The union-dues story hit the state Capitol this week with a thud. Reactions might best be described as awkward. At issue was the discovery that a defunded state agency is still transferring money from home health care workers to a government employees union, in spite of the fact that the Legislature's defunding of the agency was intended to bring the practice to an end. In response to the revelation, most lawmakers seemed at a loss for words.

“I could comment, but frankly I'm not all that clear about what's going on,” one lawmaker told Capitol Confidential. “I guess I'd just as soon not say anything right now.”

“As far as the House is concerned, there hasn't been funding for this since Oct. 1,” said Rep. Chuck Moss, R-Birmingham. “If these allegations are true, someone doesn't want to achieve the same ends that we do. Anytime someone has said anything about continuing this, our answer has been, 'Not interested.' ”

Rep. Paul Opsommer, R-DeWitt, is the sponsor of Michigan House Bill 4003, legislation designed to prohibit the so-called “forced unionization” of private contractors whose receipt of payments from state government opened the gates to the contentious "dues deductions" to a government employee union to begin with. Rep. Opsommer's bill was passed by the House on June 18, with a 63-46 vote, but it has been stalled in the Senate Committee on Reforms, Restructuring and Reinventing ever since.

“I'd just say that I'm disappointed,” Rep. Opsommer said upon hearing that the dues collection had not ended. “No one who is not a member of a union should be getting union dues taken out of their checks. These are not public employees.”

Last week, Capitol Confidential reported that the Service Employees International Union is still receiving "dues" deducted from the checks of the state's home health care workers. It had been assumed that when the Michigan Legislature cut off funding to the Michigan Quality Community Care Council, known as the "MQC3," on Oct.1, the dues deductions would stop. Yet according to the Michigan Department of Community Health, the dues are still being deducted.

Based on emails obtained by the Mackinac Center for Public Policy through the Freedom of Information Act, lawmakers, particularly Senate Appropriations Chair Roger Kahn, R-Saginaw, have been pressing behind the scenes to keep the MQC3 going. The agency's continued operation has kept the dues flowing to the SEIU.

Judy Hendrixson, a home health care worker in Roscommon, said she was amazed that the SEIU dues are still being taken out of her checks.

“This never should have happened in the first place,” Hendrixson said, referring to the forced unionization. “And now that it (the MQC3) is supposed to be gone, there's no way they should still be taking dues out of our checks.”

Hendrixson, a former SEIU union representative, said she can't figure out how the union is getting away with the continued dues collections.

“These are Medicaid funds that are ending up being transferred to a union,” Hendrixson said. “I'm an independent contractor. It's fraudulent and illegal. You're talking about a large number of people who live and work from the southern border to the U.P. We have no common meeting place or means of communicating with each other. Who is my union steward?”

At least two dubious devices were utilized in the “forced unionization.” First, under the auspices of the administration of former Gov. Jennifer Granholm, the MQC3 was created to play the role of "employer" over the workers. Many argue that allowing the MQC3 to assume this role in collective bargaining with a government employee union was illegal.

Next, SEIU took advantage of the fact that Michigan has no law requiring public notice of elections to decide whether workers will join government employee unions. In the private sector, union certification elections elections traditionally take place in factories or other single sites. Typically, workers at these sites already know when such elections will take place, having received official notice privately, and having learned of the election from co-workers.

But the “forced unionization” election in the case of the home health care workers involved independent contractors working in homes across the state, rather than employees located at one or two central buildings.

The Michigan Bureau of Employment Relations is responsible for coordinating labor elections. Its stated mission is to settle disagreements between employees and their employers. But in the “forced unionization,” most of the alleged employees apparently didn't even know MQC3 was acting as their employer.

According to the MBER, it sent out ballots to 43,000 home health care workers statewide in November 2006. Because there was no public notice requirement, no radio, TV, newspaper or online news service was aware that the election was taking place.

How many of the home health care workers knew what was going on? How many tossed the ballot envelopes away believing the ballots had nothing whatsoever to do with them?

According to the MBER, the election results were 6,949 "yes," 1,007 "no" and 589 spoiled. The 8,545 who participated in the election represented about 20 percent of the ballots that were sent out. On the basis of this election, the SEIU started receiving $6 million a year through dues deducted from the state checks sent to home health care workers.

Hasan Zahdeh, a cardiovascular interventional technologist at the Mercy Health Partners Hackley Campus in Muskegon, said he was “amazed” when he heard about the current pressure to keep the MQC3 alive.

“Here's a Republican lawmaker doing this? How can he justify it?” Zahdeh asked, in reference to Sen. Kahn. “I thought lawmakers take an oath of office to uphold the constitution.”

“If the MQC3 has been defunded, the only way it can continue to exist is by stealing,” Zahdeh continued. “How else can it continue to pay for staff and other costs? If they're still taking dues out of health care workers' paychecks, it's illegal." 

Kahn's office was contacted in reference to this article. No comment was offered.

Michigan was not the only state in which “forced unionization” has taken place. In Illinois, it happened under now disgraced former Gov. Rod Blagojevich. The SEIU figured largely in the criminal complaint against Blagojevich.

A “forced unionization” of Michigan's home-based day care workers also took place under former Gov. Granholm. The unions involved in that case were the American Federation of State, County and Municipal Employees and the United Auto Workers.

Documents pertaining to that “forced unionization” from the federal lawsuit filed by the National Right to Work Legal Defense Foundation can be viewed by clicking here.

Other links of interest regarding this topic are here.

In addition to biweekly paychecks, Michigan state employees receive something few others in the workforce enjoy: a claim on future taxpayers for even more. Specifically, the cost of taxpayer-funded health care benefits after retirement. This should stop and could now that House Bill 4701 has passed the House.

The claim is on future taxpayers because legislators and governors have refused to pre-fund retiree health care benefits in advance, as they do for regular pension benefits. So every payday, the state digs a little deeper hole for taxpayers, piling up these politicians’ promises to pay post-retirement benefits, regardless of how much those future health benefits will eventually cost.

Yet these remain mere “politicians’ promises” because the state has no legal obligation to actually pay — policymakers can adjust benefits any way they’d like.

State employees apparently believe that they and all future employees are entitled to these costly benefits. In testimony before the House Appropriations committees, they and their representatives argued that benefits as they exist now are part of a contract of employment guaranteed to them for life and for all future workers. They believe this despite Supreme Court rulings to the contrary and despite having no contract document or even verbal promise guaranteeing this benefit. The only “contract” is a state statute that is amended frequently, including last year.

The cost of this benefit has already become an excessive burden. This year taxpayers will pay $387 million to provide health coverage to thousands of former government workers. That’s more than double the $166 million paid out annually a decade ago. The cost increases show no signs of abating.

Few if any current workers in the private sector get similar benefits. A Center analysis  of these retirement benefits offered by 24 major private-sector employers in Michigan found that only three offered any sort of employer-subsidized retiree health coverage.

With the reform now under discussion, taxpayers would continue to pay for retiree health care costs of current employees and retirees, but in a way that caps future taxpayer costs. It accomplishes this by providing new employees a bump in their retirement matching plans and offering small health retirement accounts to be paid upon retirement. Under the reform, the state would remain one of the rare employers in Michigan that offer employees some subsidization of their retiree health care costs.

The bills also call for massive cash transfusions from current taxpayers to begin funding the unfunded benefits being paid to retirees. Prefunding benefits at current rates will cost more than $700 million a year — roughly $400 million than the pay-as-you-go amount last year. The state would be responsible for paying this for the next 26 years and those payments are dependent on the volatile health insurance market.

Employees could choose to either remain in the old system or switch over to a new defined-contribution retiree health benefit system. Those who switch would be paid a lump sum amount of cash based on a current estimate of what their future benefits are worth. Afterwards, they would have to contribute 4 percent to remain in the state’s pension plan.

Current participants in the state’s defined-contribution plan — around half of the state’s workforce — have the option to trade their retiree health care benefits for cash based on the benefit’s expected value as well.

Overall, the bill calls for major cash contributions from taxpayers, while current employees are largely protected from concessions.

Indeed, current employees and retirees are too protected. Even with 4 percent contributions, taxpayers would pick up the rest of their costs — the other 47 percent. There is a small change that will prevent employees from using overtime pay to calculate their final average compensation — an appropriate improvement to keep pensions more predictable and directly-related to salary — but other concessions should be explored, too.

This can be lowered with caps on contributions and payments, especially for members who retired prior to Medicare eligibility. Requiring greater contributions from employees for catching up on the benefits of other state employees should be explored as well. The reforms to benefits will lower the cash needed to prefund the benefits, making the bill fairer to taxpayers being required to support this prefunding.

Still, the proposed bill would eventually eliminate an open-ended and expensive claim against future taxpayers. It’s an important step to bringing benefits in balance and cutting down Lansing’s ability to make claims on future taxpayers. Right now, the cost is largely left to current taxpayers to bridge the funding gap and legislators should consider sharing that burden with the people receiving benefits.

#####

James Hohman is assistant director of fiscal policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in pat is hereby granted, provided that the author and the center are properly cited.