SEIU’s Rising Liabilities Escape Media Attention

SEIU’s next president will need to address the rising liabilities within the organization that work against the long-term interests of rank-and-file members.  So far, The New York Times and other media outlets have focused on the horse race between competing candidates to succeed Andy Stern as president. But there are more important questions here….

Media speculation over “a dark horse” candidate to succeed Andy Stern as president of the Service Employees International Union (SEIU) has eclipsed another more important news angle that concerns the organization’s internal finances.

Apparently, Mary Kay Henry, a leader of the union’s healthcare division is now in serious contention for the top post, according to The New York Times. She has enough support from local representatives to outpace Ann Burger, the union’s secretary-treasurer, a recent report claims.

But regardless of who takes charge, the SEIU is beset with rising liabilities and underfunded pension funds that should be a point of concern for rank and file members. Given the long history of sympathy and support The Times has shown toward organized labor, it should follow up with a report detailing the SEIU’s existing financial challenges.

Vincent Vernuccio, an adjunct analyst and former Bush Administration labor official, has carefully documented the disconcerting trajectory of SEIU’s liabilities and the collapse of its pension plans. The horserace between Henry and Berger is not unimportant, but The Times should also raise questions about Stern’s spending habits and priorities. It is also worth noting that Stern’s own pension plan remains flush and well funded, even as assets for rank and file retirement packages are washed out by red ink.

The hard numbers are available in Vernuccio’s recent report:

“SEIU has seen its liabilities skyrocket during the past decade. The union’s liabilities totaled $7,625,832 in 2000. By 2009, they had increased almost by a factor of 16, to $120,893,259. Meanwhile, SEIU’s assets barely tripled, growing from $66,632,631 in 2000 to $187,664,763 in 2009. A significant portion of SEIU’s current assets are from IOUs from hard-up locals.

SEIU is $85 million in debt, down from its 2008 high of $102 million, and has been forced to lay off employees. Mr. Stern has led protests against Bank of America, calling for the firing of Chief Executive Ken Lewis. Yet the union owes $80 million to Bank of America and $5 million to Amalgamated Bank, which is owned by the rival union Unite-Here.

SEIU’s pensions are in even worse shape. Both of SEIU’s two national pension plans, the SEIU National Industry Pension Fund and the Pension Plan for Employees of the SEIU, issued critical-status letters last year. The Pension Protection Act requires any pension fund that is funded below 65 percent of what it needs to pay its obligations to inform its beneficiaries of the deficit.”

The Times report includes biographical information the competing SEIU leadership contenders, which is helpful as far as it goes. But both candidates should be questioned about their spending priorities as it is now evident that SEIU’s political expenditures figure into the liability equation.

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