House Cuts Funding for Union Oversight Agency

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Those who read this publication soon enough come across the acronym, “OLMS” – as in the Office of Labor-Management Standards.  It’s the agency within the U.S. Department of Labor that processes union financial disclosure forms, and where necessary, investigates irregularities.  It’s a relatively low-cost way to keep union bosses, employees and associates honest.  But the Democrat-controlled 110th Congress, not unexpectedly, is on the verge of clipping its wings.  Almost all union political spending – and lots of it – goes to Democratic candidates or party committees.  On Tuesday night, July 17, the House of Representatives voted 237-186 to reject an amendment sponsored by Rep. John Kline, R-Minn., to restore a cut in OLMS funding to the overall Labor, Health & Human Services, and Education fiscal 2008 appropriations bill (H.R. 3043).  The current OLMS budget is $47.8 million; the approved measure would reduce that sum to $45.7 million.  That might not seem much of a cut, but it should be put into context.

 

The Labor Department created the Office of Labor-Management Standards pursuant to the Labor-Management Reporting and Disclosure Act of 1959, also known as the Landrum-Griffin Act.  That legislation was the result of high-profile hearings headed by Sen. John McClellan, D-Ark., that revealed much of organized labor, particularly the Teamsters, to be under the thumb of organized crime.  OLMS is to unions what the Securities & Exchange Commission (SEC) is to publicly-traded corporations, an oversight agency designed to promote transparency and accountability.  OLMS is authorized to conduct civil and criminal investigations, and refer cases to the Justice Department.  It also enables union members to hold their leaders to account.  Given that DOL now requires annual reports to be submitted and made available for viewing online, transparency would seem to be more within reach than ever. 

 

But OLMS is an overworked agency.  At present, it has the resources to audit less than 5 percent of the 15,800 labor organizations required to file disclosure forms.  Yet lawmakers proceeded to reject the Kline amendment, which was a good deal more modest than the Bush administration’s planned OLMS budget of $56.9 million.  That the proposed nearly $3 trillion federal budget is in need of trimming ought not to be at issue.  Yet the House could have looked elsewhere.  When the Senate meets in September to take up the House-passed spending bills, it should restore OLMS funding.  There are several compelling reasons why.

 

First, the House singled out the Office of Labor-Management Standards for a spending cut out of all agencies within the Department of Labor.  The Labor portion of the spending bill raises total DOL spending by $935 million over its fiscal 2007 level of $46.7 billion.  Simple math says that OLMS accounts for a mere one-tenth of 1 percent of the departmental budget.  Other portion of the department would appear to be better candidates for the axe.  Indeed, President Bush reportedly plans to veto the Labor/HHS/Education appropriations bill because it would exceed the White House budget request by $11 billion, thus making substantial spending reductions a necessity.        

 

Second, as OLMS is analogous to the Securities & Exchange Commission, it is noteworthy that the recent House Financial Services appropriations bill increased SEC spending by $15.9 million over the current year.  Labor Secretary Elaine Chao charged that the House action with respect to OLMS would “impede effective enforcement of the law that protects union democracy and financial integrity for rank-and-file members.”  Put another way, if going after potential corporate thieves is a worthwhile endeavor, then so is going after potential union thieves. 

 

Third, OLMS is an agency that delivers tangible results.  Since fiscal 2001, its investigations have increased by 20 percent, and convictions are up 26 percent.  Courts have convicted more than 775 union officials, employees and associates of fraud, embezzlement and other crimes, and ordered more than $100 million in restitution payments.  These cases, brought forth with overwhelming evidence of wrongdoing, did not railroad people into a guilty plea or jury conviction.  Nor did they arbitrarily remove union officials from their posts.  With funding restored, the overworked OLMS could pursue more cases where lawbreaking likely has occurred.  During fiscal years 1985-95, the number of full-time employees at OLMS actually fell from 464 to 299 before rising to its present level of 351, still well below the peak.

 

Fourth, OLMS is fulfilling its legislative mandate of communicating information about union revenues and spending to members and the public at large.  During a recent 12-month period, the OLMS website (www.unionreports.gov) received nearly 800,000 hits, or more than 2,100 per day.  The mandate for transparency, more than anything else, is what keeps union officials fitfully on their toes.  OLMS reported that last year 93 percent of unions met their reporting requirements.  But even if all of the other 7 percent were not guilty of lawbreaking – highly unlikely – certain union spending patterns ought to be troubling.  Nearly 50 employees at AFL-CIO headquarters in Washington, D.C., for example, received compensation in excess of $130,000.  The National Education Association donated more than $65 million to political advocacy groups bearing no tangible relationship to the interests of school teachers or their students.  With total assets estimated at $22 billion in 2005, America’s labor leaders hardly can plead poverty or ignorance if some of their members ask inconvenient questions about where their money is going.  

 

Unions counter that Congress has been cutting Labor Department funds, but at the expense of unskilled and unemployed workers.  “The department has consistently fought increases in its core enforcement powers while increasing the budget for OLMS,” said Deborah Greenfield, associate general counsel to the AFL-CIO.  Greenfield said that the administration reduced the budget for DOL’s wage and hour division by 5 percent during fiscal years 2001-07.  She added that funding for the Workforce Investment Act, which houses DOL workforce-training programs, was cut by 21 percent over that period, while the department’s employment service was cut by 25 percent.  The department counters that funding for all labor enforcement agencies has increased over the last six years in current dollars.  “Specifically, the wage and hour budget has increased by 12 percent,” said a DOL spokesperson. 

 

Greenfield argues that corruption data are faulty.  “The statistics are cooked,” she says of figures for OLMS-generated convictions and restitution.  She notes that Labor Department counts different prosecutions within the same case as though they were different cases in order to inflate the appearance of corruption.  Yet regardless of how the numbers are tallied, the number of corrupt union officers and auxiliary personnel would remain the same.  And if unions these days are less tied to the criminal underworld, that’s a product of aggressive investigation, prosecution and monitoring.  The AFL-CIO, meanwhile, appears to have a numbers exaggeration problem of its own.  A few years ago, when the federation went to federal court to rescind the new DOL rule requiring a more detailed LM-2 financial reporting form (the form used by the largest unions), it claimed that compliance would cost all unions a combined “more than $1 billion,” and the AFL-CIO alone $1 million.  As it turned out, the AFL-CIO spent a mere $54,150 to comply with the form, the constitutionality of which was upheld in appeals court in May 2005.  

 

Given all this, the House of Representatives’ decision to reduce OLMS funding seems unjustified and even vindictive.  The Senate should correct the problem when it votes on Labor Department appropriations in September.  At least House Democrats know which side their bread is buttered.  During the 2006 election cycle, House Speaker-to-be Nancy Pelosi, D-Calif., collected $260,000 from unions that had contributed at least $10,000 to her re-election campaign.  House Appropriations Labor Subcommittee Chairman David Obey (Wisc.) received more than $100,000 in union donations.  And Education and Labor Committee Chairman George Miller (Calif.) reported getting $191,000.  All three key lawmakers supported cutting the OLMS budget.  Friendship is indeed a two-way street.  (Wall Street Journal, Opinion Journal, 7/17/07; New York Sun, 7/18/07; Washington Times, 7/18/07; The Hill, 7/19/07; other sources).