Wall Street Journal - Union Doozy

October 8, 2003 -- The lead editorial in today's Wall Street Journal discusses Landmark's leading role in bringing about reform of union reporting requirements at the Department of Labor in light of scandals involving the leadership of the Washington Teachers Union.

If ever there was a poster child for the Labor Department's bid to bring union bookkeeping into the sunlight, it's Barbara Bullock. You might recall Miss Bullock from the headlines last December, when FBI agents raided the home of the Washington Teachers' Union president and found everything from fur coats to a Tiffany silver service they said she'd bought with $2.5 million in dues money stolen from the rank and file.

Yesterday Ms. Bullock was in federal court in Washington, D.C., where she pleaded guilty to mail fraud and conspiracy charges that will translate into a sentence of nine to 10 years in prison. Labor Secretary Elaine Chao was also at the courthouse, to remind us that this scandal involves far more than the greed of a handful of union cronies. It also represents, she says, precisely the "failure of accountability" and "absence of oversight" that new disclosure requirements her department released Friday are aimed at correcting.

At the heart of this disclosure is the LM-2, the form unions are required to file with Labor detailing their expenditures. The form dates to 1959 legislation designed to keep organized crime out of the union movement and had unfortunately been largely untouched since then, allowing unions to hide vast expenditures in big lump sums under vague categories. Until Secretary Chao came along. Under the new form, among other disclosures, big unions will have to itemize all expenses over $5,000.

The criminal information statement against Ms. Bullock illustrates what Secretary Chao is talking about. It describes how union checks were written for "special projects," "professional services," and "expense reimbursements." Back in February, her chauffeur admitted to receiving $7,000 toward a new Caddy and a salary that worked out to more than $100,000 a year for his part in the scam. Part of the conspiracy, he admitted, was in keeping his existence off the LM-2.

And need we say that this is the same union that has done everything in its power to prevent poor kids in the District from getting vouchers worth just a few thousand dollars to escape its failing public-school monopoly.

This isn't the only abuse of their dues money union members have to worry about. Take the National Education Association. The NEA claims it spends absolutely nothing on politics. Yet as the Landmark Legal Foundation documented in a detailed complaint filed with Labor back in April 2002, the NEA LM-2 categories include $62 million in "Grants to and Joint Projects with State and Local Affiliates" and $45 million in "Other Disbursements." That's pretty big for just "Other."

Now, the Washington Teachers' Union is not part of the NEA. But in both cases the ambiguity of the reporting categories have kept union members in the dark about where their dues are going. In the past two years everyone from Big Business to the Catholic Church have been under sustained public pressure for fuller disclosure. But now the union leaders who rightly found the $6,000 shower curtain bought by then Tyco CEO Dennis Kozlowski appalling suddenly say that forcing them to report expenditures of $5,000-plus to their own rank and file is too onerous.

In a statement by the American Federation of Teachers, the WTU parent, on Ms. Bullock's conviction, the union insisted that the new disclosure rules would not have prevented the theft. AFL-CIO chief John Sweeney went even further, saying that the new LM-2 revisions were "craftily designed to weaken unions -- the strongest advocates for American workers -- as our nation prepares for the 2004 elections." Note to Mr. Sweeney: The first new LM-2 filing will not happen until at least March 2005.

Remember, too, these new requirements apply only to the largest unions, those with annual receipts more than $250,000, about 20% of all unions. To make it even easier, the Labor Department has even come up with free software to let them file electronically. Plainly the public appetite for this information is there. Since Labor began posting union financial disclosure forms on the Internet in June 2002 (www.union-reports.dol.gov), it says it has received about 425,000 hits per month.

As Ms. Chao noted in her statement at the courthouse yesterday, the vast majority of union leaders are "hard working, decent and dedicated to their members." They have nothing to fear from a form that allows those members to see how their money is being spent. So why is there more outrage among union leaders at Ms. Chao than at Ms. Bullock?