Unions & Labor Policy
Paycheck protection ends the use of public resources to collect government unions’ political money.
Under current law, state and local governments (including school districts) take both union dues—a portion of which is used for politics—and campaign contributions out of workers’ paycheck and send the funds directly to union leaders.
Paycheck protection will benefit union members, protect taxpayers, and has bipartisan support.
New union contracts will make state government more expensive, according to two analyses released by the Independent Fiscal Office (IFO).
The IFO projects contracts negotiated by the Wolf Administration with the state’s two largest unions—AFSCME and SEIU—will cost taxpayers an additional $507 million over three years.
Prior to this law, neither lawmakers nor the public knew the true cost of these contracts.
In the near term, the contracts will add to the state’s challenging fiscal predicament. The current budget is “balanced” by borrowing money and counting on unreliable revenue from harmful tax increases and other changes to state law.
Add to this the additional costs of the new contracts, which will require an estimated $61.4 million more in General Fund spending (plus another $100 million in other funds) in 2017-18, and Pennsylvania’s budget picture now looks even bleaker.
Note, in addition to the cost estimates calculated by the IFO, the Office of Administration estimates the savings due to higher employee health care contributions would be $4.7 million for SEIU and $13.6 million for AFSCME. The IFO says each of these is “a reasonable estimate.”
Currently, the wage base (not including benefits) of affected workers is $1.835 billion. The IFO represents the increase in costs, both salary and benefits, above this baseline resulting from the new contracts.
The IFO did not consider savings from administrative changes to the PA Employees Benefit Trust Fund (PEBTF), as these savings are irrespective of the union contracts.
The lack of legislative oversight over the collective bargaining process is a glaring problem. This is why Rep. Garth Everett is sponsoring HB 2289. The legislation, which passed the House State Government committee just yesterday, would give the General Assembly the authority to rescind state labor contracts negotiated by the governor.
The proposal would provide a much needed check on the governor, who has the power to negotiate contracts with campaign contributors behind closed doors.
David Smith and Donald Lambrecht were up against a powerful foe: Gov. Wolf and an executive order that granted a sweetheart deal to a union at their expense. In a huge win, the Commonwealth Court today issued a ruling invalidating Wolf’s executive order unionizing home care workers.
Shortly after he took office, Wolf handed down an executive order that would have let the Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME) unionize thousands of home health care workers in Pennsylvania—and take millions of dollars in union dues each year from their paychecks.
Most of these home health care workers are taking care of a family member or loved one. This order would have wreaked havoc on the relationships between recipients and providers—while padding union pockets.
We’ve shared the story before of Dave and his home care provider, Don. Homebound with muscular dystrophy, Dave has relied on Don for more than 25 years. Far beyond an employer-employee relationship, Dave and Don are like family. Wolf’s order would have forced Don to unionize against Dave, effectively stripping Dave of many of his rights as an employer.
With the help of the Fairness Center, Dave and Don challenged Wolf’s order in court. Today’s ruling, which is in a similar case challenging the same executive order, is a victory for Dave, Don, and thousands of other home care providers and recipients across the commonwealth.
Beyond the overreach of the order, the deal was particularly suspicious considering the cozy relationship between Wolf and the SEIU. As we noted in a previous blog:
Michael Brunelle, the former executive director of SEIU's PA State Council, is now special assistant to the governor and regularly collaborates with his former employer. Emails between Mr. Brunelle and union officials show the administration sharing news releases, talking points, and other documents before they are published.
…Most worrisome is the collusion over a controversial executive order.
SEIU officials helped draft an executive order that enabled SEIU and AFSCME (American Federation of State, County & Municipal Employees) to rapidly unionize tens of thousands of home health care workers—and deduct union dues from their paychecks. These dues can be spent on political activity and lobbying to push the governor's agenda.
What’s more, AFSME and SEIU were two of Governor Wolf’s largest campaign contributors during the 2014 election cycle.
Wolf’s executive order was a stealth attempt to help the unions collect millions of dollars. Now, we can add one more court-approved word to describe the order: illegal.
Last week, the Commonwealth Court ordered the Pennsylvania Labor Relations Board to investigate Mary Trometter's allegation that the Pennsylvania State Education Association (PSEA) used her union dues to support Tom Wolf's run for governor.
That's illegal in Pennsylvania, according to section 1701 of the Public Employee Relations Act, but it hasn't stopped government unions from pouring dues money into politics.
PSEA spokesman Wythe Keever denied his union engages in politics, stating to the Associated Press:
“The truth is no dues dollars are contributed to political candidates or spent on public communications about candidates. Communicating with members and their families is not the same as contributing to candidates."
But Keever's "truth" isn't as it seems. Union dues deducted from teachers’ paychecks go to local unions, the PSEA, and the National Education Association (NEA) via the PSEA.
Since 2013, the NEA has sent $36 million from union dues to the NEA Advocacy Fund (the NEA’s SuperPAC). This fund supports presidential candidates, like Hillary Clinton, and other SuperPACs, like Pennsylvanians for Judicial Reform—which ran multiple attack ads influencing last year’s Pa. Supreme Court race. The NEA Advocacy Fund also funded the political ads of America Works USA, an arm of the Democratic Governors Association.
National affiliates aside, the PSEA admits spending dues on politics and lobbying. Here's the fine print from their member magazine:
In 2015, PSEA reported sending $14,000 in union dues to Governor Wolf’s Inaugural Committee and about $85,000 to partisan and left-wing groups such as Keystone Progress and Keystone Research Center.
Based on their own reports to the U.S. Department of Labor, the PSEA and many other government unions use union dues for political activities:
Union members should know their hard-earned paychecks are being spent on political activities—without their permission. Voluntary PAC contributions are one thing. Forcing teachers to fund political causes they don’t support is another. It’s wrong, and it’s illegal. It’s time PSEA officials come clean about their abuse of teachers and taxpayers.
Philadelphia's teacher shortage is making headlines, and city council is demanding the district solve the problem. A classroom without a permanent teacher is certainly unfair to students, yet Philadelphia teachers are regularly pulled out of classrooms to work full time for the teachers' union.
Each year, up to 63 district employees may be plucked from Philadelphia's classroom to do full-time union work on the taxpayers dime.
These employees, known as "ghost teachers," aren't unique to Philadelphia. Across the state, dozens of teachers and other school district employees are absent from the classroom. Instead, they work full-time jobs with the local teachers’ union. These teachers stay on district payroll, receive health benefits, amass pension credits, and accrue seniority, just as if they were actually teaching
Ultimately, lawmakers should end Pennsylvania's ghost teaching problem by passing HB 2125. The bill would ban ghost teaching with two exceptions: extended leave for statewide teacher union officers and 15 days of annual release time for all other teachers. This reform would also require the unions to reimburse every cent associated with the cost of absent teachers.
Students deserve more than ghost teachers who never show up for class, and taxpayers deserve more than paying for an empty teacher’s desk.
APSCUF—the union representing faculty at state-owned universities—has begun a vote to authorize a strike.
One of APSCUF's complaints with the proposed contract is higher health care expenses. In a recent email to faculty members, APSCUF touted the fact that employees would now have a deductible with their health insurance plans--$250 for singles and $500 for families. That is, their current contract offers a ZERO deductible.
In contrast, the average deductible nationwide for employer-provided coverage is more than $1,300 for single coverage and more than $2,000 for family coverage, according to the Kaiser Family Foundation.
Likewise, APSCUF is complaining about out-of-pocket limits on health care since employees currently pay $0 out-of-pocket. The proposed contract would limit out-of-pocket expenses to $1,000 for single coverage and $2,000 for family coverage.
Nationwide, 83 percent of employee-sponsored individual plans have an out of pocket maximum of more than $2,000, according to the Kaiser Family Foundation.
If students and parents wonder why tuition costs so much, they should look to faculty health care benefits that are out of whack compared to the private sector.
On August 30, Secretary of Administration Sharon Minnich announced the details of a new three-year labor agreement between the Wolf Administration and the American Federation of State, County, and Municipal Employees (AFSCME).
In previous years, details of an agreement would rarely, if ever, be released until after it was approved by both parties. However, with the passage of Senate Bill 644 (now Act 15), the commonwealth must provide the Independent Fiscal Office with the details and costs of state collective bargaining agreements before they’re ratified. The change allows the IFO to offer an independent assessment and gives Pennsylvanians a chance to review the contracts before they are stuck with the bill.
According to an Office of Administration (OA) press release, the major provisions of the AFSCME contract include a change to the rules governing public employee healthcare and a 7.25 percent wage increase over three years. However, this increase is understated. Over the three year contract, employees will experience five wage increases, boosting the average pay for an AFSCME employee by 12.31 percent.
OA puts the total cost of AFSCME’s contract at $292.4 million or $97.5 million annually. The total cost would have been higher if the Wolf Administration did not negotiate healthcare concessions with AFSCME. This change saved taxpayers $13.6 million, according to OA estimates.
If the deal is approved, lawmakers will need to figure out how to pay for the additional costs mandated by the contracts. Pennsylvania is already facing a $264 million deficit this year and will likely need to make significant policy changes to balance the budget next year. Adding nearly $100 million in labor costs annually will make lawmakers’ jobs even harder.
Anticipating this problem, Rep. Garth Everett introduced HB 2289, which empowers the legislature to either approve or disapprove of state collective bargaining agreements. The bill would provide a much needed check on the collective bargaining process, which generally operates outside public view and involves government unions negotiating with the same officials they help elect to office.
Rep. Everett’s legislation and a requirement to post school district teacher contracts before they’re ratified—Senate Bill 645, would further enhance transparency and oversight of the bargaining process.
CF reviewed labor contracts in each of Pennsylvania’s 500 school districts and uncovered several interesting findings. These contracts, known as collective bargaining agreements, are negotiated behind closed doors between local teachers’ unions and school boards. They include routine information about salaries and benefits, but the contracts also outline maintenance of membership clauses, fair share fees, and ghost teacher arrangements.
- Teachers in 62 percent of districts are trapped in their unions by maintenance of membership clauses, which stipulate teachers may only exit a union during a specific time period—often just days—near the expiration of a contract.
- Nearly 4 in 5 school districts require non-union members to pay fair share fees to the union. These teachers are forced to pay more than 80 percent of traditional dues to the union, even though they have chosen not to be members.
- More than 9 in 10 labor contracts include release time language, allowing school employees to attend union conventions, serve as union delegates, or conduct union business. Release time also establishes the basis for ghost teachers, whereby school employees accrue seniority, receive taxpayer-funded salary, and amass pension benefits, all while conducting full-time work for the union, a private organization. Read more about ghost teachers.
These provisions tilt the playing field toward teachers’ unions at the expense of students, teachers, and taxpayers alike.
One government union’s insatiable appetite for more tax dollars has hit a brick wall.
The Wolf Administration is in the process of negotiating a contract with the state’s largest union—the American Federation of County, State and Municipal Employees Council 13 (AFCSME). The current contract expires at midnight, and it’s highly unlikely a deal will be reached before then.
AFSCME agreed to postpone negotiations because the sides could not reach an agreement. According to AFSCME, the Wolf Administration would not sign off on proposed wage increase and wants members to contribute more to their health benefits. The administration is making these requests in light of the state’s precarious fiscal position.
The costs of public employee compensation is exploding. Benefits are particularly out of control. They’ve risen by more than 71 percent over the last 10 years. Benefits for AFSCME members make up about 44 percent of their total compensation (see page 21). In the private sector, the average is 34 percent.
The growing costs of pensions factor into the dramatic rise in compensation, but health care costs are part of the picture as well. According to the Office of Administration, public employees pay 11.7 percent for their healthcare. The private sector average is 20 percent. To their credit, the Wolf Administration wants to reduce this inequality by requiring employees to pay more for their coverage.
The governor should continue to stand firm and protect taxpayers—especially as the legislature debates a bloated budget that will probably require tax hikes. Capitulating to AFSCME now will only compound this problem.
Fortunately, the public will have an opportunity to review the labor contract before the deal is approved.
Pennsylvania's pension problem is nothing new. Over the years, lawmakers have tried to salvage the fundamentally broken system instead of creating a system that works. The latest attempt, SB 1071, passed the state House this week.
Like Act 120 of 2010 and Act 40 of 2003, this legislation makes cosmetic changes and promises modest savings that will never materialize.
Pennsylvania's pension plan for teachers and state workers is failing because defined benefit pension plans are vulnerable to swings in the stock market and political whims, leaving taxpayers with a huge bill. In the past six years, our unfunded pension liability has grown from less than $30 billion to $63 billion.
Instead of addressing the retirement systems' exposure to politics and stock market swings, SB 1071 leaves a defined benefit plan in place until a worker reaches $50,000 in salary or 25 years of service. Stacked on top of the defined benefit plan is a defined contribution plan (similar to a 401k), but the $50,000 threshold increases by three percent each year.
Public labor unions could easily accelerate this threshold in the future, lobby to defer payments or increase the multiplier. After all, the original proposal called for a 1% yearly increase.
If that's not a red flag, the cost of the plan should have you scratching your head. The PERC actuarial note claims $5 billion in savings over 30 years, but the savings amounts to just $1 billion in present value terms. A drop in the bucket.
In fact, SB 1071's insignificant savings were wiped out after PSERS announced they are reducing their assumed investment rate of return from 7.5% to 7.25%. This change instantly adds upwards of $2.5 billion to taxpayers' tab.
It's clear SB 1071 is not a step in the right direction. Rather, it's the latest in a long line of pension reform efforts that sweep Pennsylvania's pension problems under the rug.
The next step for SB 1071 is consideration in the state Senate. However, the Senate seems less than keen to advance the bill in its current form. Senate Majority Leader Jake Corman noted, "I'm not going to pat myself on the back and say, 'I did pension reform' and end up accomplishing nothing."
Senator Camera Bartolotta expressed her reservations as well, saying, “We need to put some more teeth into it, we really do.”
There's no easy way to fix our pension system, but going back on our promises to state workers or saddling future generations with debt isn't an option.
Are ghost teachers about to be put to rest?
Ghost teachers in Pennsylvania would be strictly limited under legislation approved by the state House Education Committee today. HB 2125 restricts teachers unions’ ability to pluck teachers from the classroom to work full-time for the union while remaining on the public payroll.
In Allentown, taxpayers have paid more than $1.3 million to fund the salary and benefits of the Allentown Education Association (AEA) president—using money meant for educating students. That practice is being challenged in a lawsuit by local taxpayer Steven Ramos and former school board member Scott Armstrong.
Another lawsuit is pending in Philadelphia, where last year, 16 ghost teachers earned $1.5 million while working for the Philadelphia Federation of Teachers.
HB 2125 ends ghost teaching with two exceptions:
- Statewide teachers’ unions (like the American Federation of Teachers Pennsylvania and the Pennsylvania State Education Association) could have three officials on leave for up to six years, and
- School district employees may be on leave for 15 total days each school year but no more than three consecutive days.
Most importantly the bill requires teachers unions to reimburse every cent associated with school employee leave. CF's James Paul explains:
Year-in and year-out, Pennsylvanians are asked to contribute more and more of their hard-earned dollars to public education. The least state government can do is ensure this funding is used in the classroom and not tapped to staff private organizations. HB 2125 strictly limits ghost teaching and is a victory for Pennsylvanians.
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