June 9, 2009

The importance of union transparency

This is why union transparency is so important:

Teachers in the Hoosier State recently learned that the Indiana State Teachers Association’s (ISTA’s) Insurance Trust has effectively gone bankrupt. Regulators revealed that the trust, which pays benefits for disabled teachers, owes $86 million in liabilities and has only $19 million in assets. The FBI has begun investigating.

Much of the portfolio’s value apparently vanished in high-risk investments. The investment broker managing the trust made 4,000 trades over a nine-month period, perhaps motivated by the 50 percent hike in commissions on trades that ISTA’s executive director, Warren Williams, authorized. (Emphasis mine)

At the heart of union transparency is the ability for union members to know how their dues are being spent.

Unfortunately, the enforcement of union disclosure and transparency rules has been lax. In the 50 years since the passing of the Labor Management Reporting and Disclosure Act officials in charge of monitoring unions have allowed the "list[ing of] multimillion-dollar line items for 'other' and 'miscellaneous' expenses with no further details."

Despite former Secretary of Labor Elaine Chao's serious progress in making unions more open, those gains are about to be wiped out under the Obama administration. The Obama administration is scrapping comprehensive union transparency (such as the new, more detailed LM-30 forms) at the behest of national labor unions.

Those represented by unions should take note of what can happen when their representatives are secretive and dishonest about their operations.