Are the finances of the International Union in order? Is there a balanced budget? Is more money going into organizing or into multiple salaries?
TDU, with the aid of financial experts, has reviewed a number of documents including the “Officers’ Report” produced for theIBT Convention, LM-2 financial reports on file with the Department of Labor, and audited financial statements of the International Union.
This research has shown that James Hoffa is playing politics with the members’ money, and trying to cover it with certain myths.
Teamster members deserve the facts, not propaganda. Only TDU, as an independent watchdog organization, consistently reports such facts, like our annual $100,000 Club (watch for our next issue!), no matter who is in office.
Here are the facts on the finances of our International Union. If you have questions or comments, contact TDU today. This is about your Teamsters Union.
Myth #1: Hoffa "Blanced the Books and Got the Finances in Order"
Hoffa has not balanced the books. The International Union is running a deficit every month.
The Hoffa administration in 1999 and 2000 spent $16.7 million more than they took in during that 21-month period.. In 1998, the year prior to Hoffa taking office, the union ran a surplus.
The Hoffa administration has covered up the deficit by using two accounting gimmicks, both involving their officials-only pension plan.
They took a negative expense (a credit on the books) of $18.4 million from the Teamster Affiliates Pension Fund, a windfall accounting move that is possible because the Carey administration froze this officials-only pension plan in 1994. This did not put any money in the treasury, but moved it around on paper, and cannot be repeated next year.
They also siphoned $6.4 million out of the Affiliates Plan and the Family Plan, claiming back rent for the past five years -- another one-time windfall that has to do with events before they came into office.
These accounting gimmicks with pension money may help cover-up this year, but the fact is that the Hoffa administration is spending more than it is taking in, by about $800,000 per month.
In fact, if the International Union would release to the membership its six-month audit for the first half of 2001, the facts would show a large deficit on operations. Perhaps that’s why they have refused members’ written requests for the information.
The Bottom Line
The Hoffa administration has used accounting windfalls involving an officials-only pension plan so they could claim that they balanced the books in an election year. They are taking credit for what was done during the Carey administration.
Just as bad -- or worse -- the Hoffa administration has shifted priorities away from members and toward perks for officials.
They have increased payments for multiple salaries by 478 percent. This includes the 115 Hoffa appointees who get multiple salaries. More millions would be saved if Hoffa and his elected running mates would live up to their pledge to cut and cap their own multiple salaries.
They have increased payments for officials pensions and benefits by 18 percent.
They have increased payments for PR by 49 percent, money that goes to high priced consultants like Richard Leebove, who was caught making an illegal $167,000 employer contribution to Hoffa’s 1996 campaign.
This fattening up is paid for by cutting strike benefits and organizing. As a result our union has shrunk by 11,000 members since Hoffa took office, dipping below 1.4 million for the first time in decades. Teamster power is eroding, while top Teamster officials are fattening.
Myth #2: The Biggest Expense We Have in the IBT Budget is "Government Oversight"
The truth is that less than one cent of every members dues dollar goes to cover the cost of rooting out corruption by the Independent Review Board (IRB), far less than is paid for multiple salaries and pensions for officials.
The total cost of the IRB over the past nine years has not been $100 million, as Hoffa propaganda continually claims. A review of union financial records reveals it has been $30 million, or about $3 million per year .
On page 44 of the Officers Report distributed at the Teamster Convention we find that the total cost of government in the past 12 years is $79 million, but this includes:
- $10.7 million in legal fees spent defending Hoffa’s pals such as Weldon Mathis (whose son is Hoffa’s political director), Walter Shea, Bobby Holmes and other Hoffa allies. This was spent from 1987 to 1991.
- $12.2 million in other costs associated with the racketeering lawsuit and consent decree during that 1987 to 1991 period.
- $22 million to cover the costs of our delegate and IBT officer elections in 1991, 1996 and 1998.
The Hoffa administration is lying about the cost of the IRB to scare members, to try to get rid of any effective oversight that might remove corrupt officials in Hoffas administration. His Special Assistant Dane Passo, his former running mate Billy Hogan, and his life-long associate Mike Bane have all been either charged or convicted by the IRB in the past two months. Those are facts.
All Teamsters share the goal of cleaning up our own house, without the need for the IRB, but Hoffa has done zero to make this possible.
Hoffa claimed he would make the IRB unnecessary when he launched his RISE program which was supposed to root out corruption. But RISE has accomplished nothing, after two years and millions of dues dollars, except holding press conferences for Hoffa. (See story.)
At the recent IBT Convention, the lies about union finances under Ron Carey’s term reached monumental proportions. Each Hoffa official seemed to try to top the last one in lying.
Myth #3: "Ron Carey Drained the Treasury"
From 1991 to 1996, during Carey’s tenure, IBT assets did decline. But this was because of an increase in strike benefits adopted at the June, 1991 IBT Convention to $200 with no funding mechanism. As a result, the strike fund was depleted over the next three years, while Hoffa and supporters blocked any meeting of minds to try to deal with the problem.
At that 1991 convention, 85 percent of the delegates were old guard supporters, in most cases the same ones now backing Hoffa.
The IBT lost $39 million in net assets in 1991 alone, before Ron Carey ever took office in 1992, largely because of the strike benefits.
Assets, mostly in the strike fund, were $154 million when Carey took office in 1992, and when Hoffa took office they were only $8.6 million, a decline of some $145 million. But two items account for over 99 percent of that decline.
First, during that period the IBT paid $126 million in strike benefits. And second, the IBT recorded $18 million of expenses for the Teamster Affiliates Pension Plan which the old guard had set up to provide an extra pension for officials, and which the Carey administration froze in 1994.
Excluding those two items, the assets declined by only $1 million in that seven-year period, despite the IBT paying for election costs, the 1996 convention, and the cost of the IRB.
The Bottom Line
The Teamsters Union was never bankrupt, but its strike fund was depleted because benefits were increased in 1991 with no funding mechanism.
When Hoffa ran for office in 1996, he promised to quadruple strike benefits with no dues increase, but instead has cut money being paid to strike benefits, frozen at $55 per week, and put the fat on his own salary, multiple salaries and increased perks for his appointees, and PR for himself.
The Hoffa administration has not balanced the budget, but is running a deficit on operations of $800,000 a month or $10 million a year. Accounting gimmicks may appear to balance the books, but the truth will be evident as soon as the Hoffa administration is forced to reveal the results of the audits for this year.
What has changed under the Hoffa administration are the priorities: organizing and strike benefits are cut, and multiple salaries, perks and PR costs are increased.
Bloated salaries, perks and PR will not restore Teamster power. Nor will election-year myths and cover-ups.