A Peek Into NJEA’s Finances: Teachers and School Staff May Not Like What They See.

I often insist on the distinction between those who work with children —  teachers, instructional aides, nurses, Child Study Team members, et. al.  — and  New Jersey Education Association staff members who lobby in Trenton.   In this era of Janus when public sector workers can choose to not join unions (a right excessively circumscribed in NJ), it’s worthwhile to check out the finances of those Trenton lobbyists. Information is power when teachers have a choice, right? 

Anyone can access this information from Internal Revenue Service documents called  990’s that tax-exempt organizations file annually. These forms list activities, governance and detailed financial information. For example, here’s NJEA’s 2016 990 form, the latest available from free services like Guidestar.  I was able, however, to get some information from NJEA’s 2017 990 submission, so the following information is more up-to-date.

Question of the day: How did NJEA spend its revenues of over $125 million in 2017?

The bottom line is NJEA set new spending records, largely due to exorbitant salaries and benefits lavished on its central office staff, who now make 19.1 percent more than they did in 2015. In fact, officers make seven times more than the average NJ teacher. Funding such extravagant spending translated into an increased reliance on higher and higher revenue from member dues — which has risen 9.7 percent since 2014 and now accounts for 90 percent of NJEA’s revenue, up from 88 percent three years ago.

But even soaring revenue from member dues has failed to keep pace with spending: For the first time on record, NJEA’s expenditures exceeded the union’s revenue — meaning NJEA will soon have to choose between tightening its belt or passing on an even bigger bill onto its (possibly dwindling) membership.

Here’s what NJ teachers need to know as they finally get to decide whether or not to allow NJEA and local affiliates to take a chunk of each hard-earned paycheck, about $1,000 per year. 

NJEA Broke Most Of Its Own Spending Records In 2017.

• NJEA spent a total of $139.6 million in 2017 — more than ever before. This expenditure represented a 5.2 percent increase from the year before and a 15 percent increase during the past two fiscal years.
• NJEA spent $68.9 million on union staff and benefits in 2017 — more than ever before. This record expenditure represented a 4.05 percent increase (+$2.7m) from 2016 and a 19.12 percent increase (+$18.3m) from 2015.  
• NJEA spent a larger portion of its revenue — nearly 50 percent — on employee salaries and benefits in 2017 than ever before. Almost fifty percent of NJEA’s revenue went to the union’s employees last year, up from 48.8 percent the year before and up from 43.0 percent two years ago. If current trends persist, NJEA will soon be spending more than half of its annual revenue on staff working directly for the union.
• NJEA’s President, Vice President, and Secretary-Treasurer were compensated a total of $1.44 million in 2017 — an average of $482,502, or almost seven times the average New Jersey teachers’ pay. NJEA’s former President Wendell Steinhauer (Marie Blistan replaced him last year), received a pay bump of $45,466, or 7 percent; NJEA’s Secretary-Treasurer, Sean Spiller (now he’s Vice President), received a pay bump of $40,524, or 12 percent.
• NJEA’s leadership was rewarded with $1.2 million in deferred compensation in 2017 — more than in any other year. NJEA’s Business Development Director, Timothy McGuckin, led the pack with $634,251 in deferred pay, and Executive Director Edward Richardson came in second with $335,106 in deferred pay.
• NJEA’s spent $14.1 million on legal representation in 2017, up 21 percent compared to 2015. The union’s legal bills rose for the second year in a row, up from $12.7 million in 2016 and $11.7 million in 2015.
• NJEA more than doubled its spending on government and public relations in 2017. The union spent $1.80 million on government and public relations last year, up from $857,009 in 2016 and $796,469 in 2015.
• NJEA increased spending on conferences, conventions, and meetings by 10.4 percent in 2017. The union spent $4,047,059 on conferences, conventions, and meetings in 2017, up from $3,664,419 in 2016 and 3,560,977 in 2015.

NJEA Continued To Rely On Soaring Revenue From Member Dues To Fund Spending Increases.

• NJEA upped its revenue from member dues to a record $125.1 million in 2017, up 3.2 percent from the year before.Revenue from member dues rose between $3.2 million and $3.9 million during each of the three most recent fiscal years — combining for a 9.7 percent, or $11.0 million, increase since 2014.
• Since 2014, NJEA’s revenue from member dues has risen by $11 million but income from other revenue streams has fallen by $2 million. This suggests that NJEA has reached deeper and deeper into members’ pockets to keep up with spending increases as other revenue streams falter.
• In 2017, member dues made up 90 percent of NJEA’s total revenue, up from 89.3 percent in 2016 and 88.0 percent in 2014. This trend confirms that NJEA has become increasingly dependent on raising dues to keep up with spending increases.

But Not Even Record Dues Revenue Has Been Able To Keep Pace With NJEA’s Spending Increases.

• NJEA’s revenue has increased an average of just $2.1 million each of the past two years and $3.0 million each of the past three years, while expenses have risen an average of $9.1 million each of the past two years and $3.7 million each of the past three years. This indicates that, even with NJEA’s increased dues revenue, the union’s revenue streams are increasingly incapable of keeping pace with spending increases.
• In 2017, NJEA’s expenses exceeded its revenues for the first time on record. NJEA spent $849,058 more than it brought in last year, compared to 2016’s surplus of $3.1 million and 2015’s surplus of $13.1 million.
• As recently as 2013, NJEA’s balance sheet showed $12.0 million more in assets than liabilities — but as of 2017, the union’s liabilities exceed its assets by a staggering $42.4 million.This dramatic reversal highlights the union’s increasing inability to fund its many obligations as expenditures rise.

Teachers have a choice that they never had before: They can condone extravagant staff salaries and profligate spending or they can choose to opt out. If NJEA leaders want to retain members this might be a good time to take voluntary pay cuts.  Or concede that spending $5 million of member dues on a doomed campaign against Senate President Steve Sweeney, one of the most educationally literate legislators, was a massive lapse of judgement and promise to use member contributions wisely. Or be honest about the fact that, while members’ pensions are on life-support, theirs are safe. (More on that next week.)

When I think about labor unions — probably because I’m the daughter of two members of the United Federation of Teachers (the NYC arm of AFT) — I think about equity, for schoolchildren as well as those who nurture and educate them. Based on recent revenue allocations, the leaders of NJEA lack that linchpin. Let’s hope the 1918 990 form reveals more fairness.