Mark Flatten

Money for Nothing: Taxpayers foot union bill

Posted on September 21, 2011 | Type: Investigative Report | Author: Mark Flatten
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Phoenix taxpayers spend millions of dollars to pay full salary and benefits for city employees to work exclusively for labor unions, a Goldwater Institute investigation found.

Collective bargaining agreements with seven labor organizations require the city to pay union officers and provide members with thousands of additional hours to conduct union business instead of doing their government jobs.

The total cost to Phoenix taxpayers is about $3.7 million per year, based on payroll records supplied by the city. In all, more than 73,000 hours of annual release time for city workers to conduct union business at taxpayers’ expense are permitted in the agreements.

The top officials in all of the unions have regular jobs with the city. But buried in the labor agreements are a series of provisions for those employees to be released from their regular duties to perform union work.

For top officers, the typical amount of annual release time is 2,080 hours, a full year of work based on 52 weeks at 40 hours each. They continue to draw full pay and benefits, just as if they were showing up for their regular jobs. But they are released from their regular duties to conduct undefined union business.

Union officials say the time is a good investment that leads to a more productive workforce. Critics say it amounts to an illegal gift of taxpayer money.

“It’s shocking,” said Phoenix City Councilman Sal DiCiccio, who has battled with unions that represent city workers over employee pay and his efforts to trim spending. “Taxpayers should not be funding union activities. It should all come out of union dues.”

DiCiccio voted for the union contracts in March 2010, as did every other council member present. The provisions for release time have long been a part of city contracts with labor organizations, but DiCiccio said he was unaware of them until recently.

The most generous contract both in terms of money and time is between the city and the Phoenix Law Enforcement Association (PLEA), which represents front-line police officers.

All six of the top officials at PLEA draw their full pay and benefits from the city, even though they are assigned full time to the union. Each is also entitled to 160 hours of overtime annually.

All of the other unions have the salaries and benefits of their top officials paid by the taxpayers.

Each of the unions also receive banks of additional release time ranging from a few hundred to 5,500 hours annually that members can use to conduct union business on city time.

One union leader says it was city officials who insisted on providing additional release hours, which had become a standard provision in contracts with other labor organizations.

PLEA and the Phoenix Fire Fighters Association Local 493 each get 500 hours of annual city-paid time for a lobbyist. The firefighters’ union also gets a taxpayer-funded secretary.

Two other unions each receive payments of $14,000 from the city to pay for member training and conferences, and a third gets a $2,000 parking allowance.

Other sections of the labor agreements allowing city-paid release time are difficult to quantify because they do not specify the number of hours allowed for certain tasks. Rather they state that time spent on such things as instructing union stewards on the terms of new two-year contracts does not count against the other hours that are specifically allotted.

The money coming from taxpayers is in addition to union dues that each of the labor organizations receives from its members, dues collected by the city through payroll deductions.

Some top union officials also draw salaries or stipends from their labor organization in addition to their city checks while they work exclusively on union business. Phoenix is not alone in how it treats top union officials. Other metro-Phoenix cities have similar contracts, but they tend to be less generous and involve fewer labor organizations. The federal government also allows for union business to be done on taxpayer time, but prohibits release hours for internal union activities. No such restriction is in the Phoenix contracts.

PRUDENT SPENDING OR UNION GIFT?

Ed Zuercher, Phoenix’s assistant city manager, and union officials argue the release time ends up saving taxpayers money. The city-paid hours are part of the overall compensation package negotiated between the city and the labor organizations. If union officials will trade release hours for lower overall wage and benefits packages for their members, then it does not end up costing the city anything extra, he said. Taxpayers also benefit because release time allows unions to provide such things as training on city ordinances and job requirements. That leads to better relations between management and employees, and ultimately better service to residents, Zuercher said.

“It is about how we relate to our employees in a unionized work environment,” Zuercher said, adding negotiation with labor groups is required by city ordinance. “We think it’s important to have a cooperative relationship with our employees; that they get the best representation for their rights and the best education that they can. So these hours are feeding into that ability.”

James Tierney, president of the AFSCME local that represents skilled laborers such as electricians and mechanics in the city, said the work done by unions improves worker productivity and morale. Representing rank-and-file workers at grievance and disciplinary hearings shields them from bad decisions made by the city’s bloated management, Tierney said.

“The reality is a lot of insane decisions are made” by management, Tierney said. “It kills productivity. It kills morale. If there were a little more fairness, especially from upper management, you wouldn’t need these release hours.”

But using taxpayer dollars for the salaries and benefits of union officials is likely a violation of the prohibition in the state’s constitution against using public funds to benefit private organizations, said Clint Bolick, director of the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation. The Arizona Supreme Court ruled last year in a case brought by the Goldwater Institute that benefits must roughly balance with costs when taxpayer funds are paid to private entities in order to conform to the “gift clause” in the Arizona Constitution.

The Phoenix contracts identify no specific benefits for the city and impose few duties on the unions or limits on how the time can be spent, Bolick said.

“This looks like a naked constitutional violation,” Bolick said. “This is a direct subsidy to the union for union activities that are directed and specified by the union itself. So there is no assurance of any benefit to the city, much less a proportionate benefit.”

Sidebar: Read Nick Dranias' policy recommendation here

HIDDEN BENEFITS FOR UNION INSIDERS

The public employee unions that have collective bargaining agreements with Phoenix each represent different “units,” or groups of workers with similar jobs.

Low and semi-skilled workers, such as groundskeepers and street maintenance, are represented by the Laborers' International Union of North America Local 777. Two work units are represented by separate AFSCME locals – one for skilled trades and the other for office and clerical staff.

Two unions represent police. PLEA is made up of rank-and-file officers while the Phoenix Police Sergeants and Lieutenants Association represents their mid-range supervisors.

One union represents firefighters. The seventh union – the Administrative, Supervisory, Professional & Technical Employees Association -- represents general city supervisors and other professionals such as computer specialists.

Standard clauses in bargaining agreements give each of the unions the exclusive right to represent all of the workers in their units. Benefits they negotiate apply to both union members and those who opt not to join.

The six full-time release positions for PLEA alone account for 12,480 hours of city-paid time every year. Guaranteed overtime adds another 960 hours.

All but two of the other unions are allowed three full-time release positions.

The Phoenix Police Sergeants and Lieutenants Association and Phoenix Fire Fighters Association Local 493 each have two top officials on full-time release.

The police supervisors are each allotted 208 hours of overtime annually.

The top positions in the firefighters’ union are each guaranteed 2,912 hours by the city, a quirk because of the 56-hour work weeks for department employees.

Aside from the top officials, the unions get banks of hours, which can be used to pull workers off their regular duties with the city and assign them to union tasks without the loss of any pay or benefits. Some of the contracts include guidance as to what those hours can be used for – attending meetings or conferences for example – but most do not, or include a clause that the time can be spent on any legitimate union business the association’s president deems appropriate.

Those time banks add up to almost 23,000 hours annually, the equivalent of more than 11 years for a single, full-time employee. In most cases, unused time can be carried into the next fiscal year.

COSTLY EMPLOYEES

The total cost of union release hours last fiscal year was about $3.7 million, based on pay records and benefits formulas provided by the city in response to a public records request. That includes about $2.6 million in total pay, plus more than $1 million for benefits.

The police and firefighters unions were the most costly. Release hours used by PLEA to represent officers cost taxpayers about $950,000, including benefits and overtime. The firefighters’ union accounted for almost $700,000.

Public safety employees tend to be the most expensive city workers. Four of the PLEA officials on full-time release made more than $100,000 last year in salary and overtime, with benefits adding roughly $40,000 to the cost of each of those positions. The other two were each paid more than $90,000 plus benefits.

The highest paid officials were in the union that represents police sergeants and lieutenants. Both were paid more than $150,000 last year, with benefits adding about $50,000 each in taxpayer expense.

The other five unions averaged about $420,000 apiece in total costs.

There was no separate accounting for the police and fire lobbyists in records released by the city.

Union financial statements indicate some top officials also draw paychecks from the labor organizations they represent in addition to their city salaries. Pete Gorraiz, the president of the firefighters union, was paid $70,521 plus benefits by the city last year. The disclosure form filed with the city shows the union also paid him $75,130 in wages. Gorraiz did not return repeated phone calls seeking comment, and city officials could not comment on whether he is drawing pay from taxpayers directly and through the union.

Among other unions, some did not pay salaries while others reported wages of as much as $17,400 for top officers who were also drawing city paychecks.

Union officials on full-time release do not have to account to city management for how they spend their time, though they do have to report sick and vacation leave as they would if they were working their regular jobs. The city also has no say in whether unions pay salaries to their top officials using dues withheld from members’ pay, Zuercher said.

It took the city a month to give a full accounting of how much all of those union hours cost the taxpayers. The inability of city officials to quickly account for union release time shows no one is watching how it is being used, said Councilman DiCiccio.

DiCiccio said he takes full responsibility for his vote in favor of the union agreements last year. The contracts were negotiated with city management and presented to the council about a week before the vote, he said. Though he read the contracts, he initially did not grasp the implications of the release provisions, he said, adding he wants to see them stripped from the agreements when they are renegotiated next year.

Aside from being a misuse of taxpayer money, paying union workers with city money weakens the bargaining position of management during contract negotiations, DiCiccio said. If unions were paying the salaries of their own officials, they might be more inclined to compromise on such things as wages and benefits. But since it is the taxpayers paying their salaries, they have no incentive to back down, he said.

“You have staff negotiating with staff,” he said. “You don’t have anyone from the outside that’s negotiating these contracts who feels their main responsibility is to protect the taxpayer.”

City management representatives in labor negotiations are not allowed to be union members, Zuercher said.

Thelda Williams, another council member who voted to approve the union contracts, said she too was unaware of the provisions for release time. All of the concessions the city has made to the unions when the economy was booming need to be re-examined when the contracts come up for renewal next year, said Williams, who faces re-election in November.

“We can’t afford to continue doing business this way,” Williams said. “We have given too much in the good years and we can’t afford it, nor should we. I think it’s out of proportion with the rest of the world and we need to get back to real life.”

Phoenix Mayor Phil Gordon and other members of the council who voted for the union contracts did not return repeated phone calls seeking comment.

AVOIDING TROUBLE

Union officials argue much of the city-paid release time is spent representing members in grievance and personnel hearings, adding that can avoid costly lawsuits.

Having a union representative available is particularly important for police officers, said Joe Clure, the newly elected president of PLEA. Police face more scrutiny than other city workers because of the nature of their work. In any major incident, such as an officer-involved shooting, their actions are often called into question. They could face both disciplinary action and criminal prosecution as a result.

The police union represents officers in about 300 investigations annually, Clure said. Under a 1975 U.S. Supreme Court case, police officers, like other union employees, have a right to have a representative present if they are questioned in any investigation that could lead to discipline. The release hours ensure a PLEA official is always available, so protecting the officer’s rights neither compromises nor delays the investigation.

For instance, if an officer is involved in a shooting and his judgment is questioned, the police department will likely send separate teams to investigate the criminal case and potential disciplinary action. If the officer invokes his right not to answer questions without a union representative present, that means he also cannot be questioned by detectives conducting the criminal investigation, Clure said.

“It doesn’t make sense to have a group of homicide investigators sitting out at the scene waiting on the union guy to go to work so your investigations can proceed,” Clure said. “It’s really just a cost of doing business. It’s good for the taxpayer because there are certain duties and obligations that both the association and the employer have under the ordinance, under federal labor law, that have to be comported with.”

LOBBYING HELP

As for the 500 hours PLEA gets for a lobbyist, Clure said the union spends much of that time at the Legislature arguing for things that benefit the city, such as protecting state-shared revenues from being cut.

Aside from the city-paid work done by a PLEA staff member, the union also retains a private lobbyist with its dues money.

Phoenix also lists 25 lobbyists who can represent the city at the state level, most of them city employees, according to disclosure reports filed with the Secretary of State. In the 2011 fiscal year, which ended in June, the city spent $297,538 on three outside lobbying firms to represent its interests at the state level, city records show. In 2010, Phoenix spent $492,000 on federal lobbying, according to data compiled by the Center for Responsive Politics.

UNION TRAINING

James Tierney, the president of the AFSCME local that represents skilled laborers, said the union also saves the city money by training its members and ensuring they abide by workplace rules. The union recently used some of its release hours to put on a two-day session to train union stewards on city personnel rules and ordinances. It also has put on training covering such things as employment discrimination laws.

“Training is a good thing,” Tierney said. “It benefits the stewards. It benefits the employees. But it actually benefits the city overall because if they see something that they know is wrong and could result in a lawsuit, they can tell management and we can head it off and get it rectified before it costs the city and the taxpayers anything. So it’s definitely a benefit to the city.”

Union officials also spend much of their release time protecting rank-and-file workers against retaliation from managers who make illegal or unsafe decisions, he said.

“That many release hours is a necessity because of the top-heaviness of management and the flawed decisions that come about because of the top heaviness of management,” he said. “And if it gets top heavier, we’re going to need more release hours.”

Ron Ramirez, president of the association that represents supervisory and professional workers, said he cannot explain why the organization needs so many release hours. The association has had full-time release positions for decades, he said. About two years ago, city officials asked the association to take an additional 1,500 release hours, apparently because it had become a standard condition in other labor agreements, according to Ramirez.

“I honestly tried not to get into that world,” Ramirez said of the added release time.

Janet Smith, Phoenix human resources director, said Ramirez wanted a fourth full-time release position for his union, but that the additional hour bank represented a compromise.

The Goldwater Institute attempted to interview officials in all seven unions that have agreements with the city, but only three agreed to interviews.

DOING THEIR JOB

Bolick of the Goldwater Institute said the arguments made by the city and labor leaders to justify release time are not enough to make the payments legal under the state’s constitution.

Bolick was the lead attorney in the case decided by the Arizona Supreme Court last year, which challenged a $97.4 million sales tax subsidy the City of Phoenix granted to the developer of a shopping mall.

To qualify as a legitimate payment, the contracts would have to lay out specific duties the union would be required to perform, and which would be of roughly equal value to the benefits they are receiving through taxpayer dollars, Bolick said.

Instead, the Phoenix contracts impose few requirements and give union officials near-unbridled leeway in determining how the release hours can be used.

“The valuable consideration the unions are giving is almost completely absent,” Bolick said. “These are one-sided agreements and you can’t have that under the constitution.”

The Arizona Supreme Court addressed government-paid union time in a 1984 case involving a teacher who was released from her classroom duties to do union business while continuing to draw part of her salary from the school district. In that case, Wistuber v. Paradise Valley Unified School District, the court ruled the agreement with the teacher’s union was legal because it imposed “substantial” duties on the teacher that benefited the district, and that the partial salary she was drawing was “relatively modest.”

“The constitution may still be violated if the value to be received by the public is far exceeded by the consideration being paid by the public,” the court stated in its ruling.

The court reaffirmed that balancing test last year in Turken v. Gordon, the case brought by the Goldwater Institute.

The Phoenix contracts fall short of the standard, Bolick said. The vague and implied benefits of a better working relationship with employees and tradeoffs during wage negotiations are not enough to overcome the gift ban, especially with provisions such as using city money to pay for union lobbying, he said.

“What the court is looking for is an enforceable obligation whose benefits are roughly commensurate with the city’s obligations,” Bolick said. “So a feel-good atmosphere certainly would not qualify as consideration. I saw virtually nothing in these contracts by way of enforceable obligations that provide a tangible benefit to the city.”

Zuercher, the assistant city manager, said the city is not giving away anything to the unions. When labor agreements are negotiated, there is essentially a pot of money the city is willing to spend in pay and benefits. How that money gets allocated is what is negotiated, he said.

Release time is a benefit to workers, just like insurance and retirement contributions, that gets rolled into the overall discussion, Zuercher said, adding his is a management rather than a legal perspective.

“Nobody gave anybody anything,” he said. “They were negotiated in a give-and-take, and they were costed against the package at the time. So the hours aren’t free to the union. They were taken by them in lieu of something else that they might have gotten.”

SPREADING THE WEALTH

Phoenix is not alone in its largesse to labor organizations. Other Arizona cities also provide release time to unions with few restrictions. So does the federal government.

Among the cities surveyed only Scottsdale does not have any collective bargaining agreements – or release time – with labor organizations. The State of Arizona also has no labor contracts and no release time for most agencies. The Arizona Department of Public Safety does allow up to 48 hours per month of release time for the top official in two labor organizations that represent its officers. Elected board members receive additional time. The agency does not have formal contracts with the unions, but the release hours are allowed by policy, said agency spokesman Steve Harrison.

Tempe, Mesa, Chandler and Glendale all use taxpayer money to pay salaries and benefits of union officials doing union work.

Tempe has four unions representing police, firefighters, supervisors and front-line workers. The Service Employees International Union, which represents regular city workers, gets a bank of 6,000 hours of paid time per year to spend on union business. In addition, SEIU receives release time for union representatives to attend meetings with Tempe city officials, or to represent workers in grievance and disciplinary hearings.

The Tempe police union gets 2,856 hours of city-paid time to conduct union business. The Tempe Officers Association also is allowed to designate 12 representatives who qualify for release time to attend grievance and disciplinary hearings, and the top union officials also get an unspecified amount of release time to participate in meetings with city management.

Executive board members in the Tempe union representing supervisors each are released from duty to attend up to 24 meetings that can last up to four hours each every year. The supervisors’ union also receives a bank of 300 additional hours to be used as union officials see fit.

Chandler has agreements with four unions that represent police officers, police supervisors, firefighters and rank-and-file workers. Glendale has contracts with police and fire unions. Both cities allot thousands of hours of release time to allow union officials to conduct union business at city expense.

Mesa’s contract grants the firefighter’s union 1,500 hours to conduct union business. The city’s agreement with the police association is pending.

‘HATCHETED AT MULTIPLE LEVELS’

At the federal level, release time is allowed for labor officials for certain specified purposes, including representing members and negotiating contracts. Federal law specifically bars the use of release time for strictly union business, such as recruiting new members or internal elections. However, the federal statute does include a loophole that allows the unlimited use of release hours for any other purpose deemed reasonable and necessary by the agency.

Release time for union officials cost the federal government more than $129 million in 2009, the most recent year for which figures are available, according to a report from the U.S. Office of Personnel Management.

“The taxpayers are getting hatcheted at multiple levels,” said Leslie Paige, vice president of policy and communication at Citizens Against Government Waste (CAGW), a nonpartisan Washington, D.C., nonprofit watchdog group that tracks federal spending.

Costs to taxpayers from release time goes far beyond the dollars spent on salary and benefits for government workers who do not do their government jobs, Paige said. There is no pressure on the union to settle grievances or agree to concessions in protracted negotiations with government agencies when the money paying their salaries is not coming out of union dues, she said.

“If they were paying for that out of their own pockets, you can bet there would be a more streamlined resolution to disputes and grievances,” she said. “The taxpayers may not even know that they are subsidizing the very people that are picking their pockets.”

CAGW has long supported legislation that would ban the use of taxpayer dollars to pay union officials, known as “official time” in federal law. Legislation introduced this year in the House of Representatives has gone nowhere, in part because elected officials are reluctant to take on powerful labor organizations that can respond with money and manpower to campaign against politicians deemed hostile to unions, she said.

Even that is a perverse consequence of release time, Paige said. Money the unions would otherwise have to spend paying top officers is freed up for other activities, including electioneering, when taxpayers are footing the bill for salaries and benefits, she said.

The best way to deal with union release time is to ban the practice, Paige said. Short of that, any government agency that does allow it should require strict oversight and reporting to ensure the time is being used for clearly defined and legal purposes, she said.

SHORTCHANGING MEMBERS

James Sherk, senior policy analyst in labor economics at the Heritage Foundation, said release time can end up shortchanging union members, as well as taxpayers. Even in the private sector, management is sometimes willing to pay top union officials if it brings concessions in pay and benefits that will apply to all workers, said Sherk, who advocated eliminating official time at the federal level during congressional testimony earlier this year.

Surveys conducted in the late 1990s found that about half of the private sector companies that had collective bargaining agreements with labor unions had some provision for release time, Sherk said, adding he has not seen more recent data.

“A lot of managers will say ‘it’s cheaper for me to put a few of them on the payroll than it is to pay the higher wages’” for everyone, Sherk said. “And if the union will trade off the higher wages for some institutional pork, we’ll take that. That’s what tends to happen. The union will trade the interests of the workers for their own institutional position.”

But at least in the private sector, there is pressure on management to control costs or face being wiped out by their competitors. That pressure does not exist in government, where there is no competition and no bottom line to protect, Sherk said.

That is largely the reason that government workers now make up more than half of all union members in the United States, he said.

About 11.9 percent of the nation’s workforce is comprised of union members, according to 2010 data compiled at Unionstats.com. About 52 percent of them work for some level of government, from federal agencies down to local school districts.

Among government employees, union membership is about 36.2 percent nationally, according to Unionstats.com. In the private sector, it’s about 6.9 percent.

In Arizona, about 6.4 percent of workers belong to unions. Most of them work for some level of government. About 19.7 percent of government workers in Arizona belong to a union. In the private sector, it’s about 3.6 percent.

Unions that represent government workers are able to essentially elect their own bosses, Sherk said. They can use union money to donate to candidates directly, or to finance such things as independent advertising campaigns and get-out-the vote efforts to support those politicians sympathetic to their cause, he said.

“When the taxpayers are subsidizing it all, it frees up the union resources to engage in different political activities because they don’t have to spend it to do their actual jobs. The taxpayers are doing that,” Sherk said.

Political activism by the unions, particularly at the city level, makes the agreements with Phoenix labor organizations even more troubling and strengthens the argument that they are illegal, Bolick said. Because the unions don’t have to pay their top people, they can use money they otherwise would have paid in salaries to help elect city council members who are likely to approve the lopsided agreements, Bolick said.

That is exactly the kind of special interest influence the state’s constitution is meant to prevent, he said.

“That’s why you have a gift clause where the courts will take a look and see what was negotiated, and to see if the taxpayers are being ripped off,” Bolick said. “So anytime you have a cozy deal, that’s when an alarm bell is rung under the constitution. And this one is a fire alarm.”

Mark Flatten is an investigative reporter for the Goldwater Institute.

Sidebar: Read Nick Dranias' policy recommendation here

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