Big Money, Big Problems
You can be certain that anti-union politicians
and activists track every misstep we take
and make sure that employers know about it.
By William Lucy
Not much more than a generation ago AFSCME was one of the labor movement’s most poorly financed unions. We were always walking a financial tightrope. Today AFSCME and its affiliates handle a billion dollars a year in dues and in insurance, pension, and welfare funds. That is big money, and big money can lead to big problems.
That’s why the International Executive Board, at its pre-convention meeting, adopted a tougher Financial Standards Code and delegates to the 1998 Convention amended the International’s Constitution to put tighter controls on the use of members’ money. These changes require greater financial accountability, more accurate financial reporting, and annual audits of the books by outside auditors for our councils and largest locals.
The new standards affect all AFSCME affiliates, not just those targeted by the amendments to our Constitution. In addition, the amendments place new financial reporting requirements on all councils and those locals that represent 2,000 members or more.
A billion-dollars-a-year operation puts AFSCME in the same league as a medium-sized corporation, but with tremendous differences. A corporation hires professionals to handle its finances, usually in one central office. Structurally, we can’t do that. In the first place, we’re fragmented into more than 60 councils and 3,500 locals plus all the independent affiliates, many of them with separate business offices. Also, our Constitution guarantees the autonomy of our affiliates, permitting them to make independent financial decisions. The International’s oversight comes after the fact — after the decisions have been made.
More importantly, while many affiliates employ financial professionals, the key fiscal decisions are made by approximately 24,000 rank-and-file officers who are elected by other rank-and-filers. While a local trustee or board member or treasurer is undoubtedly a skilled, knowledgeable public employee, the odds are that he or she has not been provided with the tools or information needed to make the financial decisions necessary for running a business, and we are a business.
Despite AFSCME’s Financial Standards Code and a country-wide workshop program to train local secretary-treasurers, the incidence of improper, imprudent, but not necessarily illegal, expenditures of union funds has increased. Sometimes this has been intentional, but more commonly it has been because the officers and board members simply were not acquainted with the guidelines for appropriate handling and prudent use of union funds.
That creates a very serious situation. It hurts the union’s credibility with its members, their employers, and the public. You can be certain that anti-union politicians and activists track every misstep we take and make sure that employers know about it. The bottom line is that the improper and/or imprudent use of the members’ money makes the union’s struggle to protect members tougher on every front: in organizing, bargaining, political action, lobbying, you name it.
Those responsibilities include preparing financial statements that give members a true picture of their affiliate’s fiscal condition and preparing budgets that realistically deal with an affiliate’s resources and needs. Financial code changes hold officers and executive board members more accountable for their financial decisions, ensuring that expenditures are appropriate.
These are tough requirements, a challenge to those who may not be currently in compliance, at least in the beginning. To make the transition easier, the International has stepped up and improved its Secretary-Treasurer Training Program, has increased staffing to support the audit and review program, and is preparing programs to assist those who have difficulties with the new requirements.
All in all, it’s a pretty big order, changing the way a number of our affiliates operate. But the requirements ensure that from here on out, officers should be better able to meet their financial responsibilities and members can be sure that their hard-earned dues are working in their behalf.
