2013 UTLA Leadership ConferenceAugust 4, 2013 – Westin LAX

UTLA BUDGET CRISIS AND HOW IT AFFECTS YOU

→Learn about UTLA’s financial crisis and how it affects services to you and your members.

→ Provide us with your suggestions on how to address this critical issue.

Workshop Team: Arlene Inouye (UTLA Treasurer), John Perez (Dues Restructuring co-chair), Mary Rose Ortega (CTA Board) and Sonia Martin-Solis (CTA/NEA)

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 $-

$100

$200

$300

$400

$500

$600

$700

$800

$900

604 604 622 622 635 650689 689

709 709 709 709 709

569 586615

644670

743 756 774 757783

805825 827

UTLA Full Dues CTA/NEA Dues

Notes:UTLA Full Dues represents the annual dues assessed UTLA Full Time Members from the 1998/99 year thru the 201213 year. CTA/NEA Dues represents the annual dues paid to the affiliates by UTLA on behalf of the members from the 1998/99 year thru the 2012/13 year. As can be seen above, in years 2000/01 thru 2002/03, UTLA collected more dues from members than was paid out to the affiliates. However, since 2003/2004 , UTLA has paid out more to the affiliates than was collected from the members.

UTLA AFFILIATE DUES ANALYSISComparison Chart – Annual Dues

UTLA Building Rental Income:2012 2011 20103,244,233 3,026,510 3,160,219

UTLA Building Rental Expenses:2012 2011 20102,513,309 2,580,413 2,523,269Net Income2012 2011 2010730,924 446,097 636,950Cost of Using the UTLA Building if we had to pay for the leasesWhat we save because we own the UTLA Building Expense per month: 900,000 Expense per year: 1.08

Note: Years 2006, 2007 and 2008 include special assessments paid (approximately $2.3 million each year)

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

Net Cash & CE = Represents the cash, plus investments, plus various receivables, less various payables. Crisis Fund = Represents the estimated balance in the Crisis Fund (Strike Fund) if fulling funded as of the end of the years. Cash Available for Operations = Represents the net cash available after the Crisis (Strike) Fund is fully funded. As can be seen, the "Cash Available" has declined significantly over the years from over $8 million to less than $3 million. Note: 2012/13 figures are estimates based on May 31, 2013 YTD figures.

United Teachers Los AngelesAnalysis of Cash and Cash Equivalents

8/31/01 thru 8/31/13

Full-time UTLA Members

Part-time UTLA Members

To: Warren Fletcher, UTLA President , UTLA Officers, UTLA Board of Directors, NEA/CTA, AFT/CFT UTLA House of Representatives From: UTLA Ad Hoc Committee on Dues Restructuring REPORT #1: April 2013 The Problem UTLA, the second largest local in the country represents approximately 33,800 full and part time education employees (teachers, substitutes and Health and Human Services Professionals). Since our founding in February 1970 our goal has always been to improve the quality of Los Angeles’ public schools and to enhance the professional lives of our members. We are proud of what we have accomplished through negotiations, member education representation, and advocacy. Most recently working with our state affiliates we helped pass Proposition 30 and defeat proposition 32. We stopped the Los Angeles Unified School District from eliminating Adult and Early Childhood education. Our negotiating team continues to offer one of the best health benefits plan in the nation. But UTLA today faces a budget problem that has been building over the past 10 years. The recent recession, the loss of students in the LAUSD and a corresponding loss of members and the privatization movement have placed great pressure on UTLA’s budget. Since 2005 UTLA has lost over 10,000 members, resulting in a loss of millions of dollars. Just in the last 2 years, UTLA has lost over $2 million due to the above problems. At the same time, UTLA’s expenditures have risen due to increases in employee benefits, insurance costs, inflation, legal costs and increases in its state and national dues. This loss of revenue is no longer sustainable. But the most significant problem facing UTLA is the structural problem with its dues. This problem has over time gotten worse and has severely limited UTLA’s ability to properly serve its members and defend the institution of public education in the LAUSD. The UTLA dues structure is the same today as it was when UTLA was born. The dues for full time, regular members remain 1.5% of the basic credentialed salary. UTLA’s dues cannot be changed by its policy making body—the UTLA House of Representatives—but only by a vote of the entire membership. This problem means that UTLA’s dues are among the lowest in California and the nation. It also means that UTLA’s dues are very regressive. As a percentage of salary UTLA dues are highest when a member is new to the profession and lowest when a member reaches the top of the salary schedule. When the merger agreement was written between UTLA and its four affiliates (CFT/AFT, CTA/NEA) it was agreed that UTLA would pay full dues to the affiliates and that UTLA would get a set percentage rebate on its dues. This rebate though larger than other locals, allows us staffing independence and requires us to pay for our own member defense. In 1970 UTLA collected more in dues than it owed the affiliates, thus enabling UTLA to produce a balanced budget. Over time as the dues structure of the affiliates changed and their dues increased the low UTLA dues structure began to work against UTLA. (UTLA dues only go up in years when UTLA is able to negotiate a salary increase.) Unlike many locals UTLA does not have a “pass through” provision concerning its dues. If UTLA had a “pass through” like most other locals, from

2004 to the present we would have increased our revenue by approximately 8 million dollars. Thus in years when UTLA has not been able to negotiate a salary increase, any increase in dues to the national and state affiliates has had to come out of the regular UTLA dues. Today, and for a number of years past, UTLA has collected LESS than its dues to the national and state affiliates. This has meant that the rebate no longer provides sufficient financial resources for UTLA to develop a balanced budget. The aforementioned structural problem was apparent as early as 1980 and has been the topic of discussion between UTLA and its four affiliates periodically since then. This problem is not solely a UTLA problem. Since Los Angeles is one of the most important epicenters of the “reform” and privatization movements the inability of UTLA to have balanced budgets presents a problem for the state and national unions as well. Steps That Have Already Been Taken UTLA has since 2005-06 made adjustments to its budget due to the continuing loss of revenue by drawing down its cash reserves. UTLA’s cash reserves have fallen from about $6 million to only $2.2 million. UTLA will take another $1 million from the reserve to help close a $1.4 million deficit in the 2013-14 budget.UTLA has cut back on the United Teacher. ($100,000.) UTLA Officers have decreased spending and cut compensation. ($200,000)Efficiencies have been made in the IT Department. ($85,000).Grants from Affiliates for organizing have added revenue of approximately $500,000.Vendor and Sponsorships have been increased by $100,000.Moving the annual Leadership Conference back to Los Angeles has also saved some money. ($50,00-75,000). The Ad Hoc Committee on Dues Restructuring Recognizing the problems created by the current UTLA dues structure UTLA Treasurer, Arlene Inouye, has appointed an Ad Hoc Committee on dues restructuring. The Co-chair with Treasurer Inouye is former UTLA President John Perez. The Committee includes four members of the UTLA Board of Directors Budget Committee and nine additional members who reflect a variety of perspectives and affiliations. The Committee met in February and March of 2013 and has made the following recommendations. The Committee does not believe that a simple, short, piece-meal campaign will convince the UTLA membership that it needs to increase its dues. This was tried in 2008 and by a vote of 66.64% to 33.36% the members voted NOT to increase their dues. The Committee believes that the effort to change the UTLA dues structure requires nothing short of a full scale organizing campaign. It should be treated like a UTLA effort to elect UTLA endorsed candidates, UTLA endorsed initiatives, or a campaign to support UTLA contract negotiations.

The Committee feels that this campaign should be geared to holding a vote on a new dues structure in the spring of 2015. We have built in times for evaluating the effectiveness of our communication strategies, membership polling results and feedback from UTLA leaders. We also have considered the UTLA internal election cycle that can be a distraction if held at the same time as a dues restructuring vote.Starting immediately UTLA should use its communication tools (the United Teacher, the web site, Tuesday Talking Points, social media, etc) to educate the members to the problem, its causes, and why there needs to be a dues increase. This has already started through the Treasurer’s column and other communications, but a systematic and developed communication strategy is needed.A workshop that addresses the fiscal challenges facing UTLA within a larger context should be held at the Fall Leadership Conference in August 2013 along with a budget report at one of the general sessions.Materials and Talking Points should be produced for distribution at the 2013-14 UTLA Area Meetings.A “Talking Points” palm card needs to be produced that UTLA officers and staff can use when visiting schools and work sites.A poll needs to be developed with a reputable polling organization for field implementation sometime in Oct/Nov 2013 to provide information regarding whether members are persuadable to support a dues increase, and under what conditions.The UTLA professional staff will need to be engaged in this effort just as they are engaged when UTLA is running any organizing campaign relative to contract negotiations or political action. A Coordinator/Director or point person will be needed to run the campaign. The campaign will also include research and organizing at every school and work site in the District. Until a Coordinator/Director independent of the Committee is appointed the current Co-chairs will continue to lead the Committee’s work.If this effort is unsuccessful, it will have negative state and national effects. UTLA will need to call upon its state and national affiliates as it has done in the past for support. The affiliates have on many occasions supported with staff and resources UTLA efforts to negotiate contracts, run political campaigns, fight privatization and Public School Choice, and organize charter school teachers. The effort to change the UTLA dues structure like the original merger, needs to be a five party effort.The Due Restructuring Committee needs the following support at this time, research, money, and consultants on all aspects of the campaign. Summary The challenges that UTLA faces in these current times require a comprehensive dues restructuring that will be shaped and developed by a committee that is responsive to the UTLA membership. It is a problem that not only impacts UTLA, but will also have a ripple effect throughout California and the nation. This is the first in a series of reports and as the campaign picks up speed the Committee will make further timely reports to the Board and to our affiliates. The members of the Ad Hoc Committee on UTLA Dues Restructuring are: Dan Barnhart, Aaron Bruhnke, Tim Delia, David Goldberg, John Horta, Brad Jones, Lisa Karahalios, Hattie McFrazier, Mary Rose Ortega, Sonia Martin Solis, and Joe Zeccola. The Co-chairs are Arlene Inouye and John Perez