CTU Million Dollar Loan Questions
By Therese Boyle
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| Clinician Therese Boyle will run for CTU president with Members First. |
Dear CTU Officers, Trustees and Executive Board Members,
I am writing to ask for clarification about the $1 million loan and related financial matters that were discussed at the April 2018 and May 2018 House of Delegates (HOD) meetings. AFT President Randi Weingarten and IFT President Dan Montgomery were present at the May 2018 HOD and heard the delegate questions related to the loan and I have copied them on this email as a courtesy. I have also copied Stacy Davis Gates, CTU Political and Legislative Director as a courtesy, since our PAC was the recipient of a portion of the loan monies. In view of the fact that our union is facing a budget shortfall of approximately $3 million dollars in FY19 (if we do not make changes), I want to have a clear understanding of the $1 million loan.
At the April 2018 and May 2018 HOD meetings, CTU VP Jesse Sharkey explained that delegates had approved a $1 million loan at a winter 2015 HOD meeting. I have attached a copy of the Resolution to Amend the CTU Budget to Fund a Political and Contract Fight that was approved by the HOD in winter 2015 to this email. The Resolution approved that “CTU increase it 2015 budget by $1.4 million, to be paid for out of reserves and with the explicit understanding that all of the CTU budgetary safeguards and procedures remain in effect, and that monies not spent be returned to the CTU’s treasury.”
Below are my questions for clarification:
1. Is this Resolution serving as the HOD ‘approval’ for the loan? The language in the Resolution does not use the term loan. The Resolution also states the the CTU Constitution and By-Laws “gives the power to adopt urgent and unforseen spending to the Executive Board” and that such actions “be reported to the House of Delegates.” I want to be clear on how the loan was approved.
2. Marty Ritter, of the CTU Organizing Department, explained to me that the loan document is held upstairs at the CTU office. I am requesting that the loan document be shared with delegates so that we can see the signatories to the loan and the terms of the loan.
3. The CTU PAC (the one established in 1974) did not document the loan on any of the D-2 Quarterly Reports Section A-3 Loans Received filed with the Illinois State Board of Elections. Why is the loan to the CTU PAC not documented with the Illinois State Board of Elections?
4. Was the original loan made in the amount $1.4 million as stated in the Resolution?
a. Page 4 of the CTU FY19 Proposed Budget (see attached) shows the loan amount to be $1,003,007.00. Did the CTU PAC originally take a loan $1.4 million and then return “monies not spent” of $396,993.00 to the CTU treasury?
b. Is there documentation of the original loan disbursement and the return of monies not spent? I could not find the loan information on the CTU 2014 IRS 990 Form (see attached). However, the CTU 2014 990 did show CTU PAC Revenue ($1,920,944) and CTU PAC Expenses ($2,946,085) indicating the PAC spent $1,025,141 more than it received.
c. Page 4 of the CTU FY 19 Proposed Budget indicates a repayment was made by the CTU PAC to CTU reserves in the amount of $75,052.00 in March 2018. I looked at the three PACs operated by CTU (Chicago Teachers Union PAC Illinois Federation of Teachers 1974, Chicago Teachers Union Local 1 PAC 2018, and Chicagoans United for Economic Security PAC 2014) and was not able to see the amount of $75,052.00 in any of the D-2 Quarterly Reports (Reporting period: 1/1/2018 thru 3/31/2018) Section B Expenditures. Why is the $75,052.00 payment from the PAC funds not documented with the Illinois State Board of Elections?
d. The CTU 03/31/18 Statement of Financial Position/Statement of Activities (see attached), given to the delegates at the May 2018 HOD, did not show the PAC repayment of $75,052.00 that was reported on Page 4 of the CTU FY19 Proposed Budget as being made in March 2018. Where can I see this payment?
5. The Resolution the HOD approved for $1.4 million was “to be spent in roughly equal parts on political campaigns, our contract campaign, and communicating our issues on education, pensions, and schools to the public.”
a. Can you provide an accounting for how the $1.4 million or $1,003,007.00 was spent? At the spring 2018 HOD meetings, Jesse explained the PAC portion of the loan was spent to unseat Rahm Emanuel. Can delegates get a reporting of how the PAC portion of the loan was spent?
b. Was the money spent in roughly equal thirds as stated n the Resolution: PAC, Contract Campaign, & Communications?
c. Which PAC fund did the money go to; the Chicago Teachers Union PAC Illinois Federation of Teachers 1974 or the Chicagoans United for Economic Security PAC 2014?
c. Is the PAC responsible for paying back only the 1/3 given to PAC? Or is PAC also responsible for paying back money spent on the Contract Campaign and Communications?
d. The 10 year repayment plan detailed on page 4 of the CTU FY19 Proposed Budget indicates the loan will be paid back at the rate of approximately $100,000 per year. What percentage of the average annual PAC contributions does the $100,000 repayment represent? Are PAC contributions predicted to fall with the projected member/fee payer fall-off we are expecting from both Janus and the Illinois Policy Institute campaigns? If so, will this impact our PACs ability to repay the loan according to the schedule of payments shown on the CTY FY19 Proposed Budget?
6. The Resolution reported that CTU had $8.8 million in reserves as of winter 2015. The March 31, 2018 Statement of Financial Position handed out at the May 2nd HOD shows we have Net Assets of $3,525,206.00.
a. Have our reserves have dropped by $5,274,794.00 over the past three years?
b. If we loaned the PAC $1,003.007.00, that leaves $4,271,787.00 not accounted for in terms of diminished reserves. How and when did we spend the additional $4,271,787.00 in reserves? Did CTU make other loans?
7. Are the acronyms COPE and PAC used interchangeably by CTU when discussing the loan? The Resolution talks about ‘giving money from CTU reserves to CTU PAC’ and the CTU budget references ‘repayment of the COPE loan’.
Thank you in advance for your response,
Therese Boyle, Citywide Clinician Delegate
Copy of Resolution:
RESOLUTION TO AMEND THE CTU BUDGET TO FUND A
POLITICAL AND CONTRACT FIGHT
POLITICAL AND CONTRACT FIGHT
WHEREAS, in April of 2014 the Director of Financial Operations of the Chicago Teachers Union presented to the Executive Board of the CTU, and in June of 2014, the House of Delegates adopted, a total budget of $29.1 million dollars; abs
WHEREAS, this budget was in keeping with the prudent budget practices the leadership has adopted since coming to office—in that time we have brought in $4.9 million more than we have spent resulting in an $8.8 million financial reserve; and
WHEREAS, in assessing the political and contractual challenges that our union faces the leadership believes that it will be necessary to set aside an additional fund of $1.4 million, to be spent in roughly equal parts on political campaigns, our contract campaign, and communicating our issues on education, pensions, and schools to the public; and
WHEREAS, the Constitution and By-Laws of the CTU gives the power to adopt a budget to the HOD—Article VI, Section 2(g):
The Executive Board shall submit the proposed budget, together with its recommendations, to the May meeting of the House of Delegates. No budget shall be in force until it has been passed by the House; and
WHEREAS, the Constitution and By-Laws of the CTU gives the power to adopt urgent and unforseen spending to the Executive Board—Article VI, Section (h)
The union budget shall provide a contingent fund for the Executive Board to meet emergency expenses in Union service; and
WHEREAS, the Constitution and By-Laws of the CTU specify that such actions of the Executive Board be reported to the House of Delegates, the officers and Executive Board nevertheless thought it important to seek approval from the House of Delegates for such a large expenditure; and
WHEREAS, the further reasons for additional political spending include our assessment that this moment includes more potential and peril alike than any time in recent memory because the current mayor and his backers in city council have carried out an aggressive policy of school cuts, staff reductions, charter expansion, and pension attacks despite widespread protest and opposition to their policies, which in turn has created record low poll numbers, and the entry of many CTU members and movement allies into the electoral arena; and
WHEREAS, the prospect of electing CTU champions heartens us, but the prospect of an emboldened mayor with a rubber-stamp city council and an anti-union governor demoralizes us just as we head into contract negotiations; and
WHEREAS, the further reasons the leadership proposes to spend additional monies on our upcoming contract fight flow from the need to create unity and excitement on the level of our last contract fight, despite political obstacles and internal stress in our buildings; and
WHEREAS, the further reasons to spend money on communications to our members, networks of supporters and the public reflect the fact that the CTU has emerged as a trusted voice for educational issues, and promoting our viewpoint will pay dividends with both public opinion and with confidence of our own membership; therefore be it
RESOLVED, that the CTU increase it 2015 budget by $1.4 million, to be paid for out of reserves and with the explicit understanding that all of the CTU budgetary safeguards and procedures remain in effect, and that monies not spent be returned to the CTU’s treasury.
Adopted Adopted as amended Defeated Tabled Other
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