Supremes could hammer NY unions

by Ken Girardin |  | NY Torch

Supreme Court BuildingThe U.S. Supreme Court will hear arguments today in Friedrichs v. California Teachers Association, and the stakes couldn’t be higher for New York’s politically powerful public-sector unions.

The plaintiffs in Friedrichs are public school teachers challenging a California state law that, like New York’s, requires them to pay dues-like “agency fees” to the state’s teachers union even though they chose not to join the union. A ruling in the teachers’ favor could effectively repeal the agency-fee privilege for government unions across the country, including New York State.

How much money could we be talking about here?  As shown below, based on their latest reports to the U.S. Labor Department, five of New York’s largest public-sector labor union umbrella organizations collected total dues revenue of $338 million in 2014.

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These figures just scratch the surface, since they don’t include the funds collected and spent by local affiliates. For example, New York City’s United Federation of Teachers reported collecting $136 million in dues income during FY2014—even more than its “parent,” New York State United Teachers (NYSUT).

Individual dues vary by union and job type. For example, a $50,000-a-year state employee represented by CSEA pays the union $605 annually, while a Buffalo school teacher, represented by a NYSUT affiliate and making the same amount, pays $917.

While the number of agency-fee payers is now relatively small, how many fewer union members would choose to voluntarily pay dues if, pursuant to Friedrichs ruling, the agency fee privilege no longer applied?  The experience of one New York union provided a real-life test case.

Among the penalties imposed for its illegal 2005 strike, New York City’s Transportation Workers Union (TWU) Local 100 had its dues checkoff privilege temporarily suspended. A year later, more than half of Local 100 members didn’t pay dues. Even as of 2014—more than six years after the automatic deduction had been restored—more than 20 percent of employees were still being reported in the union’s filings as “not in good standing,” meaning they owed past dues or were agency fee payers.

The teachers are also challenging a component of California law that, in accordance with the 1986 Supreme Court ruling in Chicago Teachers Union v. Hudson, allows them to opt-out of paying the portion of agency fees that go toward political activity and lobbying. New York has a similar law, and the plaintiffs argue that the process is too arduous and that the unions should instead have to obtain an individual’s consent before collecting the money.

In some cases, New York public employees actually have to spend money to get this money back. For example, the AFSCME refund process requires two certified letters ($3.45 each) be sent to the union, every year, during a 15-day window in April.

Should the court uphold the agency fee requirement but require this consent, the unions will presumably experience a negative but considerably smaller financial impact.

Far-reaching implications

One of New York’s biggest public-sector unions could find itself in serious financial trouble if agency-fee payments were ended and a similarly large percentage of its members ever chose not to pay dues voluntarily.  As recently reported in the Albany Times Union, NYSUT’s latest financial statement listed $416 million in liabilities against $111 million in assets. While the union’s operating budget is still balanced, one labor expert noted, “if NYSUT lost 100,000 (dues-paying) members, that would be a very different thing.”

Government workers have come to increasingly dominate union ranks as private-sector union membership has shrunk. Their most recent effort to expand in New York—a 2007 executive order by Gov. Eliot Spitzer organizing daycare providers—was thwarted after the U.S. Supreme Court ruled against a similar effort in Illinois.

Unions have been major players in state and local politics, and any substantial loss of funds would likely curb their influence in Albany.

CSEA, for example, transferred $3.5 million in member dues to its political action fund. Although NYSUT generally uses voluntary employee contributions for politics, the teachers’ union spent $200,000 in dues revenue on TV ads promoting the 2014 “Smart Schools Bond Act” boondoggle.



- Ken Girardin is the Policy Analyst at the Empire Center for Public Policy.