The nation’s largest teachers’ union may soon come to regret the educational-policy buzzwords “accountability” and “testing.” The Internal Revenue Service is currently auditing the National Education Association and students of the NEA’s political practices are betting that the powerful union’s “new math” approach to its returns will flunk under long-overdue examination. A convincing stack of documents collected by the Landmark Legal Foundation reveals that for the past ten years the millions of tax-exempt funds that the 2.7-million-member union spends on political activity has wound up amounting to “zero” on its tax returns.
”The IRS is potentially in the position, if it does its job, to collect tens of millions in corporate taxes owed,” says Mark R. Levin, the tenacious president of Landmark (he is also an NRO contributor) who first filed a formal complaint against the NEA with the IRS in 2000. The NEA claims it got a clean bill of health from an IRS review of its 1993 return, but that’s history. Landmark’s thorough critique begins with the union’s 1994 return and rests on recent evidence unavailable to the IRS during any previous review.
It is perfectly legal for the NEA to use members’ dues to support political activity. The catch is that such expenditures must be fully accounted for and taxes must be paid on any tax-exempt general revenues that are spent on politics. “Political expenditures” that must be reported on tax returns are those “intended to influence the selection, nomination, election, or appointment of anyone to a federal, state, or local public office….”
Unions also make contributions to candidates and political parties through political-action committees (PACs) that collect voluntary contributions. The NEA has one of the largest PACs, which donates millions to Democratic candidates. But there is far more money available for campaigning from tens of millions collected in involuntary dues. In addition to wanting to avoid paying taxes on these expenditures, unions–including the NEA–would like to keep their members in the dark about exactly how the money is being used. Unfortunately for the union bosses, under the Supreme Court’s Beck decision, union members have a right to demand a refund of the portion of their dues spent on politics.
In 1996, as has been its practice for the past ten years, the NEA claimed on its income-tax return that it hadn’t spent a penny on politics. The claim appears to be directly contradicted by internal NEA documents Landmark has made publicly available and brought to the attention of the IRS. In just one example, the NEA’s “1996 Strategic Focus Plan” dedicated $9.6 million to “build bipartisan constituencies among those running for and elected to public office to support public education.” That was the year that the NEA and other unions coordinated directly with the Democratic National Committee as a member of “National Coordinated Campaign Steering Committee” that met throughout the year to review and approve Democratic candidates’ campaign plans. More recently, the NEA’s strategic plan called for spending about $2 million to elect “pro-public education candidates in the 2000 general election.”
Each year, the NEA spends about $75 million (state and local affiliates contribute an additional $43 million) on its 1,800-member “UniServ” staff who serve as local administrators for the union. According to the NEA’s policy guidelines, the responsibilities for UniServ staff include “developing and/or executing local association political action.” It’s Mark Levin’s view that these employees amount to 1,8000 precinct workers, paid entirely by tax-exempt funds. Randall J. Moody, the NEA’s candid federal policy manager recently stated, “Politics move our policy. We work through UniServ.”
And it’s not just conservatives who see the NEA discrepancies. After reviewing the NEA’s campaigning documents (at Landmark’s request), the former head of the IRS’s nonprofit department concluded, “it appears that NEA engaged in political activities, the costs of which should have been reported as political expenditures on line 81 of its Forms 990.” Edward D. Coleman also agreed that “the expenditures concerning UniServ directors appear to have been reportable political expenditures.”
The tens of millions that the NEA spends on politics, without accountability to its members or taxpayers, has never caught the interest of celebrated campaign-finance reformers on Capitol Hill. But a congressional hearing was held in June 2002 to examine possible tax violations by the NEA. Rep. Charlie Norwood (R., Ga.), the chairman of the House Subcommittee on Workforce Protections, urged the IRS to take action because “the evidence presented by Landmark establishes more than a prima facie case that the NEA is violating the Internal Revenue Code by failing to report taxable expenditures and pay income taxes on them.”
At the hearing, the NEA ’s general counsel Robert H. Chanin defended the millions in political expenditures from its general treasury, arguing that they fell under IRS exemptions allowed for union communications with members and PAC administration. Levin, having combed through their internal records, is not convinced: “I can assure you that they’re not spending tens of millions of dollars just to send out fliers to their members.”
During the 2000 elections, in an interview with Education Week, Chanin declared, “So you tell me how I can possibly separate NEA’s collective bargaining efforts from politics–you just can’t. It’s all politics.” You hear that, auditors? With an annual budget of $270,000,000, there could be a significant windfall to taxpayers from the union’s back taxes.