On Monday in the
Washington Times, Service Employee International
Union (SEIU) Secretary-Treasurer Anna Burger — a protégée of
outgoing SEIU President Andrew Stern — defended her and Stern’s
time in leadership at SEIU, claiming that the union is
financially healthy. Burger’s letter to the editor was in
response to
my April 23 article in which I showed the poor state of
SEIU’s finances — and the even poorer state of its pension funds
for rank-and-file members.
Burger admitted, “While our pension funds — like all pension and
retirement funds — took a hit last year when the market
collapsed, our outside investment managers have developed a plan
to address those challenges within the parameters of the Pension
Protection Act.” However, her implication, that SEIU’s pension
funds took a hit like that of all other pension and
retirement funds, obscures the bigger picture.
SEIU’s pensions were in trouble long before the financial crisis
hit. Former Department of Labor chief economist Diana
Furchtgott-Roth, now with the Hudson Institute, showed in a 2009
study, which compared union-sponsored and private pension funds,
that the SEIU National Industry Pension Plan was only 75 percent
funded in 2006. Since then, the financial crisis has only made
things worse.
SEIU’s National Industry Pension Fund and Pension Plan for
Employees of the SEIU both issued critical status letters last
year. The Pension Protection Act requires a pension fund to send
a critical status notice to its participants if its funding drops
below 65 percent of that required to pay obligations. Unlike the
vast majority of pensions in the United States, these two plans
joined only 90 others , mostly union pension plans, in having
been required to send out critical status letters. Four of the 90
were SEIU plans.
Notably absent from the critical list was the SEIU officer’s
plan, which is currently funded at 98.3 percent, according to the
fund’s Department of Labor Form 5500 filing, available at
SEIUmonitor.com.
(SEIU Monitor, maintained by Americans for Limited Government,
allows users to compare SEIU’s pension plan for union officers to
that of the national and local plans for rank-and-file members.)
Burger, like Stern, can rest easy knowing her pension is safe.
Rank-and-file SEIU members do not have that luxury.
Puzzlingly, Burger claims that “all SEIU beneficiaries are whole
by law — no one has lost a dime.” The only logical explanation
for such a statement is that she is probably referring to the
pension protections of the Pension Benefit Guarantee Corporation
(PBGC). Unfortunately for union members, PBGC
guarantees only $12,870 in benefits for members of
multiemployer plans such as those in the SEIU plans (in contrast
to a maximum of
$54,000 for private plans).
Burger proclaims that, “In 2009, SEIU grew by 7 percent, doubled
its net assets, decreased its debt as a proportion of overall
assets by 22 percent and reduced non-real-estate debt by more
than 60 percent” (and that what she calls my “misuse of LM-2
figures misleads readers and misses the facts”). Her narrow
analysis conveniently omits a decade of liability increases,
which skyrocketed by a factor of 16. The union’s
liabilities were $7,625,832 in 2000 and
$120,893,259 at the end of 2009. She also did not account for
IOUs from SEIU locals being counted as assets. Much of SEIU’s
$85-million debt stems from its lavish Washington, D.C.,
headquarters, purchased in 2003, which required an
$80 million dollar loan, as well as from heavy
political spending in 2008.
Burger was forced to defend Andy Stern’s record. Stern’s
resignation has resulted in a battle for the leadership of SEIU.
Late last week, several SEIU locals swung their support to
California nurses leader Mary Kay Henry.
Politico and
Bloomberg Business Week had all but declared Henry
the winner. Burger was forced to drop out of the race
Though it’s hard to know for sure why some locals defected, one
of the main reasons for Burger’s downfall is her ties to Andy
Stern. Stern is seen as divisive and some local leaders have
bristled at his efforts to centralize power in SEIU’s Washington
headquarters. No matter who leads the SEIU, the union will have a
difficult time bringing its pensions to full funding. Hopefully,
the new leadership will focus more on representing its members
and ensuring their retirement than in pushing a political agenda.
