If any one state stands out in the race to the bottom of public employee pension insolvency, Illinois would be it. And GOP Governor Bruce Rauner is steeling himself to prevent a collapse. Rauner, a former private equity fund manager, was elected last November over Democratic incumbent Pat Quinn. He faces $111 billion in unfunded pension liabilities, or about $8,500 per resident. The years of greed, corruption and bad luck having taken a toll, the governor and his top fiscal policy adviser, Donna Arduin, have proposed tough measures to reverse course. So far, they haven’t won any friends among public-sector unions - or the Illinois Supreme Court, which on May 8 sided with the unions in invalidating reforms enacted in late 2013.
Jesse Morgan used to head a union that represented county jail employees. Now he’s set to become a federal prison inmate. On May 11, Morgan, formerly president of American Federation of State, County and Municipal Employees (AFSCME) Local 1707 in Kansas City, Mo., was sentenced in U.S. District Court for the Western District of Missouri to 21 months in prison for defrauding the union, which represents employees of the Jackson County Detention Center. He had pleaded guilty in October 2014 after being indicted that February. The actions follow a probe by the U.S. Labor Department’s Office of Labor-Management Standards.
Leonard Bridge II found a variety of ways to rip off his union. But during the next year he’s not likely to find much of a variety in anything. On May 4, Bridge, former business manager for International Union of Elevator Constructors Local 131, was sentenced in U.S. District Court for the District of New Mexico to 12 months in prison, to be followed by three years of supervised release, for embezzling more than $140,000 from the Albuquerque union. He had been indicted in February 2014, and pleaded guilty to one of 20 counts in September following an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.
The current leadership of Communications Workers of America Local 84555 might not be stealing funds, but they are inviting suspicion all the same, especially from the U.S. Department of Labor. On April 28, the DOL filed a complaint in Detroit federal court against the Durand, Mich.-based union, claiming it has been repeatedly and excessively late in filing required annual financial statements to its Office of Labor-Management Standards. The fiscal year 2014 report, for example, was due last June 29 yet has not been sent. The nearly 200-member local has not issued a response.
Two and a half years ago, the International Longshoremen's Association was digging in for a strike that could have crippled shipping along the Atlantic and Gulf Coasts. The strike didn't happen. Yet the union power that led to the impasse remains. The Manhattan Institute has some ideas about how to avert future such showdowns. Last month it published a paper, “Held Hostage: U.S. Ports, Labor Unrest, and the Threat to National Commerce,” arguing that strikes and slowdowns, or the threat of them, impose high costs. Written by Institute Senior Fellow Diana Furchtgott-Roth, the report cites federal labor law as the main culprit, concluding Congress should shift responsibility for collective bargaining oversight from the National Labor Relations Board to the National Mediation Board.
On April 24, Henry Shuler, former secretary-treasurer of United Transportation Union Local 1892, pleaded guilty in U.S. District Court for the Southern District of Texas to one count of embezzling $40,118 in funds over a six-year period from the Houston-based union. Prosecutors had charged that Shuler, now 65, a resident of Houston, wrote union checks for purchases from Sam’s Club and masked other funds as “dues” repayments to nonexistent local members. He had been charged in February following an internal audit and a subsequent investigation by the U.S. Labor Department’s Office of Labor-Management Standards. He is set for sentencing in July.
On March 30, Assane Faye, founder and president of the United Security & Police Officers Association (USPOA), was indicted in U.S. District Court for the District of New Jersey on two counts of embezzlement of union funds and seven counts of unemployment fraud. Prosecutors say that Mr. Faye, an ethnic Senegalese, since 2010 stole more than $300,000 from the Washington, D.C.-based union. The indictment follows a joint probe by the U.S. Labor Department’s Office of Labor-Management Standards and the Office of Inspector General.
When it comes to living large, no union is quite the match for the International Brotherhood of Boilermakers. And the IBB appears to be setting an example for its local affiliates. Late last month, KDKA, the CBS television affiliate for the Pittsburgh area, confirmed that the FBI has launched an investigation of the Pittsburgh-based Boilermakers Local 154. The union, which represents more than 2,000 welders, pipefitters and other construction workers, may have diverted as much as $1 million in member dues for unauthorized expenditures during the three most recent fiscal years. The probe is based on financial reports submitted to the U.S. Labor Department’s Office of Labor-Management Standards.
Carolyn Hall took around a year and a half to have the law of averages catch up. On or about April 24, Hall, former bookkeeper for Laborers International Union of North America Local 1197, was charged in U.S. District Court for the Southern District of Illinois with embezzling $26,491 in cash receipts from the union, which represents construction and other workers in southern counties of the state. Prosecutors allege Hall, 53, a resident of McLeansboro, Ill., during July 2012-February 2014 stole cash receipts from member dues and used the funds to cover personal expenses. The indictment follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.
In the construction industry, nothing exemplifies union monopoly, and its costs, quite like a Project Labor Agreement. A new proposal before Congress, the Government Neutrality in Contracting Act, would protect contractors from intrusion by organized labor upon contractual liberty. Sponsored by Rep. Mick Mulvaney, R-S.C., and Sen. David Vitter, R-La. (H.R. 1671, S. 71), the measure would bar the use of these agreements on federally-sponsored or subsidized public works. In promoting open competition in bidding, hiring and other aspects of project labor, it effectively would overturn President Obama’s Executive Order 13502. Issued in February 2009, that order “encouraged” federal agencies to require such pacts on a case-by-case basis on projects of $25 million or more.