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 THE TRUSTEES TEAM — (L to R) Bob
Renyolds, Arlea Igoe, Olubiyi Sehindemi (known to all as
“Mr. B”). — Photo by John EptingThe Trustees Report to the 2001 Convention Delegates There’s an old Chinese proverb that says “May you live in interesting times”. If applied to PEF over the last couple of years, these words ring loud and clear. Since our second term in office, we have had a statewide election each successive year. We saw Pat Baker elected as Vice President last year and now Olubiyi Sehindemi (Mr. B. for short) was recently elected as Trustee to fill the vacancy left by Glendore Ulerie. Glendore, Bob and I were together since day one and were totally in sync and complemented each other well. We shared similar views on the Union and its obligations to the members as well as what our duties as Trustees would be. Individually we were very different. But our differences were what made us work so well as a team. Glendore was our nurturer and the person who put the polish on our reports. She was always able to give an objective outside view of our reports. She had a gentle persuasion that we needed and will miss. We wish her luck in her new endeavor and hope that she doesn’t forget us. We will not forget her. Mr. B. is someone you probably all know by name or sight –he’s usually at the convention taking pictures. His educational background in economics and work experience doing audits for the State of New York definitely insures that he brings a wealth of knowledge and experience into his position as Trustee. Mr. B. is liked and respected by all who know him. Bob and I are glad to welcome him into this crazy mix and know that with his wonderful wit, personality and credentials we’ll feel as though he has always been here. We look forward to a long and rewarding relationship. If you see him, please welcome him. The Trustees are Constitutionally charged to periodically review PEF’s financial records; report to the membership any activities not in their best interest and to attend Executive Board meetings. We periodically meet and review, at random, Division audits, Regional Coordinator budgets, and PEF’s general ledger and expense vouchers. The Trustees work closely with the Secretary-Treasurer to review those Divisions not in compliance with acceptable PEF financial policies. OVERVIEW OF ORGANIZATION The NYS Public Employees Federation (PEF) is affiliated with the American Federation of Teachers (AFT) and the Service Employees International Union (SEIU). It is a self-governing unit representing the professional, scientific and technical employees of the State of New York. The majority of revenues are from membership dues and agency shop fees. The consolidated financial statements include the accounts of PEF and its subsidiary, PEF Land Holding Corporation. PEF Land Holding Corporation is a not-for-profit corporation formed to hold title to the land and office building used to house PEF’s headquarters. AUDIT REPORT On August 9, 2001, a meeting was held with Secretary-Treasurer Jane Hallum, Tom Curley, Director of Finance, the Trustees and Frank Venezia and Bob Gramuglia, representatives of Marvin and Company. Bob Gramuglia presented an overview of the PEF 2000-2001 audit and their findings. The audit included examination of documentation that supported the amounts and disclosures in the PEF consolidated financial statements. The audit also assessed the accounting principles used and estimates made by management, as well as evaluating the overall financial statements. There were no new accounting policies adopted and all existing policies were not changed during fiscal year 2000-2001. The audit found there were no PEF transactions that were neither significant nor unusual nor were there transactions made without authoritative guidance or consensus. Marvin and Company did find an uncorrected misstatement of the Consolidated Financial Statements in the amount of $154,000 for the Divisional Distributions line. This amount should have been included for FY1999-2000 as a divisional payable liability but was not. This was corrected in the current audit. As a result this shows as more profit in the current year. All appropriate forms were filed and no adjustment was necessary. Each year Marvin and Company does a random sampling of PEF’s financial records as well as follow-up on the previous year’s findings. Marvin and Company reported that PEF’s financial position for fiscal year 2000-2001 ended in conformity with generally accepted accounting procedures. They further stated that all financial PEF statements reviewed by them supported their opinions and fairly represented PEF’s financial position. The financial statements received include the accounts of PEF and its subsidiary, PEF Land Holding Corporation. The accounts of PEF include a general fund, a political action fund, a Committee on Political Education (COPE) fund and a plant fund. RECOMMENDATIONS The Trustees would like to note that almost all of last year’s recommendations have been dealt with and that over the last 4 years our list has shrunk dramatically. PEF continues to take these recommendations of internal control seriously and is implementing procedures to ensure that PEF maintains a professional atmosphere conducive to doing business in a way that will best serve our members. 1. Accounting Procedures Manual Finding: PEF has yet to develop a complete formal accounting policies and procedures manual. Recommendation: All informal procedures should be documented for review and approval by the Secretary-Treasurer and compiled into a procedure manual for all employees to follow. Without documented policies and procedures, directives set by management are difficult to consistently adhere to and enforce. Over time this may result in procedural changes that may lead to a breakdown in the internal controls formulated and approved by management. This is especially important as people leave or retire and take this knowledge base with them. 2. Fixed Assets Inventory Finding: The audit again disclosed that PEF has not performed a physical inventory of fixed assets and has not done a reconciliation of such assets to the general ledger. Recommendation: Director of Finance is responsible to perform this task at PEF’s main office. It is the responsibility of the Field Directors to do the inventory for the Regions. There is an informal system but it needs to be updated and implemented as soon as possible. We recognize that this is a huge undertaking but it is important and should be phased in and completed within a reasonable period of time. After completion, PEF’s insurance coverage should be checked to determine if our coverage is adequate. 3. Allocation of Expenses Finding: The allocation of chargeable and non-chargeable expenses appears to be based on overly generous estimates by various department heads using past percentages. Time studies and appropriate direct allocation data were not maintained during the year to allocate expenses. Expenses allocated as chargeable/non-chargeable could be subject to questioning in a court of law. The auditors again pointed out that if PEF were to be sued and taken to court, there would be nothing concrete to back-up assumptions of PEF’s chargeable vs. non-chargeable figures. Recommendation: The recommendation that a formal system be put into place to track chargeable and non-chargeable expenses using current time studies and direct allocation has been implemented. This is currently being arbitrated with PEF’s USWA staff. FISCAL 2000-2001 INVESTMENTS Our investment firm is Stacy Braun Associates, Inc. PEF invests in US Treasury Notes and Bills that have an average return rate of 4.75% - 7.25%; US Treasury Zero Coupon Bonds that have an average return rate of 4.81%; and GNMA Pass-Thru Securities that average 6.50% - 7.50%. Cash equivalents consist of investments in certificates of deposit with original maturities of three months or less. Investment securities are measured at fair value. As our investments mature they are sold and reinvested. PEF has an obligation to its members to be fiscally responsible. For this reason, PEF continues to follow a conservative approach when investing our money. Because of this ‘safe’ approach to our investments, PEF saw a $300,000 increase in its investment securities up to $4,251,477 from last year’s $3,825,354. While the return on investment may not be as high as that which might be gained from a more aggressive stock portfolio, the risks associated with our current investments are minimal, our growth rate competitive and our money safer. Had our holdings been invested in more aggressive markets, PEF would have taken a heavy hit given the economic climate of today. INCOME TAXES PEF as a labor union is exempt from Federal income taxes under Section (c )(5) of the Internal Revenue Code. However, under Section 527 of this same code, PEF’s investment income from COPE is subject to tax. PEF Land Holding Corporation is a title-holding corporation and is also exempt from Federal income taxes. FUNDS PEF maintains a Political Action Fund and a PEF employee Pension Fund. The Political Action Fund is administered by the PEF Legislative Department. It is used for political contributions approved by the Executive Board and operations of the Legislative Department. For fiscal year 2000-2001, $356,530.00 was allocated for its operations and political contributions. The Pension Fund is a defined multi-employer pension plan for PEF employees. For fiscal year 2000-2001, pension expense was approximately $690,000.00. This amount is based on the contribution rate of 14% of total eligible employee compensation. PEF must calculate this benefit for any employee earning $4000.00 or more in salary. MEMBERSHIP PEF has a membership totaling 54,015. Of that 49,797 are members and 4,218 are fee payers. PEF revenue is comprised of dues paid by PEF members and agency shop fee payers. Dues income is collected in the pay period for which New York State pays members’ salaries. PEF’s revenue from dues paid by members and fee payers for fiscal year 2000-2001 was $21,477,273 up approximately $1,709,423 from last year due to an increase in members and an increase in our dues from .8% to .9%. Of that amount, $783,545 was distributed to local Divisions in per caps. UNION AFFILIATIONS PEF is a dues paying member of both the American Federation of Teachers (AFT) and the Services Employees International Union (SEIU). We have approximately a 50/50 split of our membership into each affiliate. For fiscal year 2000-2001, PEF paid a total of $8,144,879.00 in dues to AFT and SEIU. Our current SEIU per caps per member is $7.95. This will increase each year to $12.65 per member in the year 2005. Our current AFT per caps per member is $10.95. There was a decrease in income from our union affiliations of approximately $300,000 because no monies were needed for contract fight back activities. LIABILITY Under an arbitration award rendered in May 1985, PEF was ordered to pay New York State United Teachers/American Federation of Teachers in excess of $9 million in back per capita dues for the period March 1984 thru March 1985. In 1988 a State Supreme Court decision vacated the award in its entirety. AFT appealed the decision and in May 1989, the Appellate Division reversed the lower court decision and awarded AFT approximately $9.2 million in back per capita taxes. In 1989, PEF appealed the decision of the Appellate Division and on March 27, 1990, the Court of Appeals denied PEF’s motion and reaffirmed the $9.2 million judgment to AFT. During fiscal year ending March 31, 1991, the State Supreme Court granted AFT’s motion to the Supreme Court to be awarded prejudgment date interest. In June, 1991, the State Supreme Court granted AFT’s motion for prejudgment date interest. Interest on the outstanding balance accrues at the rate of 9% annually. On March 31, 2001, PEF’s debt amounted to approximately $8,144,879.00. PEF anticipates paying off this judgment in about 7 years. This outstanding AFT debt is the only liability that threatens PEF’s solvency at this time. The AFT continues to ‘forgive’ a percentage of our debt and the interest for the current year. The reduction equals one twentieth of the original amount owed plus interest accrued for calendar year 2000. For the calendar year ending December 31, 2000, $785,050.00 in interest was forgiven. We hope to see this arrangement to continue. DIVISIONS PEF has about 225 Divisions. Divisions are required to submit, on a timely basis, quarterly expenditure reports and a year-end fiscal audit to PEF. Failure to do so will result in forfeiture of Divisions per cap allotment(s). Repeated failure to submit these reports will result in the Division’s account being closed down and put into receivership. At the time of this report, there are eleven (11) Divisions that have not yet submitted their audits for fiscal year 2000-2001. Approximately five (5) Divisions may have their accounts closed and turned over to the Secretary-Treasurer because their audit reports have not been done or submitted for the past couple of years. This continues to be a problem. We strongly urge any Division in need of assistance to contact Ingrid Young of Divisions Finance, Secretary-Treasurer Jane Hallum or the Trustees. There is also training held at the convention for Division treasurers and any other interested parties that are very helpful and instructive. President Benson has charged the PEF Divisions Committee, chaired by Dave Stallone, to look at and assess all current Division policies. The committee will come up with a revised set of policies that are clear, concise and reflect best practices for Divisions to follow. EDUCATION AND TRAINING PEF’s Education and Training Office helps formulate and administer our Article 15 training programs for our members in cooperation with the Governor’s Office of Employee Relations (GOER) as well as in-house training programs. Funding and participation is dependent upon contract approval. We have listed the programs that are funded by PEF contract monies only and are available to our members. 1. Work Force Initiative Program This program supports services that are not provided for in other training programs. Agencies can tailor a specific program or labor management training to fit their needs. 2. Public Service Training Program (PSTP) This program provides tuition reimbursement to our members. Under PSTP, PEF members can receive up to $600 per semester for classes attended at participating colleges with a maximum of $1200 per fiscal year. The program has made available over $10 million for tuition payments. 3. Public Service Workshops Program (PSWP) Provides non-credit workshops on current topics and issues of interest to our members. This forum has been used to provide our members with courses necessary to meet their continuing education requirements to maintain their employment as well as basic computer training courses. Members are encouraged to submit their ideas for training programs they need that can be accomplished in 1-3 days. 2000 CONVENTION RESOLUTIONS Listed below are the 2000 Convention resolutions that were adopted and the action that has been taken on each. RESOLUTION #3: Promotion Test Battery – Equal Employment Opportunity Action: Referred to Civil Service Enforcement Department. An article on the status of PEF’s ongoing fight with Civil Service was published in The Communicator. RESOLUTION #4: Pension COLA Action: Referred to the Legislative Department. The Pension Cola issue has been implemented. PEF continues to put forth enhancements to pension legislation. RESOLUTION #5: Pension System Entitlement – Education of the PEF Member Action: Referred to the Public Relations Department. An article on this was printed in The Communicator. In addition numerous memos from PEF on this subject have been sent to stewards, council leaders and Executive Board members. RESOLUTION #6: Raising the Amount of Earnings that a Retired PEF Employee Can Earn Within the State of New York Action: Referred to the Legislative Department and has been included as part of the Legislative Agenda. RESOLUTION #7: Tier Equity Action: Referred to the Legislative Department and has been included as part of the Legislative Agenda. Pef does not expect any action to be taken on this during the current Legislative session. Action is more likely to come in 2002. RESOLUTION #8: Veterans’ Pension Buy-back Improvement Action: Referred to the Legislative Department and has been accomplished. As in all areas of pension reform, PEF continues to ask for additional improvements. RESOLUTION #9: Health Maintenance-Medical Industrial Complex Action: Referred to the Legislative Department. PEF also sent a letter of support on this bill (S.02871). RESOLUTION #15: Convention Delegate/Division Stipend Equality for Both Steward and Non-Steward Action: This resolution was printed and included in the PEF Policy Manual and was sent in the Delegate mailing. Local Divisions should be complying with this. RESOLUTION #17: Employee Organizational Leave (EOL) for Division Council Leaders Action: Referred to the Divisions Committee for action. The Divisions Committee questioned the financial ability of PEF to pay for EOL for Council Leaders vs. the ability to negotiate an agreement around this issue with the Governor’s Office of Employee Relations (GOER). The committee believes PEF should attempt the latter. RESOLUTION #20: Support for Stronger Division Steward Council Action: Referred to the Divisions Committee. Divisions Committee will refer the new steward training issues to the Mobilization/Education and Training Department and will refer the issues on mailings and updates to the Membership Information System (MIS). The Mobilization/Education and Training Department is in the process of updating and improving the steward training modules as well as instituting advanced training. RESOLUTION #22: Building PEF Power Through Member Mobilization Action: Referred to Mobilization/Education and Training Department. This is a work in progress. This Department is actively seeking to increase PEF’s member mobilizer network. Numerous memos, articles and e-mails have gone out to stewards, council leaders, current mobilizers and Executive Board members encouraging them to get folks signed up and involved. RESOLUTION #25: Adequate Staffing to Deliver Quality Services Action: Referred to Full Staffing Committee. PEF has made this a priority. Vice President Joe Fox chairs this committee that has been given money and resources to adequately address this issue. Statewide Labor Management Chairs and council leaders have been asked to participate in identifying those agencies where short staffing is a problem. A booklet has been developed around this issue and will be presented to the delegates at this year’s Convention. This is an on-going process. RESOLUTION #26: Regional Flexibility Action: Referred to the Accounting Department, Secretary-Treasurer Jane Hallum and the Trustees. This allows the Regions to be able to carry over their budget monies if not used month to month like Divisions. The Accounting Department has implemented this. Secretary-Treasurer Jane Hallum and the Trustees are working on developing guidelines for the Regions to follow that will mirror the Division policies. RESOLUTION #31: Publication of Executive Board Minutes Action: Referred to Membership Information Systems Department. Board minutes are now sent out in mailings to stewards, council leaders and Executive Board members. RESOLUTION #33: Using Public Relations Resources to Build PEF Power Action: Referred to Executive Council and Executive Board for consideration. As a result, PEF has hired the Don Klores PR Firm. RESOLUTION #34: 55b and 55c Entitlements: PEF As An Advocate For Its Qualifying Members Action: Referred to PEF’s Public Relations Department. There will be an article in the October Communicator on this issue. The Communicator Home Page |
