NYSUT Update: Exposing Martin Messner's Mess

Let’s begin with NYSUT’s Form 990, which every tax-exempt organization is required to file annually with the IRS. The most recent one available covers the period September 2014-August 2015. It shows NYSUT with an $18.9 million deficit. It was signed on January 13, 2016 by Martin Messner, NYSUT’s secretary-treasurer.

Three months later, Messner addressed the delegates of the NYSUT representative assembly and told them the union had recorded its “second surplus in a row.” (at the 1:55 mark) He also stated that NYSUT pension fund was 86 percent funded. (at the 2:20 mark) Messner did not address the costs of post-retirement health care.

Less than four months later, NYSUT sent a letter to local affiliate presidents with quite a different story. Though the date on the letter is July 26, 2015, it was actually sent on that date in 2016, as the contents of the letter will confirm. The key details are:

In January of 2016, the NYSUT officers were notified of a looming pension spike for the NYSUT pension system that was extremely high. In late April of 2016, we received a second report from our actuary that was even more damaging and the numbers have reached a point that absent action they could jeopardize the entire organization.

Messner did not inform the delegates of the “looming pension spike” NYSUT was warned about in January, and his rosy forecast for the pension system somehow came crashing down only three weeks after his speech.

Intercepts

NYSUT Can’t Keep Its Stories Straight

Mike Antonucci has continued to cover the NYSUT story we have been reporting about. Here he quotes from our Mike Lillis post:

Michael Lillis is a candidate for the NYSUT presidency, and he told New York City education blogger Norm Scott that his caucus is “aware of the uncertain economic situation within NYSUT, and we have grave concerns that if not addressed properly, this house of cards could come tumbling down, leaving members vulnerable to the worst of the political winds out there.”  

Mike also did a piece about Harry Lirtzman's analysis- NYSUT is a Ponzi Scheme - Harris Lirtzman Analyzes... 
in this follow-up where he points to Harry's background and how that when Harry speaks people should listen:

With elections approaching, activists are taking notice. NYSUT’s officers dismiss critics outside the union, but it’s difficult to marginalize Harris Lirtzman, whose credentials both as a labor advocate and in the financial world are unique and seemingly impeccable.

 

Lirtzman became a New York City teacher late in life, after

Harris Lirtzman in NY Times piece

a long career at Merrill Lynch and the New York City Comptroller’s Office, rising to the position of deputy comptroller for administration. As a teacher, Lirtzman was profiled in The New York Times for blowing the whistle on violations of the state’s special education regulations, charges for which he was ultimately vindicated.

 

Lirtzman has taken a special interest in NYSUT’s finances. In a letter to New York City education blogger Norm Scott, he described its situation bluntly, charging that it used member dues to pay overdue debts.

 

“NYSUT is a Ponzi scheme,” he said. “So long as the cash keeps moving from dues-paying members to NYSUT to the AFT to the UFT and back around it can keep its doors open.”

 

But he suggested that if the flow of dues slows for any reason, the structure collapses. “No one ever suspected that the cash could stop,” he said. “But it will stop and soon.”

 

Lirtzman explained in layman’s terms the two ways to fund a retirement system. “You can either make arrangements to pay for those commitments by funding them over time and investing those funds to earn more money,” he wrote. “Or you can take cash that comes in today from member dues and use it to pay the benefits you owe your current and retired employees. The first way is prudent but can be expensive. The second way can work but only if everything plays out the way you hope.”

 

In this scenario, a Friedrichs-type court action that results in an end to agency fees (paid by non-member teachers who benefit from collective bargaining) or an economic downturn that forces downsizing of school staffs could create a crisis.

 

Lirtzman thinks drastic action is necessary. “We can keep the worst of this from happening if we take the time, now, to understand how badly NYSUT is managed, how terribly our money is being misused and how much we will lose if we don’t act,” he wrote. “I hope that the political strategy [voting out incumbent NYSUT leaders] works in the long run. I’m afraid that we don’t have the long run to find out.”

 

As The New York Times suggested in that profile, “Perhaps it pays to heed Harris Lirtzman.”