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Six Secrets the National Education Association Keeps About Its Business Dealings

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July 25, 2017

Talking Points

While @NEAToday delegates focused on trivialities, top leadership made little-known business moves

.@NEAToday’s business transactions offer insight into the union as a corporate entity

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Mike Antonucci’s Union Report appears Wednesdays; see the full archive

The National Education Association is America’s largest labor union and a potent political force. It is also a $367 million–a-year corporate entity with a bewildering number of affiliates, subsidiaries, interlocking directorates, and business partnerships.

The details of NEA’s interactions are unknown to the public and a mystery even to its most dedicated activists. While members of the union’s “highest decision-making body,” the 7,000-delegate Representative Assembly, devoted themselves at an annual conference to choosing articles to be published on the NEA website, the union’s executive officers conducted weightier transactions that failed to elicit a single question or comment from delegates. Here are six of them:

1) NEA Properties Inc. In May 2009 the Indiana State Teachers Association Insurance Trust went bust due to bad investments, poor oversight, and financial mismanagement. The Indiana union itself was in danger of collapse, prompting NEA to place it under trusteeship. NEA then created a real estate firm — NEA Properties Inc. — for the sole purpose of purchasing the ISTA headquarters building and leasing it back to the state union. The Indiana affiliate has been a tenant of NEA Properties ever since.

In conjunction with this move — never addressed nor approved by the Representative Assembly — NEA made an unsecured loan to ISTA, which was refinanced in 2014 to $15 million at 2.5% interest, payable by 2028.

Since 2009, ISTA has lost 26 percent of its membership, making full repayment a doubtful proposition. NEA describes $6.1 million of the loan as uncollectible.

2) National Board for Professional Teaching Standards. NEA has long been a supporter, financial and otherwise, of NBPTS, an independent organization that issues national certification for teachers who seek it. Teacher candidates send videos and portfolios of their work to NBPTS, which examines the material and either issues or denies the certification.

The program is costly and time-consuming, but a number of organizations and states offer financial aid to complete the training. Some states also grant higher salaries to nationally certified teachers.

None of this is terribly controversial, but NEA is now propping up NBPTS operations. Last year the union made a $1 million, no-interest loan to NBPTS, payable in five years. A look at NBPTS finances reveals ongoing budget deficits.

NBPTS spent more than it took in each year from 2012 to 2015 (its 2016 numbers are not yet available). The accumulated shortfall was almost $24 million, reducing its net assets by more than 73 percent.

In 2013, NBPTS shut down its San Antonio office, taking a loss of $4.9 million, and transferred all of its functions to Pearson NCS, a company that is often criticized by NEA and the American Federation of Teachers.

The late CEO of NBPTS, Ronald Thorpe, was making more than $325,000 at the time.

3) NEA Members Insurance Trust. NEA’s internal financial reports note, “The Department of Labor is conducting a review of certain issues surrounding the NEA Members Insurance Plan of which NEA is the sponsor and administrator. The outcome of this review is unknown at this time.”

No further details are provided.

4) NEA Member Benefits Corporation. This NEA subsidiary manages the union’s various member discount offerings, along with insurance and financial products. For additional income NEA MBC has $3,565,041 invested in hedge funds — making $2 million in purchases during 2015–16.

At the same time, NEA was running articles informing members “how hedge fund billionaires profit at the expense of our students.”

5) NEA Healthy Futures. This NEA subsidiary was founded as the NEA Health Information Network in 1987. NEA Healthy Futures “manages and implements programs that provide health and wellness solutions, advocacy tools, and funding and resource opportunities for NEA members and the education community at large. NEA Healthy Futures secures funds from public and private sources to implement these programs.”

NEA spent about a half-million dollars each year on the nonprofit and hosts web pages and a Twitter account dedicated to its activities.

That’s all well and good, except that NEA dissolved NEA Healthy Futures last year without a word and transferred its remaining assets to the NEA Foundation, a separate nonprofit subsidiary.

Why this was done is anyone’s guess, but it’s curious that NEA didn’t announce it publicly or otherwise.

6) NEA 360. NEA created a limited liability corporation in 2015 to manage NEA 360, its new database and tech platform, designed not only so the union could keep track of basic member information but to allow it to interact with individual members for organizing purposes.

It’s an ambitious undertaking, but it has run into a number of obstacles. Its rollout has been delayed several times. Last November, NEA canceled its contract with the vendor responsible for “developing the transactional component of the NEA 360 platform” and “suspended work on the original project design.” The union is now “leveraging extant systems,” which sounds like jargon for “using someone else’s existing software.”

NEA has earmarked $10 million in its 2017–18 budget for NEA 360.

With all the focus on the union’s political activities, it is important to remember that NEA engages in a host of business and financial activities that members also subsidize. These are undertaken mostly without their knowledge, let alone consent.

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