June 20, 2002 -- Landmark President Mark R. Levin testified before the the House Committee on Education and the Workforce, the Subcommittee on Worforce Protections, on the political activities of the NEA in violation of federal tax, campaign and labor laws.
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Opening Statement of
Mark R. Levin, President
Landmark Legal Foundation
Subcommittee on Workforce Protections
House Education and Workforce Committee
June 20, 2002
Do the 2.7 million members of the National Education Association (“NEA”) – which is the nation’s largest union – know how their dues are being used? The answer is no. More specifically, do they know how much of their money is being used to influence political activities at the federal, state and local levels? The answer is no.
Does the Internal Revenue Service (“IRS”) – which is supposed to enforce the Internal Revenue Code (“IRC”) -- know how much tax-exempt, general revenue the NEA spends on political activities? The answer is no. Does the Department of Labor (“Labor”) know how much money the NEA spends on political activities? The answer is no.
While we cannot determine the full extent to which the NEA is directly and indirectly participating in political activities, or the exact level of funding it expends in this regard, the fact that it is active in political campaigns, and spends millions of tax-exempt dollars on these activities, is beyond dispute. The evidence for this includes the NEA’s own budgets, strategic plans, financial statements, accomplishment reports, handbooks, and information provided to the Federal Election Commission (“FEC”) in response to subpoenas issued by that agency in the performance of an investigation.
On June 23, 2000, Landmark Legal Foundation filed a comprehensive complaint against the NEA with the IRS. The complaint provides substantial and specific evidence of the NEA’s political activities and expenditures. On July 20, 2001, Landmark filed a second comprehensive complaint against the NEA with the IRS. In addition to further examples of the NEA’s political expenditures, Landmark provided the IRS with significant information disclosing the close coordination of political strategy and expenditures among the NEA, the Democratic National Committee (“DNC”), other Democratic organizations, the 1996 Clinton-Gore campaign, other Democratic candidates, the AFL-CIO, and Emily’s List.
I have attached Landmark’s complaints against the NEA, including additional related complaints filed with the IRS, FEC and Labor, to my written statement. I would also request that the exhibit books Landmark provided to these agencies as attachments to the complaints be included in this Committee’s record as they provide voluminous evidence of the NEA’s political activities and expenditures.
Some examples of the NEA’s political expenditures included:
In its 1998-2000 Strategic Plan and Budget, the NEA’s strategic priorities include:
-$350,000 for “cyberspace advocacy systems developed and maintain on the NEA and state affiliate Web sties that mobilize Association members and the public in support of pro-public education legislation and candidates at the state and federal level.”
-$386,000 for “organizational partnerships with political parties, campaign committees, and political organizations representing elected officials at the state and national levels strengthened, increasing legislators’ commitment to support public education on a bipartisan basis.”
-$540,000 over two years for development of a “national political strategy … to address issues such as congressional and legislative reapportionment and redistricting, campaign finance reform, candidate recruitment, independent expenditures, early voting, and vote-by-mail programs in order to strengthen support for pro-public education candidates. …”
-The 1998-1999 NEA Interim Financial Statements, prepared by NEA auditors, reported an actual expenditure of $3,026,212 through April 30, 1999 for “Increased and lasting bipartisan political advocacy support.” Moreover, the NEA budgeted an additional $2,033,650 for the remaining four months of the fiscal year ending on August 31, 1999.
- The NEA’s 1996 Strategic Focus Plan included:$9.6 million to “build bipartisan constituencies among those running for and elected to public office to support public education.” Activities designed to accomplish this objective included: “Screening candidates for federal office; conducting political surveys for candidate evaluation; mobilize members and other resources… to support the election of pro-education candidates and ballot measures; provide technical assistance, surveys, and training in political campaign work to affiliates and member at all levels; identify and evaluate new/innovative ways to effect election results, such as mail ballot early voting, term limits on state elected officials, etc.; cultivate working relationships with Democratic and Republican parties.”
Some examples of the NEA’s coordination activities include:
- The NEA’s Strategic Plan and Budget for fiscal years 2000-2002 indicates an allotment of $1,993,735 for “[a]coordinated state-specific campaign developed and implemented to elect bipartisan pro-public education candidates in the 2000 general election.”
-In 1995 and 1996, a group known as the “National Coordinated Campaign Steering Committee” (“Steering Committee”) met between six and eight times for the purpose of planning the coordinated campaign. The Steering Committee met at DNC headquarters in Washington, DC; in New Orleans, LA; in August of 1995; and in Chicago, IL, during the time of the Democratic National Convention (August 26-29, 1996). Attendees included representatives from the NEA, DNC, the Democratic Congressional Campaign Committee (“DCCC”), the Clinton/Gore ’96 Primary Committee and the Clinton/Gore ’96 General Committee, and EMILY’s List.
- During 1996, an extensive Coordinated Campaign operated in the state of North Carolina with the goal of electing Democratic candidates. The Coordinated Campaign provided services such as voter registration activities, early vote programs, staff training, and voter canvassing at the state and local levels.
-A statement from the Etheridge for Congress Committee, which participated in the Coordinated Campaign, demonstrates the extent to which the NEA participated and coordinated political activities:
When the draft plan is initialized in the state, it is forwarded to the DNC for review. If the plan meets the DNC’s specifications, it is shared with the National Coordinated Campaign funding partners at the AFL-CIO, NEA, Emily’s List (in targeted states), and the other national campaign committees for review. When the DNC and it’s (sic) national partners, including the DSCC/DCCC/DGA/LCC, the AFL-CIO and the NEA agree on the contents of a plan, each national partner will give their funding commitment to the state.
The NEA and its state affiliates are 501(c)(5) tax-exempt organizations. Each is required to file a Form 990 tax return. The instructions accompanying the Form 990 require explicitly that certain political expenditures must be reported by exempt organizations. The instructions state, in part:
Line 81 Expenditures for political purposes-
A political expenditure is one intended to influence the selection, nomination, election, or appointment of anyone to a federal, state, or local public office, or office in a political organization, or the election of Presidential or Vice Presidential electors. It does not matter whether the attempt succeeds.
An expenditure includes a payment, distribution, loan, advance, deposit, or gift of money, or anything of value. It also includes a contract, promise, or agreement to make an expenditure, whether or not legally enforceable.
The NEA is permitted to engage in political activity, as defined by IRC 527(f) (and set forth in the instructions to Line 81, above), if all such political expenditures and activities are fully accounted for and reported to the IRS as taxable income. Despite overwhelming and indisputable evidence that the NEA is involved in these activities, it has reported to the IRS, since at least 1994, that it has made no such political expenditures.
And despite the fact that all this information has been provided to the IRS, NEA spokesperson Kathleen Lyons has stated publicly that the NEA has yet to receive an audit letter from the IRS.
Nearly two years ago, Landmark asked Edward Coleman, former chief of the Exempt Organizations Division at the IRS – which oversees and enforces compliance with the IRC by tax-exempt organizations – to review Landmark’s June 23, 2000 complaint and supporting exhibits. I have attached Mr. Coleman’s memorandum to my written testimony. However, I believe it’s useful to provide the Committee with some excerpts for this hearing. Mr. Coleman wrote, in part:
- You allege that the NEA’s political guidebooks provide evidence of a systematic strategy to integrate political action in all aspects of union organizations, rather than segregate those activities from general operations.
Based on my analysis of the political guidebooks and workshop material …, it appears that NEA engaged in political activities, the cost of which should have been reported as political expenditures on line 81a of its Form 990.
- Your complaint states that among NEA’s Program Accomplishments was the apparent expenditure of millions of dollars to promote and support candidates for public office. However, none of these expenditures were reported on line 81a of NEA’s Form 990.
My review of this allegation …supports your conclusion that NEA had reportable political expenditures.
- Your complaint sets forth nine other examples of alleged reportable political activity.
These examples certainly raise the question of political expenditures that should have been reported on the NEA’s Form 990.
Mr. Coleman concluded:
… I concur with your analysis of NEA’s alleged political expenditures and your recommendation of an IRS examination of the NEA. NEA certainly appears to have filed inaccurate Forms 990 and neglected to pay taxes on Forms 1120-POL.
On August 7, 2001, the Associated Press published a story entitled “Unions Don’t Cite Political Activities.” The reporter examined documents released by the FEC, including those provided to the IRS by Landmark in its July 20, 2001 complaint. AP quoted Tom Miller, the manager of the IRS section that writes the rules for tax-exempt groups: “If you look at some of the things that have been out there publicly, some of the (union) activities fall on that side of the line. If I was an examiner and have documents showing the purpose is to elect Democratic candidates, and they say it’s not partisan, it shifts the burden to them.”
The situation is no better at Labor. The purpose of the Landrum-Griffin Act (“Act”) was to empower union members by providing them with access to financial information relating to their union’s affairs. Union members would then be able to question certain practices and hold their leaders to account.
The Act requires unions with total annual receipts of $200,000 or more to submit a Form LM-2. The financial information – receipts and expenditures -- provided on the Form LM-2 must be “in such detail as may be necessary accurately to disclose its financial condition and operations for its preceding fiscal year and in such categories as prescribed by the Assistant Secretary.” 29 C.F.R. Sec. 403.2(b) (2001).
The NEA’s political activities are widespread and pervasive. Yet, the NEA’s Form LM-2s, going back to at least 1994, don’t reported a single dollar spent on political activities – not under Schedule 12 (Contributions, Gifts and Grants), Schedule 13 (Office and Administrative Expense), or Schedule 15 (Other Disbursements). And what’s clear is that the NEA has chosen to interpret the reporting requirements under each of these schedules as broadly as possible so as to avoid disclosing its political expenditures to its membership.
In conclusion, the most diligent NEA member cannot discern how much his union engages in, or how much of his union dues are being spent, on political activities. The most logical places for him to look for this information are the IRS and Labor. But the NEA’s public filings with these departments won’t be of any help because neither the Internal Revenue Code nor the Landrum-Griffin Act are being enforced. |
