ANDY STERN'S DEBTS: UNION LEADER SWIMS AWAY WHILE HIS ORGANIZATION SINKS
April 26, 2010
Purple may be the official color of the Service Employees International Union (SEIU), but Andy Stern is leaving the union deep in the red. Last week, he surprised the labor community by announcing his resignation as president of Service Employees International Union (SEIU). Stern has claimed victories in helping pass health care legislation and getting President Obama elected, but his impact within his own organization shows gaping budget deficits and massive underfunding of pensions, says F. Vincent Vernuccio, an adjunct analyst at the Competitive Enterprise Institute.
SEIU has seen its liabilities skyrocket during the past decade, says Vernuccio:
- The union's liabilities totaled $7,625,832 in 2000.
- By 2009, they had increased almost by a factor of 16, to $120,893,259.
- Meanwhile, SEIU's assets barely tripled, growing from $66,632,631 in 2000 to $187,664,763 in 2009.
- A significant portion of SEIU's current assets are from IOUs from hard-up locals.
SEIU is $85 million in debt, down from its 2008 high of $102 million, and has been forced to lay off employees. Stern has led protests against Bank of America, calling for the firing of Chief Executive Ken Lewis. Yet the union owes $80 million to Bank of America and $5 million to Amalgamated Bank, which is owned by the rival union Unite.
SEIU's pensions are in even worse shape, says Vernuccio:
- Both of SEIU's two national pension plans, the SEIU National Industry Pension Fund and the Pension Plan for Employees of the SEIU, issued critical-status letters last year.
- The Pension Protection Act requires any pension fund that is funded below 65 percent of what it needs to pay its obligations to inform its beneficiaries of the deficit.
Many SEIU local pension plans are in as bad a shape as the national plans -- if not worse, says Vernuccio. In 2007, well before the financial meltdown:
- The SEIU Local 32BJ Building Maintenance Contractors Association Pension Plan was funded at an anemic 41 percent.
- The SEIU 1199 Greater New York Pension Fund at 58 percent.
- The 32BJ District Building Operators Pension Trust Fund at 56 percent.
- The Service Employees 32BJ North Pension Fund at 68 percent.
Source: F. Vincent Vernuccio, "Andy Stern's debts: SEIU leader swims away while his organization sinks," Washington Times, April 23, 2010.
Browse more articles on Economic Issues