto Worker employees in Michigan – to achieve the goal of protecting worker freedoms. Statistical data shows that the implementation of a Right-To-Work law is positive, as such states see statistical growth in both population and jobs. Right-To-Work laws are important guarantees of the freedom of choice and the assurance of a lack of intimidation in the organizing process, but there is growing evidence that workers and management in RTW states are still subjected to union intimidation.

A recent article by Diana Furchtgott-Roth of The Manhattan Institute, suggests not.  Ms. Furchtgott-Roth points out that RTW states not only have the highest employment growth over the last 4-5 years, but they also have the highest growth rate for union membership! The statistics she presented were absolutely astonishing, but few people have picked up on the significance and logic behind the union growth in these states. The truly frightening part is the number of cases recorded, since Card Check is virtually unregulated and therefore untraceable.

“Why Union Growth: According to data from the National Labor Relations Board (NLRB), in 38% of all union recognitions in 2009, the latest year for which data is available, unions bypassed secret ballot elections and instead used card checks to unionize employees. Specifically, the NLRB reports that unions won 794 single-union representation elections. During that period, the NLRB recorded 485 notices of card check union recognition.”

Unfortunately, Big Labor’s “Gasping Dinosaurs” are a resourceful lot. Their political contributions have bought them the support of President Obama and his Administration, who has, in turn, appointed a Rogue NLRB. The NLRB is currently lead by heavily pro-union favored board members, many of whom were unconstitutionally appointed by the President (see Appeals Court Nixed Obama’s Recess Appointments). The result of this support is that Big Labor bosses see RTW states as a shining new opportunity to rebuild its declining membership. Unions understand that with the support of the indebted President and pro-labor support from the NLRB, they can achieve membership without an election through Card Check by utilizing their insidious campaigns of “Death by a Thousand Cuts.”

Once they have infiltrated the masses, Big Labor can then use the same type tactics against the newly forced unionized employees to ensure that they don’t exercise their right not to pay dues (or in some cases, belong to the union) under RTW laws. This can be accomplished by making sure that the uneducated are not advised of these rights, or by the specific targeting of persons who choose not to pay dues.  This can be accomplished because, unions are legally allowed to broadcast a list of those individuals who choose not to pay dues (see Worker’s Allege Improper Collection of Union Dues).

This raises concern, as it is unclear how the “dues-paying” union membership will choose to use this list. Membership who view non-payers as “freeloaders,” may be inclined to use unlawful force, threats, and/or intimidation in an attempt to alter a non-member’s decision. Unfortunately, most members ultimately cave, as employees subject to such intimidation have few options.  While this type of activity is unlawful, the sole oversight of these actions belongs with the National Labor Relations Board, a partisan governmental “agency” whose devotion to labor unions is well-documented and unquestioned. The process is timely, difficult to understand, and expensive – as it generally includes the involvement of an attorney to represent ones interest. With little oversight, Big Labor can continue to grow its membership in RTW states through a combination of employee and employer intimidation, with no government regulation to hinder its actions.

Although RTW has been a Godsend for many states, employees and employers, RTW laws need more “teeth” in order to truly protect employees and employers from ruthless forced unionization tactics. The following changes would eliminate the “behind the scenes” intimidation and allow for fair representation in union elections. Additionally, these changes would impose collective bargaining restrictions that would allow members to make decisions free of coercion as to whether they wished to remain part of the bargaining unit.

1. Reinstate Secret Ballot Elections:  Uphold the long standing belief in allowing people to vote their conscience through a “Secret Ballot Election” by inserting language that requires all union representation be achieved by secret ballot conducted under the auspices of the National Labor Relations Board (NLRB). Currently Indiana State Senator Jim Banks has introduced such an Amendment to the Indiana state constitution and Virginia has already passed such a law (see New Employee Privacy and Union Voting Rights Laws in Virginia Go Into Effect July 2013).

2. Eliminate Check Off Clauses:  Such clauses in collective bargaining agreements require unionized employers and government entities to deduct union dues from member paychecks and forward them to the union. These clauses are utilized by Big Labor through intimidation to force employees to remain part of the bargaining unit in RTW states. Unions should be required to be their own accountants and collect dues directly from the employees without third party involvement. In essence members would then have the ability to decide, just like in the free market, if the services/products they are receiving are worth paying for directly. This is no different than a person paying when satisfied for legal, real estate, investing, or other services/ products. It only makes sense, but is often a non-starter for Big Labor in contract negotiations (see Teachers Silenced by Teachers Union).

3. Eliminate Monopoly Representation and Outlaw Neutrality Agreements:  In The Devil at Our Doorstep, I presented the following as the first two points in my “Ten-Point Plan to Battle Big Labor.”

a) Replace the current union monopoly representation with a secret ballot election every three years, so unions have to justify their actions to the employees. Unions must obtain written consent from every dues paying member before using money on anything other than collective bargaining activities.

b) Institute a new regulation that outlaws neutrality-type agreements, which allow card check in lieu of secret ballot elections.

4. Rewrite State Extortion and Blackmail Laws:  James Sherk of The Heritage Foundation accurately proposed that we should modify state extortion and blackmail laws to include unions, which are currently not implicated under labor law. This would prohibit pressure campaigns which are designed to force an employer to surrender, rather than trying to persuade the employees to unionize.

Leveling the Playing Field through these changes and passing a National Right-To-Work Law are necessary steps to improve the economy and continue to create jobs absent the threat of Big Labor intimidation! It is imperative for this great country and the freedom of its citizens that new “teeth” are introduced to support and assure the success of the recently passed Right-To-Work laws.

David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

Fixing California’s Retiree Health Care Problem

Editor’s Note: Apart from pensions, the most financially significant “OPEB,” or “other post employment benefit,” typically awarded a government employee is retirement health care. This benefit is designed to fill the health coverage gap during the years between when someone retires and when they become eligible for Medicare, and in many cases, they are also designed to supplement the standard Medicare benefit.

To the extent the employer (taxpayers) fund retirement health care benefits, it is necessary to apply the present value of these future benefits to a beneficiary’s working years as part of the calculation of their total compensation. Because typically retirement health benefits are for insurer funded medical services, and because heath care premiums fluctuate unpredictably, it is difficult to project how much these benefits will cost. And in any case, retirement health care benefits are rarely pre-funded. Instead, government agencies pay health benefits for their retirees out of current budgets, and as the benefits increase and as number of retirees increases, this expense becomes more and more significant.

While retirement health care obligations have not gotten the same attention in the press or among policymakers as retirement pensions, that is changing. And while the scale of these financial obligations do not rival pensions, in California, in aggregate, they are nonetheless measured in hundreds of billions – with hardly any of them pre-funded. Put another way, since nearly 100% of retirement health benefit obligations are not prefunded at all, the size of this liability is comparable to the size of the unfunded pension liability.

To provide an in-depth primer on this complex yet urgent topic of how we may fund retiree health benefits for our public employees, Manhattan Institute senior fellow Stephen D. Eide has just released a study entitled “Reform Before Revenue – Fixing California’s Retiree Health Care Problem.” Eide has agreed to allow UnionWatch to republish two key sections of that report here.

THE ROLE OF OPEB IN LOCAL FISCAL DISTRESS IN CALIFORNIA

California state government has been in a sustained fiscal crisis for almost five years. In every year since 2008, the state government has faced budget deficits ranging from $10 billion to $30 billion. [44] Expressed as a percentage of the total general fund budget, California’s budget deficits have ranked among the largest of all state governments in both of the last two years. [45] All three credit ratings agencies have downgraded the state’s bond rating by at least two notches since 2008. [46] California now has the lowest bond rating out of all 50 states. [47] A late-August survey of states’ borrowing costs by Barron’s found that California’s were the second-highest among all 50 states. [48]

Fiscal crisis at the local level is even more pronounced. Four California cities have declared bankruptcy since 2008—three in the summer of 2012 alone.

These fiscal problems cannot simply be attributed to California’s weak economy, though that factor must be acknowledged. California is one of only three American states whose unemployment rate is still above 10 percent. Of the 14 American metropolitan areas where unemployment is above 13 percent, 11 are in California. [49] California’s GDP growth has trailed most other states in every year since 2008. [50] California cities made up seven out of the top ten metro areas with the highest rates of new foreclosures in the first half of 2012. [51]

But economic weakness alone cannot explain government’s fiscal distress. Both unemployment and per-capita income are poor predictors of fiscal distress in a community, as measured by its percentage of workforce reduction between 2008 and 2011 (see Charts 4 and 5). Relatively wealthy communities and communities with low unemployment rates have downsized by about the same amount as communities with lower per-capita incomes and high unemployment rates.

California state and local governments’ deficit is more structural than cyclical. Certainly, high unemployment and the housing collapse have strained budgets. But cities’ spending commitments have left them unable to adjust to changing economic conditions. Among those commitments, retirement-related costs are a major factor.

Unsustainable spending on retirement benefits has played a critical role in three out of the four Chapter 9 bankruptcy filings among California cities since 2008. [52] In 2009, Vallejo became the first California local government to use the federal bankruptcy law’s Chapter 9 (reserved for municipalities) to reduce retiree health-care benefits. Today, post-bankruptcy, Vallejo’s benefits are $300 per month per retiree, down from as high as $1,500. [53] The city of Stockton, which filed for bankruptcy last summer, intends to go even further: it seeks to eliminate retiree health benefits entirely and thus erase the city’s $540 million unfunded OPEB liability. [54] San Bernardino, which also filed last summer, has proposed cutting retiree health payments while in bankruptcy. [55]

When OPEB is unfunded (which, as we have noted, is the case in most California communities), costs in coming years are set to accelerate rapidly—likely more rapidly than pension costs. When a worker retires and begins to draw benefits, his pension comes out of the pension fund, whereas his health benefits continue to come directly out of the operating budget. Thus, for as long as governments fund OPEB on a pay-as-you-go basis, they will experience the combined force of the baby-boom retirement wave and rising health-care costs. In a prefunded system, the effect is filtered. [56]

Consider what Stockton was up against before it adjusted OPEB in bankruptcy court (Chart 6). Stockton’s pay-as-you-go OPEB costs were set to nearly triple between 2009 and 2019. The city itself claimed that its “retiree medical benefit is one of the most generous in the state.” [57] CalPERS was Stockton’s largest unsecured creditor ($147.5 million), and its second-largest unsecured creditor was Wells Fargo, the trustee for Stockton’s $124.3 million in pension obligation bonds. [58]

Although the size of the overall liabilities is smaller, managing the coming OPEB squeeze may prove just as challenging to public officials as managing pension costs.

WHAT IS TO BE DONE? THE REVENUE QUESTION AND THE LEGAL QUESTION

Despite evidence that governments are in an unsustainable spiral of spending for retirees, a strong current of opinion continues to interpret the California fiscal crisis as a revenue problem. In 2009, the state temporarily raised income, sales, and car taxes. (The hikes had all expired by June 2011, after efforts to make them permanent failed.)

The November 2012 ballot features two tax-increase initiatives: Proposition 30 and Proposition 38. Both would raise income taxes and direct all new revenues primarily to public education. Both contain spending restrictions to prevent the new revenues from being used for unauthorized purposes. Opponents have found these spending restrictions to be a “shell game.” As several argued in a statement in the state’s official voter guide, the legislature “can take existing money for schools and use it for other purposes and then replace that money with the money from the new taxes…. Prop. 30 does not guarantee one penny of new funding for schools.” [59] Although Proposition 38’s spending restrictions are tighter, they, too, are vulnerable to the shell-game critique.

In light of the looming OPEB crisis, it is fair to ask: Would more revenues be a bad thing? Perhaps what some have alleged to be a weakness of Prop. 30— that the real destination of its new revenues would be retirement benefits, not schools [60]—is a reason to support it.

New revenues eventually will be needed to address OPEB. But new revenues need not mean new taxes. A fairer way to raise revenue for OPEB is glaringly obvious: require current employees to contribute to their future health care. In most of California’s government retirement systems, current employees still pay nothing for their postretirement healthcare benefits.

Instead, it is popular this political season to promote increased taxes on higher incomes (as both Propositions 30 and 38 would do). But high-earner income is a uniquely poor source of revenue to support mounting OPEB costs because that income is volatile. Wealthier people earn more money from investments than do people in lower income brackets, which means that this income fluctuates with the ups and downs of financial markets. As long as new tax revenue comes from high-income earners, it will increase revenue volatility, already a well-documented problem in California. [61]

Governor Jerry Brown, Proposition 30’s chief backer, has focused on California public employees’ retirement benefits as a problem. When he presented his first tax-increase proposal last year, he paired it with a plan for pension reform. The implicit promise was “reform before revenue,” but the pension bill that Brown eventually signed into law failed to fulfill that pledge for several reasons, not least because it did not address OPEB. [62]

Recently, some California governments have acknowledged their OPEB problems and attempted to address them, through bargaining (San Diego), ballot initiative (San Francisco), bankruptcy (discussed above), and legislation (Orange County). [63]

Out of all these options, legislative action—changing the retirement system’s obligations by an act of law—holds the greatest potential for savings. But simply changing the law on benefits represents a unilateral reduction, and this is legally controversial.

Pensions for current employees and retirees in California are protected by the “California rule.” Premised on the notion that pension promises are implicitly contractual, this long-standing legal doctrine mandates that all “detrimental changes” to pensions, whether increasing employees’ contributions or reducing their benefits, can be applied only to new hires. [64]

Is there such a thing as an implied contractual right to OPEB? In principle, the answer is yes, according to the most recent, definitive statement on the matter by the California Supreme Court (see sidebar). [65] However, the ruling does not establish that all existing retiree health benefits are protected to the same degree to which pensions are. Local governments’ ability to adjust OPEB, for current employees and retirees, remains unsettled in law.

Some systems have explicitly argued that retiree health benefits amount to a “gratuity.” Like a gold watch at retirement, they claim, continuing health benefits may be expected as a gesture of employer beneficence and gratitude but not legally guaranteed. Before 1974’s Employee Retirement Income Security Act (ERISA) changed federal law, it was commonfor corporations to insert exculpatory clauses into retirement-benefits documents, to define pensions as gratuities and thereby limit liability. [66] ERISA forbade this; but ERISA does not apply to state and local governments.

Some local governments in California have placed exculpatory clauses like those once found in private industry in their employee-benefit documents. In upholding Orange County’s right to reduce OPEB this past August, a U.S. district judge cited disclaimers that Orange County had appended to its documents over the years.

The legal confusion over what can and can’t be done about OPEB is a consequence of the unsystematic nature of retiree health-care benefits. Pensioncommitments are relatively unambiguous: what was promised was a certain fixed percentage of the final salary. [70] But retiree health care comes in a few different forms. A court that determines that retirees have a contractual right to expect health benefits must wade into another question: Which ones? Medigap? Implicit subsidy? Part B reimbursement? Dependent and survivor coverage? An explicit subsidy? And, if the last, how generous do they have a right to expect?

REFERENCES

44 San Diego County Taxpayers’ Association analysis of Legislative Analyst’s Office research, “Proposition 30: The Schools and Local Public Safety Protection Act of 2012,” August 2012.

45 Center for Budget and Policy Priorities, via California Budget Project, “Measuring Up: The Social and Economic Context of the Governor’s Proposed 2012–13 Budget,” February 2012, p. 26; and “States Continue to Feel Recession’s Impact,” Center for Budget and Policy Priorities, June 27, 2012, p. 5.

46 California Department of Finance, Chart K-5 : California Municipal Bonds Rating History, http://www.dof.ca.gov/budgeting/budget_faqs/information/documents/CHART-K5.pdf.

47 Andrew Bary, “State of the States,” Barron’s, August 25, 2012.

48 Ibid.

49 Bureau of Labor Statistics, http://www.bls.gov/web/metro/laummtrk.htm.

50 Bureau of Economic Analysis, http://www.bea.gov/newsreleases/regional/gdp_state/2012/pdf/gsp0612.pdf.

51 “California Still Dominates Foreclosure Scene,” cbsnews.com, July 26, 2012. California has the third-highest foreclosure rate in the nation (after Illinois and Florida); Mark Glover, “California Foreclosures Improve, but Still Look Bad,” Sacramento Bee, September 14, 2012.

52 “Local Government Bankruptcy in CA: Qs and As,” Policy Brief, Legislative Analyst’s Office, August 7, 2012, pp. 6–7; Sydney Evans, Bohdan Kosenko, and Mike Polyakov, “How Stockton Went Bust: A California’ City’s Decade of Policies and the Financial Crisis That Followed,” California Common Sense, June 2012; Steven C. Johnson and Chris Francescani, “U.S. Loves Cops and Firefighters—but Not Their Pensions,” Reuters, July 29, 2012; Don Bellamante, David Denholm, and Ivan Osorio, “Vallejo con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Representative Government,” Cato Institute Policy Analysis No. 645, September 29, 2009; and Jeremy Rozansky, “San Bernardino’s Route to Bankruptcy,” City Journal, July 18, 2012.

53 “Local Government Bankruptcy in California: Qs and As,” Policy Brief, Legislative Analyst’s Office, August 7, 2012; Jim Christie and Peter Henderson, “Court Lets Stockton, California Cut Retiree Health Care,” Reuters, July 27, 2012; Ed Mendel, “City Bankruptcies Target Retiree Health Care Costs,” August 6, 2012; and Ed Mendel, “Stockton Plan Cuts Bond Payment: $197.5 million,” July 23, 2012.

54 Bob Deis, “A Message from the City That Went Bankrupt,” Wall Street Journal, September 27, 2012.

55 Peter Henderson, “Near-Bankrupt San Bernardino Targets Bonds, Retiree Health,” Reuters, July 24, 2012; and Mendel, “City Bankruptcies Target Retiree Health Care Costs.”

56 For clear illustrations of the advantages of prefunding over pay-as-you-go, see “State Budget Crisis Task Force Report,” July 2012, p. 44 (fig. 15); and Adam Tatum, “California’s Neglected Promise: How California Has Failed to Prepare for Its Accumulating Retiree Health Care Obligations,” California Common Sense, July 2012, pp. 7–8 (figs. 5 and 6). “State Budget Crisis Task Force: California Report,” September 2012, p. 26, fig. 7.

57 “City of Stockton, 2011/2012 Annual Budget,” p. P-26.

58 Steven Church, “Stockton Threatens to Be First City to Stiff Bondholders,” Bloomberg, June 30, 2012.

59 Proposition 30, “Official Title and Summary” and “Official Arguments and Rebuttals.”

60 David Crane, “New California Taxes Pay for Pensions, Not Schools,” Bloomberg, April 23, 2012; and “California’s Pension Tax,” Wall Street Journal, April 22, 2012.

61 Legislative Analyst’s Office, “Revenue Volatility in California,” January 2005; and David Block and Scott Drenkard, “Governor Brown’s Tax Proposal and the Folly of California’s Income Tax,” Tax Foundation Fiscal Fact No. 324, August 1, 2012.

62 Brown’s initial 12-point pension reform plan would have made two modest changes to retiree health-care policy: first, increase eligibility for new state government employees from ten to 15 years for minimum health-care benefits and from 20 to 25 for the maximum. Second, Brown proposed addressing “the anomaly of retirees paying less for health care premiums than current employees.” State retirees are eligible for an employer contribution of up to 100 percent of health-care premium costs (90 percent for dependents). The employer contribution rate to active workers’ health care varies by bargaining unit but is generally 80 percent; “A Preliminary Analysis of Governor Brown’s Twelve Point Pension Reform Plan,” CalPERS, November 30, 2011.

63 For a recent survey of the literature on state and local governments’ OPEB changes, see Joshua Franzel and Alexander Brown, “Understanding Finances and Changes in Retiree Health Care,” Government Finance Review, pp. 62–63. The most comprehensive source is probably the annual summaries of retirement benefits changes published by the National Conference of State Legislatures.

64 For an extensive discussion and critique of the California Rule, see Amy Monahan, “Statutes as Contracts? The ‘California Rule’ and Its Impact on Public Pension Reform,” Iowa Law Review 97 (2012): pp. 1029-1083.

65 Retired Employees Association of Orange County, Inc. v. County of Orange, Supreme Court of California, November 21, 2011.

66 Steven Sass, The Promise of Private Pensions: The First Hundred Years (Cambridge, Mass.: Harvard University Press, 1997), pp. 187–89, 272–73.

67 Ed Mendel, “Court Strengthens Public Retiree Health Rights,” Calpensions.com, November 28, 2011; and “Calif. Court Weighs in on Retiree Health Benefits,” Thomson Reuters News and Insight, November 21, 2011.

68 Mendel, “Court Strengthens Public Retiree Health Rights”; and Steven Greenhut, “Public Unions Send Medical Bills to Taxpayers,” Bloomberg, March 15, 2012.

69 Retired Employees Association of Orange County, Inc. v. County of Orange, U.S. District Court for the Central District of California, August 13, 2012.

70 The only exception would be with COLAs. Recent court challenges to COLA reductions or eliminations have centered on whether COLAs are part of the core pension benefit, finding generally that they are not.

Stephen D. Eide is a senior fellow at the Manhattan Institute‘s Center for State and Local Leadership. He was previously a senior research associate at the Worcester Regional Research Bureau. He is a regular contributor to PublicSectorInc.org, a project of the Manhattan Institute. His work focuses on public administration, public finance, political theory, and urban policy. His work has been published in the New York Post, Worcester Telegram and Gazette, Worcester Business Journal, Commonwealth Magazine, Boston Herald, Interpretation: A Journal of Political Philosophy, and Academic Questions. A native of Richmond, Virginia, Eide holds a bachelor’s degree from St. John’s College in Santa Fe, N.M., and a Ph.D. in political philosophy from Boston College.

When Public Sector Unions Win in California

Editor’s note:  Earlier this month, Manhattan Institute senior fellow Daniel DiSalvo released a study entitled “The Nays Have It: When Public Sector Unions Win in California.” DiSalvo has agreed to allow UnionWatch to republish two key sections of that report here, concerning California’s public sector union influence over the outcome of citizen initiatives and over the state legislature. Readers are encouraged to read the entire study, as well as DiSalvo’s other recent studies on public sector union power, “Dues and Deep Pockets: Public-Sector Unions’ Money Machine” (March 2012), and “Storm Clouds Ahead: Why Conflict with Public Unions Will Continue” (November 2011).

California’s Public Employee Unions & Citizen Initiatives

We isolated the 15 propositions that stand out as particularly important to public-employee unions (Table 2). Of course, another analyst might choose a few different propositions to be included in the list of the most important,
but there is likely to be broad agreement on most of those included here. These were major battles on which the unions spent huge sums of money in efforts to convince the electorate and mobilize their members. This more qualitative analysis reveals that when unions pull out all the stops for a ballot-initiative campaign, they almost always win. Of these major initiatives, the unions supported six and opposed nine, and voters enacted only one of those that they fought (ending bilingual education in 1998). On the other hand, voters ratified four of the six measures that the unions supported. And the two that failed went down by quite narrow margins. (One of these proposals would have allowed school districts to issue their own bonds, if approved by a simple majority of voters rather than the existing two-thirds requirement; the other would have put limits on lobbying and established limits on campaign contributions and spending.) In sum, out of the 15 ballots most dear to them over the last 30 years, the unions have lost only three times. It is an impressive record.

What issues motivated the unions to pull out all the stops? Education, clearly central to the teach ers’ unions in California, tops the list: ten of the 15 measures touched on education issues. On “defense,” six of the nine initiatives that the unions opposed were education-related. These political triumphs had huge policy consequences. Led by the CTA, public sector unions managed to block proposals for school vouchers (twice), teacher evaluation and testing, new requirements for teacher tenure, and a relaxation of education spending requirements. On “offense,” four of the six measures that unions supported were designed to funnel more money into the schools. On all these propositions, the unions spent substantial sums (Chart 2). Indeed, on some of them, they almost entirely underwrote their side of the campaign. In most of these campaigns, the teachers’ unions and their allies significantly outspent their rivals. A few of the votes were close; but in most cases, the union position won an overwhelming majority. No wonder former Governor Pete Wilson described the CTA as a “relentless political machine” (Quoted in Richard Lee Colvin, “Wilson Is Lampooned at Teachers Union ‘Boot Camp,’” Los Angeles Times, August 26, 1998).

The most important of all these education-related measures was Proposition 98 in 1988. It required that 40 percent of the state’s general fund be spent annually on K–12 education and community colleges. That year, the CTA spent $4.5 million, a very large sum in those days, to promote it. The CTA’s victory, by a slim margin, was one of the most significant pieces of legislation in the last 30 years of California history. It also demonstrated the power of the teachers’ unions. As political scientist Terry Moe asked: “How often is a special interest group able to commandeer 40 percent of a state’s entire budget for its own realm of policy?” (Terry M. Moe, Special Interest: Teachers Unions and America’s Public Schools, Washington, D.C.: Brookings Institution, 2010, 299). The consequence was a severe constriction of the state’s fiscal flexibility. By guaranteeing such lavish funding, Proposition 98 also reduced accountability, as school districts have had to worry less about the most efficient allocation of resources. By using its influence on local school boards, the CTA channeled much of the new monies—about $450 million a year—into increasing teacher pay (Troy Senik, “The Worst Union in America,” City Journal 22, no. 2, spring 2012). California now boasts the highest average teacher salaries in the country.

In opposition, the teachers’ unions have vehemently opposed voucher plans, which they see as a threat to their survival. School vouchers have made it onto the ballot twice in California: Proposition 174 in 1993 and Proposition 38 in 2000. In both instances, the teachers’ unions single-handedly bankrolled the opposition campaign (Moe, Special Interest, 298). In the 1993 campaign on this issue, the CTA spent $12.5 million, outspending supporters 8 to 1. In addition, it persuaded March Fong Eu, the secretary of state, to significantly change the proposition’s title from “Parental Choice” to “Education Vouchers” (Senik, “Worst Union in America.” The state attorney general’s authority over ballot titles stems from a 1974 measure, Proposition 9, which mandated the creation of a Fair Political Practices Commission). According to education scholar and former teacher Myron Lieberman, the more controversial title dropped Proposition 174 ten points in the polls, where it had initially been well received by voters (Myron Lieberman, The Teacher Unions: How the NEA and AFT Sabotage Reform and Hold Students, Parents, and Teachers Hostage to Bureaucracy: New York: The Free Press, 1997). In the 2000 ballot fight, the teachers’ unions spent some $21 million. In both cases, many other interest groups in California—such as the NAACP, the PTA, and the ACLU—publicly opposed school vouchers. Yet they spent almost nothing to defeat the proposals at the ballot box.

The teachers’ unions have also blocked efforts to impose greater accountability measures on California’s public schools. In 1998, the CTA spent nearly $7 million to defeat Proposition 8. The measure would have allowed the use of student performance as a criterion for teacher evaluation and required teachers to take credentialing tests in their fields. In 2005, Governor Arnold Schwarzenegger, in his supposed “Year of Reform,” proposed a measure aimed at teacher tenure in K–12 education that would have extended the apprentice period for teachers from two years to five. Another measure would have set limits on state spending and relaxed the education spending requirements imposed by Proposition 98. The CTA alone spent $57 million, mortgaging its Sacramento headquarters, to fight these and other measures.

Given their record, it is understandable that many consider public-employee unions in California quite simply the most effective interest group in state politics. Our analysis finds that the unions often outspent their opponents handily on many issues. In 2005, for example, the unions and their allies spent $54 million to defeat Proposition 75 (another version of paycheck protection). The measure’s supporters mustered a measly $5.8 million. Governor Schwarzenegger’s state-spending cap elicited zero support while its opponents, led by the unions, shelled out $28 million. Including the paycheck-protection measure of that year, in 2005 all public-sector unions combined spent a whopping $90 million in opposition to initiatives they deemed against their interests, according to the National Institute on Money in State Politics. Supporters of these measures didn’t even come close.

What about the other side of the coin—measures favored by business? A look at these campaigns finds that they typically involve less spending and that opponents and proponents tend to be evenly matched. This suggests that other groups that spend in initiative campaigns are spread across many different issues. In contrast, the role of the unions is concentrated on a few priorities and is thus outsize. This finding comports with reporting by The Wall Street Journal, which found that organized labor, led by the SEIU, spends far more on political activity than is generally thought (Tom McGinty and Brody Mullins, “Political Spending by Unions Far Exceeds Direct Donations,” The Wall Street Journal, July 10, 2012).  Some have claimed that public-sector unions are regularly outspent by business interests (however defined). Our analysis finds that, at least in the California’s direct-democracy process, this is a myth.

Public Sector Union Power in the California State Legislature

The Democratic Party dominates California’s legislature. In the past half-century, the Republican Party has had majorities on only one occasion in each of the two houses of the state legislature. The GOP’s state senate majority lasted for two years, while the one in the assembly lasted less than a year. California’s Democrats are closely allied with public employee unions in the state. As Sacramento Bee columnist Dan Walter has remarked, the Golden State’s “public employee unions wield immense — even hegemonic — influence” over the Democratic majorities in the state legislature (Dan Walters, “Democrats strengthen unions noose,” Orange County Register, July 10, 2009.
http://www.ocregister.com/opinion/unions-19986-bankruptcy-public.html). The control exercised by public employee unions was brought home to many when a 2010 video went viral. It showed an official of the Service Employees International Union (SEIU) in a legislative chamber telling elected officials: “We helped to get you into office, and we got a good memory… Come November, if you don’t back our program, we’ll get you out of office” (http://unionwatch.org/seiu-spokesperson-threatening-california-lawmakers-with-union-retaliation/). While Walters and other commentators have often remarked on the power wielded by public sector unions in the state legislature, it is worth taking a closer look at their role helping California’s representatives get elected.

Electoral rules help reinforce connections between Democrats and the unions. California’s gerrymandered legislative districts foster little meaningful competition between the political parties. What electoral competition there is in California takes place within the parties at the nomination stage. Whoever wins the primary contest in a so-called “safe district” usually walks away with the general election. Without party labels to guide voters, candidates turn to endorsements. Within the Democratic Party, the endorsement of the public sector unions looms above all others in importance. The unions offer both money and manpower to candidates they support. According to the Los Angeles Times, the California Teachers Association, the state affiliate of the National Education Association, “has deep pockets, a militia of more than 300,000 members to call on and a track record of making or breaking political careers” (Eric Bailey, “Proposition 98, which guards funding for state’s schools, is tested again, Los Angeles Times, July 17, 2009”).

Public employee unions have distinct advantages over other interest groups in pressuring legislators. First, they have regular access to them through the collective bargaining process. Other interest groups must fight for such access. Second, they have a cadre of experienced activists that can be quickly mobilized for get-out-the-vote operations and protests on the steps of the state capitol. Third, the regular revenue streams provided by dues check-off and government collection of union dues allow the unions to finance extensive lobbying operations. Other groups must constantly struggle for resources and have greater difficulty maintaining a vigilant presence in Sacramento. Fourth, a number of California legislators are themselves former public employee union members. Other interest groups can only look upon with envy upon this network.

Finally, public employee unions are among the most active groups in California’s electoral process. They are among the leaders in direct donations to candidates and make significant independent expenditures on behalf of their favorite sons and daughters. As Table 3 indicates, public sector unions are regularly among the top three donors to legislative candidates. In many of the years when the unions were the number two donor, they were only outpaced by general trade unions. In combination, public and private labor unions outspent the next largest contributor to candidates by two to one. (See Charts 3 and 4).

*  *  *

*  *  *

Furthermore, while other groups move up and down the donor rankings, depending presumably on the issues at stake in a given election year, public sector unions remain consistently at the top of the heap. Bear in mind that these figures only reflect the direct donation of public employee unions to candidates’ campaign coffers. They do not include the independent expenditures the unions also make on behalf of candidates.

Public sector unions donate overwhelmingly to Democratic candidates (Table 5). Compare the year 2002 in tables 4 and 5. That year the unions gave 90 percent of their donations to Democrat and 5 percent to Republicans. On the other hand, the finance, insurance, and real estate industries combined split their contributions nearly evenly between the parties, giving 53 percent of their contributions to Democrats and 45 percent to Republicans.

*  *  *

Beyond these aggregate figures, it is instructive to consider a few examples. Take the saga of the state’s charter school cap in 1998. California had a legal cap of 100 charter schools for the entire state. The teachers’ unions were adamantly opposed to raising the cap and allowing more charter schools. Democrats in the state legislature, following the teachers’ union line, refused to raise the cap. Reed Hastings, a Silicon Valley entrepreneur who later founded Netflix, financed a ballot measure to lift the charter cap with $15 million of his own money.

The CTA was opposed to Hastings’ move, as it would have to spend far more than $15 million to defeat the measure, which would severely cut into the funds it had to spend on candidates in the general election. In a series of private meetings, the CTA got Hastings to back off. It agreed to raise the cap by 100 schools the following year. Of course, neither Hastings nor the CTA alone had the legal authority to change California law. Only voters or the legislature could do that. Yet the union and businessman brokered the deal nonetheless. Democrats were happy to raise the cap once the CTA blessed the idea. The legislature dutifully produced a bill conforming to the CTA’s private agreement with Hastings and passed it into law.

Take another extraordinary example: the major expansion of public employee benefits in 1999 and 2001. The Service Employees International Union, California Correctional Peace Officers Association, and the California Teachers Association all strongly backed the election of Democrat Gray Davis in 1998. Davis came into office with solid Democratic majorities in both the state senate and assembly. Davis then signed Senate Bill 400, which increased state workers’ retirement benefits by lowering the retirement age, re-jiggering the benefit formula, or both. The bill also granted a 6 percent boost in benefits to those who had already retired and increased survivor benefits. The state’s retirement fund, CalPERS, where the unions exercise some influence, claimed that: “[N]o increase over current employer contributions is needed for these benefit improvements” (David Crane, “Taxpayers covering Legislature’s bad bet,” San Francisco Chronicle, June 19, 2012). In the wake of this change, however, the pension fund earned far lower returns than were projected, forcing the state (i.e. taxpayers) to contribute some $27 billion to make up the difference.

In sum, the Democratic Party handily controls all of California’s electoral institutions. And the biggest contributors to that party in terms of direct donations, independent expenditures, and campaign foot-soldiers are public employee unions. The unions’ influence in the legislature combined with their record of success in the Golden State’s direct democracy process makes for a powerful one-two punch. The results have pushed the state’s finances to the edge of a cliff.

About the Author: Daniel DiSalvo is a senior fellow at the Manhattan Institute’s Center for State and Local Leadership and an assistant professor of political science at The City College of New York. He received his doctorate in politics from the University of Virginia, and is the author of Engines of Change: Party Faction in American politics, 1868-2010 (Oxford). His work focuses on American political parties, elections, labor unions, state government, and public policy. He has written on these topics for both scholarly and popular publications, including National Affairs, The Public Interest, The Weekly Standard, Commentary, the New York Daily News, the New York Post, The Forum: A Journal of Applied Research in Contemporary Politics, The Tocqueville Review, Congress & the Presidency, and The Journal of Policy History. These excerpts are republished with permission from the author, and the full report can be downloaded here “THE NAYS HAVE IT: When Public Sector Unions Win in California.”