MEA Charging Members Extra To Cover Retirement Liabilities For Union's Employees

While MEA fights changing state pension system, union has trouble with its own underfunding

By Tom Gantert | October 24, 2013

Faced with $208 million in retirement liabilities for its own employees, the Michigan Education Association is charging its members an extra $50 a year for three years to help cover those costs, according to teachers who are familiar with the fees.

The MEA is in the red for $159.3 million as of Aug. 31, 2012, due to $224 million in liabilities with a big chunk of that from its projected retirement costs. It has a defined benefit pension plan for its employees.

The MEA didn't immediately respond to a request for comment.

The MEA has 117,000 active members and if they are all being charged the $50 a year for three years, it would generate a total of about $17.5 million.

The MEA's retirement liabilities for its employees increased by nearly $45 million from $163.8 million in 2011 to $208 million in 2012, according to the LM-2 reports the union filed with the U.S. Department of Labor. The retirement pension liability was $129 million and the retirement health liabilities were $79.4 million in 2012.

Michigan's pension system for teachers is $22.4 billion underfunded. State employees and most private sector workers have been shifted to defined contribution, 401(k)-type accounts. The MEA has long fought against closing the state's defined benefit plan for employees; first defeating an attempt in the late 1990s (when new state employees were shifted) and again last year.

Teachers who commented for this story are not being identified because they are worried the union might retaliate against them. One MEA local has printed in a newsletter the names of employees who opted out of the union. And MEA President Steve Cook has referred to people who exercise their right to leave the union as "free loaders."

One teacher said some teachers may think the $50 charge is new because changes in recent state laws allow teachers to see a breakdown of their dues. Teachers may just be noticing the "temporary dues" charge of $50 now that it is specifically identified. It is unclear if the $50 payment is in its first or second year. The "temporary dues" could be extended if there was a vote to continue it, according to one of the teachers.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

Unions are the Freeloaders

Forced dues spent on politics, benefits for union staff

By Jarrett Skorup | October 23, 2013

While there have been many positive responses to the stories of the teachers from across the state fighting to get out of the Michigan Education Association, there also are naysayers.

And a common complaint about the educators who want out of the union is wrong.

The side that supports forcing people to financially support a union to keep their jobs has a standard response: Those teachers are freeloaders — receiving union benefits while not wanting to pay for it.

There are several problems with this stance, but here's the biggest: The MEA, like many unions, spends very little money on bargaining for its members.

According to the MEA's most recent LM-2 filing, which details the union's finances, the MEA spends only 11 percent of its dues on "representational activities." In the past six years, only 12.8 percent was spent in that category.

So where does that money go? It goes to the salaries and benefits of the union's staff.

While only $4.8 million of MEA spending went directly to politics as "political activity and lobbying," the union spent $50.1 million on "general overhead," $24.2 million on benefits, and $6.5 million on union administration. That's more than 60 percent of the nearly $134 million spent by the MEA in the 2011-12 fiscal year.

And $4.8 million is not all the union spent on politics. Disclosure rules make it difficult to find out more specifically what the union spends its money on. But the fees sent to the MEA from public employees is being used to pay for a variety of things including union administrators spending time on politics, communications persuading people to vote a certain way, rallies and get-out-the-vote drives, union employees writing articles on political issues, convention costs and food for workers taking part in "sickouts," among other things. Most people would consider those activities to be political. So why should employees be forced to pay for them?

Because of federal laws, fought for by the unions, employees in union shops are not allowed to represent themselves. For decades, unions have argued in court that they should be allowed to solely represent all employees, as well as use dues money for all activities — including politics.

Because of shifting public opinion, it is not surprising that the associations are now changing their tune. But bear in mind: Teachers exercising right-to-work are not freeloaders — they are forced riders.