○Philadelphia workers choose, or feel compelled to, unionize because they are promised access to special funds to cover health care costs. The Philadelphia Federation of Teachers operates one such fund. Teacher Health and Welfare Fund. The structure is fairly simple.
First, the union establishes a trust, primarily funded by the employer (in this case, the Philadelphia School District). These funds are distributed to public employees as health and insurance benefits through PFT funds. PFT said he established the benefit fund in 1971, and the collective bargaining agreement with the school district requires the district to make an annual contribution from taxpayers.
At its best, this type of trust can be an efficient way for unions to provide health benefits to workers. But PFT’s Health and Welfare Fund shows how funds meant to help workers can be mismanaged to cover up union leaders’ corrupt dealings, leaving hard-working teachers in the cold. This became a case.
Financial documents reveal that PFT spent more than $12 million rescuing failed real estate businesses between surplus cash in its benefit fund and dues collected from members.
The Health and Welfare Fund is a good indicator of fiscal health.by Latest financial disclosures For 2021, the School District of Philadelphia has deposited $65,133,008 into this fund. In total, the benefit fund has generated an excess return of $9 million, and the net financial position is $36 million.
The Health and Welfare Fund’s financial position was so strong that it was able to loan $4.8 million to an entity known as the 1816 Chestnut Street Corporation (1816).This loan is dates back over 10 years.investigating report revealed The Health and Welfare Fund lent this money interest-free and with no repayment conditions. Currently, the loan balance remains unchanged and no payments or interest are accruing.
What does 1816 have to do with providing health benefits to teachers in Philadelphia? As it turns out, not much. 1816 is a non-profit organization created to “retain title to the assets of the PFT H&W Fund, collect rent, and pay all expenses.” In other words, it is the real estate arm of the PFT Health and Welfare Fund. This may come as a surprise to those who know that PFT already occupies office space at the district headquarters.
And there’s another problem. The holding company doesn’t seem to own much.among them Latest financial disclosures, 1816 reported selling only real estate assets. But where did the building go? It appears that 1816 may have sold its only remaining real estate holdings to PFT.
In 2021, PFT itself acquired the building with a book value of $7.6 million, according to . Union financial records. In the same year, 1816 Company reported that the loan received from the sale of the building was $7.6 million. According to past disclosures, 1816 had been operating with a negative net financial position since at least 2011, but after selling the building in 2021, the organization’s net financial position improved by more than $6 million.
The first $4.8 million loan to 1816 should have been the first sign of trouble for PFT’s real estate division. In 2021, more than a decade after the loan, the association used $7.6 million in dues to buy out its holdings in 1816. PFT and its affiliates spent a total of $12.4 million by 1816 to support what is now believed to be a failed real estate venture.
The $12.4 million was intended to benefit Philadelphia public school teachers. As medical costs continue to rise, her $4.8 million in health and welfare funds could have been saved to offset future medical costs. The $7.6 million in dues could have been used to pay for member training, bargaining costs, or other benefits the union was supposed to provide to its members.
Instead, the teachers who paid dues and enrolled in health care benefits, and all the taxpayers in Philadelphia who fund those benefits, were left behind by the union executives who turned PFT’s failed real estate mogul. We have an obligation to get answers from them. It’s time to confess what they did with other people’s money.
Elizabeth Messenger is the CEO. Americans demanding fair treatmentis a national nonprofit organization that educates public employees about their rights in unionized workplaces. Andrew Holman is a policy analyst. commonwealth foundation.