Labor belabored: MEA losing members, losing fights. Will it lose its grip?

Michigan’s largest teachers union is struggling to keep a toehold as change-minded foes with growing momentum seek to topple the MEA -- one of the state’s traditional political giants.

The 152,000-member union’s finances are deteriorating. Its growth strategy is uncertain. And it faces an unrelenting political offensive by opponents who see the MEA’s position and worldview as hindrances to Michigan’s future.

“That is the unfortunate reality of the moment,” said John Austin, the Democratic president of the State Board of Education. “There’s a political ideology out there that says everything would be better if the traditional delivery agents of education were diminished.”

Such traditions are coming into conflict with parent and citizen expectations, however. Statewide polls in 2012 found more than half (59 percent) gave Michigan public schools a “C” or worse for their work; only 7 percent judged them with an “A.”

The MEA’s largely Republican foes point to lagging student achievement, decades of unchecked decline in urban schools and the union’s hearty support of Democratic Party fortunes as reasons to reconsider the MEA’s role – and to deliver unapologetic thumpings to teacher unions at every turn.

MORE COVERAGE: Long-simmering GOP-MEA war intensifies going into 2014

“If you look at it through a business lens, the MEA has had no real competition and has allowed themselves to be less responsive to their members,” said Ari Adler, spokesman for the House Republican Caucus. “With Right to Work, they are afraid of competition and they are afraid of being held accountable by their members.”

The outcome of this clash, which pits the MEA and the much-smaller Michigan arm of the American Federation of Teachers against powerful interests seeking to continue to zap the power of public sector unions could determine the direction of K-12 education policy in Michigan for years.

Among those forces are RTW advocates, including the Mackinac Center for Public Policy and Gov. Rick Snyder, who is promising a continued major overhaul of public education.

“We are the only one with the collective power to fight back,” counters MEA spokesman Doug Pratt said. “The MEA has been around for 160 years because people care about public education.”

MEA coffers large, but shrinking

No one is suggesting that the MEA, which last year took in $122 million in receipts and has nearly $65 million in assets, is about to go under.

But it faces serious challenges in the most hostile political climate toward the union in memory:

--The union is rapidly burning through cash to pay rising expenses and exploding staff retiree costs, which total more than $200 million — three times the union’s total assets.

--Membership has fallen nearly 7.5 percent over the past seven years (from 164,000 to 152,000) as school districts have laid off staffers in response to declining enrollment and tightening budgets.

--Michigan has fewer students to teach. From a recent high of 1.71 million in 2005, statewide enrollment is expected to dip to 1.53 million by next year. And, with changes in state policy, more of those remaining students are expected to attend largely non-unionized charter schools.

--The MEA is in the midst of an epic political losing streak. Its preferred gubernatorial candidate got waxed in 2010. Its favored political party has no power in the Legislature. And it spent millions of dollars supporting a failed ballot proposal in 2012 that would have enshrined collective bargaining rights in the constitution.

--Even its fabled lobbying power – backed by members in every legislative district in the state – failed to prevent passage of Right to Work last December.

MEA and AFT Michigan officials say they are responding to these threats by monitoring expenses, constantly communicating with their members on the value of union membership and positioning themselves as the defenders of Michigan’s long-establishment public education system.

Leaders of the two unions also say they’re working more closely than ever on political activities. Among other things, the unions are developing a strategy to overturn Right to Work, said AFT President David Hecker.

“There have long been obstacles in our way,” he said. “We’ve been able to overcome these things before and we’ll do it again.”

But of the two unions, the MEA has long been the 800-pound gorilla. And the gorilla is ailing.

MEA’s ironic burden: Exploding legacy costs and big cash burn

In the past seven years, the MEA has lost more than 12,000 members and seen its unfunded liabilities for pensions for its staffers balloon from $67.8 million to $129 million. (These are liabilities for internal union employee pensions. Classroom teachers and school personnel are covered by a separate statewide pension system.)

In addition to the unfunded pension liability of $129 million, the union is on the hook for another $79.5 million in future retiree health care benefits.

Ironically, the MEA faces the same kinds of internal financial pressures on benefits with its own staff that it has encountered in negotiations with local school districts for years.

The union also is rapidly burning through cash to fund operations, according to financial reports it must file with the U.S. Department of Labor.

It ended last year with $30.6 million in cash, $12.2 million less than it had on hand at the beginning of the year. However, that was the first time in a decade that its cash reserve had shrunk.

Pratt attributed the cash burn to funding obligations for retiree benefits, the cost of maintaining programs, spending on last year’s collective bargaining ballot proposals and declining revenues.

Dues revenue fell nearly $1 million, from $62.8 million in 2011 to $61.9 million last year. Dues revenue hasn’t been that low since 2003 when the MEA collected $50.4 million. The next largest receipt category --- “other” at $39.5 million – mainly reflects a payroll function for its subsidiaries, not actual revenue.

Those numbers paint a troubling picture of the MEA’s financial condition, one expert said.

“The trend here is definitely negative,” said Michael Boudreau, managing director of O’Keefe, a Bloomfield Hills-based company that provides financial turnaround services for corporate and public sector clients.

“Its retirement plans are underfunded; it’s burning through cash; and there’s a risk they’ll lose membership (under RTW), which will exacerbate the situation,” he explained.

Boudreau, who reviewed MEA financial statements at Bridge’s request, doesn’t think the union’s compensation and administrative costs were out of line for an organization of its kind. But he said payment of the union’s benefit costs were an unsustainable 26 percent of total expenses last year.

“That number jumps off the page,” he said. “It’s definitely cause for concern.”

MEA Executive Director Gretchen Dziadosz said the unfunded liability for retiree benefits of the union’s 250 active employees and almost 800 staff retirees is “obviously a big number and a concern.” But she expects the liabilities to decrease over time.

MEA President Steve Cook explained the union is getting some relief on pension funding through a 2012 federal law that gives employer-provided defined benefit plans more time to address funding shortfalls.

Last year, the MEA assessed members as much as $67.40 a person, depending on salary level, to help fund its pension plan. That fee – above the standard annual dues -- has been reduced to a maximum $50 this year because of the new law.

But the MEA’s 1,000-member Representative Assembly voted just last month to boost dues by $5 to $640 a member.

The union, like the school districts it negotiates with, has cut staffing, too. Its current work force of 250 is down 31 percent from the 362-employee force from 2001.

“We always look at the budget,” Dziadosz said. “We’re always re-evaluating as we bargain collectively with our staff.”

Still, Boudreau said the MEA’s huge and growing liability likely will force the union to reduce retiree health benefits and change its pension from a traditional defined benefit plan to a 401(k) type plan, at least for new employees.

“It’s a new world out there,” he said. “The public sector is slow to adopt these measures.”

MORE COVERAGE: As Right to Work takes root, MEA faces rough lessons from Wisconsin

AFT Michigan is in relatively better financial shape. Its membership has been hovering around 25,000 for most of the past decade and it reported no retiree health care liability for its approximately 50 employees in its 2011 annual report, the latest on file at the Labor Department.

Hecker said most of the union’s employees once worked for local school districts and are eligible for retirement benefits through them.

Dziadosz, who assumed the MEA executive director role in 2012, is described by some who know her as a savvy, hard-working insider.

“She’s solid,” said Tom White, the retired executive director of the Michigan School Business Officials. “She’s a moderating influence at the MEA.”

Observer sees big losses ahead for MEA

Prior to accepting the union’s top management job, Dziadosz had served at MEA for more than 25 years, working her way up to director of its “UniServ” staff.

UniServ staffers are the heart of the MEA’s operation. They aid local MEA units in contract negotiations, filing grievances, dealing with teacher tenure issues, helping to develop school improvement plans and other issues.

“At one time, there was a bit of seasonality to bargaining, but those days are long past,” explained Dziadosz. “In essence, (UniServ staffers) are the local face of the MEA to our members and are charged with assisting local associations and members with whatever their professional needs may be.”

About two-thirds of the MEA’s staff work as UniServ directors and field assistants from 40 field offices scattered across the state.

MORE COVERAGE: MEA faces breakaways, poaching of locals

The operation has long been considered a major strength of the MEA. But in recent years, some local units have complained that the service has become too costly and isn’t serving them well.

Among those are teachers in Roscommon Area Schools, which dropped out of the MEA last year and formed their own independent union.

“They were never involved in any significant way in helping us negotiate contracts,” said Jim Perialas, president of the new Roscommon Teachers Association.

“I think (the MEA) is likely to lose a lot of members,” White said.

White, who now works as a labor negotiator for school boards, said the MEA is particularly vulnerable to losing lower-paid school staff support members who have taken concessions in recent years and may want to save money by not paying dues.

AFT Michigan is less vulnerable, he said, because its dues are about a third as much as the MEA’s dues.

MEA’s Cook said it could be years before the group feels the full effect of RTW because “hundreds” of union locals signed long-term labor contracts before the law took effect in late March. (Union members are not allowed to stop paying dues or agency fees until contracts negotiated before the law took effect expire.)

“We’re not seeing that groundswell of noise in the system that says we’re leaving,” he said.

MEA’s survival strategy?

While MEA’s short-term strategy to deal with Right to Work became quickly evident this year, how the union handles long-term demographic and political shifts is much less clear.

MEA and AFT Michigan are not considering a merger, but are working more closely than ever on public education advocacy, AFT’s Hecker said.

And the AFT has been aggressive in trying to organize charter schools in Michigan and other states. In February, 140 teachers at the Cesar Chavez Academy in Detroit voted to join AFT Michigan.

But Chavez is just the second charter in the state to be organized by AFT Michigan.

Pratt of the MEA said his union has organized fewer than a dozen charters -- and none in recent years.

“It's hard to organize charters because their staff turnover is so high,” he said. “By the time you get a critical mass together, many move on or are let go.”

MEA and AFT officials say the key to their sustainability will be in providing excellent service to their members.

“In a Right-to-Work world, it’s all about communicating with our members,” Pratt said. “We’ve been doing this for many years now — talking about the advantages of being members and the value of public education in general.”

White, the school board labor negotiator, said he hopes the MEA, in particular, can overcome its serious financial challenges.

“As a management guy, I’m not reveling in this,” he said. “They’re a balancing force and a powerful advocate for public education. I wish them well in how they sort this out.”

Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.

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Tue, 05/07/2013 - 9:10am
With statements like "they are afraid to be held accountable by their members" and "The MEA has been around for 160 years because people care about public education", one has to wonder why even have this union. For the first time in a long time the State has a balanced budget, and most things seem to be going in the right direction. Let's let new laws like RTW play out and see if we'll be better off. I believe so.
Chuck Jordan
Tue, 05/07/2013 - 10:08am
This is all very sad. Since unions have gone down and republican ideology has risen, more people are working part time, wages have stagnated, and a few very rich have gotten richer. Not to say the teachers unions are not partly to blame, but the overall picture is dismal. I would not advise anyone to go into teaching today.
Tue, 05/07/2013 - 10:27am
Chuck, what professions exactly would you advise young people to go in? I've worked in the corporate private sector all my life for more years than I care to mention. Trust me, my friend, belts have tightened everywhere and people work harder and longer for less money in all walks of life. If teaching is your passion, you should certainly pursue it, regardless of unions, wages, etc. If one were only considering the teaching profession because of the ridiculous union benefits and paid time off which none of the rest of us have, then I agree, go another route. The last thing we need is a bunch of young whining teachers who don't really want to teach but really just want a secure government job with lifetime benefits. If that's what you want, go into politics.
Thu, 05/09/2013 - 12:26am
Michigan colleges are still pumping out more education degreed graduates than the state needs. Grads are still leaving Michigan to find teaching jobs. Michigan taxpayers continue to subsidize this. Why do so many young people go into this field? I contend a major reason for many IS the lucrative pension, as well as 2 and a half months off in the summer and 4 weeks during the school year. And people know they have a job for life even if they are a mediocre performer. Thankfully it is rare to find mediocrity rewarded in the non-union private sector, or the country would be worse off than it is already.
Cynthia Andrews
Sun, 05/12/2013 - 10:01pm
I would disagree with your comments, sir. As a teacher, I do not have a lucrative pension. I have a 401K that has not made any money and lost more than I can state. I do not have two and a half months off during the summer. I use this time to take graduate classes so as not to interfere with my teaching during the school year. The state requires that teachers take certain classes and continuing education classes to maintain their certification. If we lose our certification, we lose our jobs. Please note that I said I am required to take graduate classes. These are very costly. A three credit hour class can cost upwards of $1,500.00, not including books. I have not had more than a 2% raise in the last three years and am paid for my nine years of service less that 35K a year. However, college tuition rises from 7-12% each year. You may consider that I am a mediocre teacher to be paid so little. Perhaps. Some of my accomplishments include three teaching fellowships within the last five years. I also have a student loan that I am paying off and have a family. This is not a living wage for the level of education that is expected of hard working individuals. Even with great evaluations, student test scores, and seniority, teachers are losing their jobs, despite all of the hard work that they are accomplishing. I never expected to live a cushy lifestyle or to even try to be a mediocre teacher, when I entered this profession. But I certainly didn't believe that I would be rewarded by being beat-up by my fellow neighbors, or to have to live in poverty. I went into teaching because I wanted to give back to a profession that gave me so much, including wonderful teachers who opened up the world to me. I am saddened by your comments and lack of understanding about this wonderful, caring profession. I can only hope that you will gain some more knowledge of this situation and perhaps some compassion.
Tue, 05/07/2013 - 2:16pm
As the article states repeatedly, and accurately, the MEA is plagued by the same retiree benefits dilemma as the schools that have long employed them. The 26% that "jumps off the page" is In line with what the local school districts pay as well. The MEA is caught In the jet wash of the financial death spiral the schools have long been in. MPSERS reform was long needed, and fought tooth and nail by the MEA at every turn. Now it's truly the MEA's problem too, both directly and indirectly.
Tue, 05/07/2013 - 6:20pm
The world, economic and social, has been changing and will change faster and faster. Whether it is the MEA or other unoins they need to figure out how to not only change with it but to make change part of their culture. The purpose for unions has revolve around to principles; represent their members and to protect the poorest performing member. Economy and society have move to one about performance and accountabity. Those currently are creating a conflict that the MEA and unions in general are fighting rather then trying to lead. The old saying 'you're either part of the problem or part of the solution.' As long as the MEA is in a confrontation mode/doing head on battles (much of how they had past success) they will be treated as part of the problem, will be seen a a barrier to change that must be overcome, and with that they will continue to loss both influence and members. As apporant as it is to the unions they need to look at the companies that have survive the current fiscal/economic upheavals to learn how they have done that. They have changed, they have turn to look at issues through their customers eyes and recognize what is expected by those customers and change to fulfill those expectations. What do the parents want, what do the kids need, how can the schools provide that, how do communities measure success of the schools, these are what should be addressed so the schools/employers can stabilize themselves and their workforce.
Wed, 05/08/2013 - 8:59pm
Good comments here. The teachers unions and all public unions for that matter need to realize that the taxpayers are not a bottomless pit of money that they can keep extorting from. It's one thing to barter against a corporation that is limited by the market as to what they can charge for their product and what they can pay their employees and it's another for these public employees to barter with the very same people that they financially supported to get into office.
jean kozek
Sun, 05/12/2013 - 11:19am
From the above comments there seems to be some misunderstanding about teachers' pay and benefits. Teachers' wages are figured on a per hour basis of time spent in the classroom. Teachers with more experience and advanced degrees earn more per hour. When schools break for vacations, teachers do not receive paid vacation time. While teachers are paid per hour with students, time spent before and after school preparing lesson plans, grading papers, updating record books, attending workshops, meeting with parents, etc. are not considered in the per hour formula. School districts, however, understand that these activities are actually part of the school day. There have been times is the last few decades when instead of getting cost of living wage increases, teachers were promised that they'd receive a pension when they retired. So, like private sector workers, teachers' wages became stagnant. In the meantime state laws were written that directed teachers to continue to take additional college courses to improve their knowledge of course content and teaching strategies. These requirements benefit the quality of education provided to public school children, but they also affect teacher take home pay since colleges yearly raise tuition costs; in addition, often it is during summer recess when teachers have the time to attend these courses. Again, people knowledgeable about the teaching profession understand why the school calendar is unlike that of other professions. Teachers' unions are the lobbyists for the teaching profession. They inform politicians of the concerns teachers have about students' performance and needs. Teachers support Head Start and other such pre-school programs because there are large numbers of children who come to school unprepared to learn and whose education is not necessarily supported by their families. Irregular school attendance affects student learning. Parents who don't make sure their children complete assigned work are parents who negatively impact their children's chances of success. Teacher Unions can also provide information to elected officials about the value of state and national tests. Teachers value tests that provide feedback on the progress of student learning so they know how better to use class time. Some tests, however, are designed for other purposes. For example, they may be tests written by a particular textbook company that wants to influence the choice of textbooks bought for the classrooms. Teachers may not choose such texts for a variety of reasons, yet a business could coerce teachers to buy them so that students test scores don't decline. Yes, politics can affect student learning and the teacher unions need to be available to inform politicians of such corporate maneuvering. There are private corporations that are disinterested in student learning but are eager to profit from public tax dollars so they lobby politicians to write laws to publicly finance on-line learning and private charter schools. Since there is no independent oversight as to the quality and success of these private venues, teacher unions urge politicians to not readily accept corporate declarations without insisting that the same tests be taken and the scores publicly provided that public schools adhere to. If the Right to Work law weakens the teaching profession so that teachers have no voice with elected officials, then only the voice of corporations will be heard.
Ron Modreski
Mon, 05/13/2013 - 2:30pm
These coments and the article read very similar to discussions the union members in the auto industry, union workers in cities like Detroit and Philadelphia have had for the last 20-30 years. The model of the union to recruit new members, charge dues, promise great negotiations with salary increases every year, power to get what they want with threats of strikes, promise early retirement benefits forever, and blame everyone else but their own leadership when the real world can't finance that model anymore is very familiar. Eventually the union pension promise for the teachers will collapse. Maybe they should do what the auto unions finally had to do, take over responsibility for all member pensions in the future. They could negotiate a one time lump sum and then develop a model of dues payments and investments for future teachers who choose to join the union. Another major time savings and cost savings would be to do away with the "requirement" for continuing education for public school teachers. It is no longer affordable for teachers (especially younger ones with large college loans to pay off). Also there is little real evidence (other than from the institutions that do the teacher training and they have an obvious bias) that it actually works and results in better teachers or better student learning.
Wed, 11/27/2013 - 1:13pm
Getting a good education is a proven approach to increase the economy and raise one's ability to move up in society. If you look at RTW states, you see that public education is weakened and poverty increases. This is now Michigan's future.