Service Employees International Union (SEIU) President Andrew Stern plans to retire as head of the union that he helped to transform into the most powerful in America. Considering the access he enjoys to the Obama administration — he was the most frequent visitor to the White House last year — the timing of his departure seems odd.
While it could be seen as a case of knowing when to quit so as to go out on top, or of riding into the sunset following SEIU’s huge victory in helping ram Obamacare through Congress, there may be another, much less triumphant reason for Stern to quit now.
He may be getting off the Titanic that is SEIU before it runs headlong into the proverbial iceberg in the form of severely underfunded pensions. As Diana Furchtgott-Roth of the Hudson Institute notes in a 2009 study that compares union-sponsored vs. private pension funds:
On July 11, 2008, in response to an article published in the July 9 edition of the New York Sun by Diana Furchtgott-Roth on the state of union pensions, the Service Employees International Union (SEIU) issued a blistering press release. The article stated “Yet in 2006, the SEIU National Industry Pension Plan, a plan for the rank-and-file members, covering 100,787 workers, was 75% funded. That is, it had three-fourths of the money it needed to pay benefit obligations of workers and retirees. In contrast, a separate fund for the union’s own employees, numbering 1,305, participants was 91% funded. Even better, the pension fund for SEIU officers and employees, which had 6,595 members, was 103% funded.”
The SEIU lambasted the article and claimed that the SEIU National Industry Pension Fund had achieved high funding levels, 92 percent in 2006, and 96 percent in 2008. Now, perhaps the union’s internal calculations showed the SEIU pension plan was in good shape, but in 2009, the SEIU National Pension Fund reported to the DOL that it was in critical status—a sign of serious funding deficiencies that suggests the SEIU’s arguments were ignorant at best, and disingenuous or worse if they were aware of these problems22.
In addition, three of SEIU’s pension funds were in endangered status as of 2008, and this year the 1199 Pension Fund declared critical status.
The Local 32BJ District 36 Building Maintenance Pension and the Local 32BJ District 36 Building Operators Pensions cover together 7,000 people. And the SEIU 1199 Greater New York Pension covers another 29,000, or 36,000 in New York in all.
Whatever the reason for the disparity in funding between rank-and-file pensions and those of SEIU staff and officers, it doesn’t look good. With Stern gone, it’s somebody else’s problem now. That somebody else will most likely be SEIU Treasurer Anna Burger, who has long been considered Stern’s heir apparent, though, as Politico‘s Ben Smith reports, she may be challenged from within the union.