What follows is the Trustees' Report for the 1999 Public Employees Federation Convention held Oct. 17-29, 1999, in Rochester, N.Y. In the interest of space, our report on the resolutions considered by convention delegates last year are summarized at the end of this report.

As Trustees, we act in an oversight capacity on behalf of all members of PEF. We are here to insure that monies spent and policies enacted are not counterproductive to the interests of our members. It is our duty and responsibility to report those issues that may have a negative impact as well as those that are of benefit to our membership.

The Trustees review expense vouchers submitted for payment to PEF on a quarterly basis as well as looking at other PEF expenditures including EOL requests. With few exceptions, vouchers are submitted with necessary receipts and documentation.

Audit Report
Secretary-Treasurer Jane Hallum, Tom Curly, Director of Finance and the Trustees met with representatives of Marvin and Company on August 23, 1999 to review the 1998-1999 PEF audit report. Mr. Frank Venezia and Bob Gramuglia of Marvin and Company presented a thorough walk through of the audit and their findings. The audit included examination of documentation that supported the amounts and disclosures in the consolidated financial statements. The audit also assessed the accounting principles used, estimates made by management, as well as evaluating the overall financial statement.
Marvin and Company reported that PEF's financial position for fiscal year 1998-1999 ended in conformity with generally accepted accounting procedures.

Fiscal 1998-1999
1. PEF's expenses by functional activity

2. Temporary Restricted Net Assets
Those assets as of 3/31/99 that are to be used for specific purposes only:

Recommendations
1. Bank reconciliations finding: The audit disclosed that accounting division staff prepare the monthly reconciliation's as required but are not reviewed by a second party.
Recommendation: Bank reconciliation should be reviewed by someone other than the person who prepares them. The review should be dated and initialed by that individual.

2. Payroll finding: The payroll is processed, approved and distributed without approvals. Lack of such approvals could result in incorrect amounts being paid and improper allocations made to expense categories. Payroll is the largest PEF expense and the need for controls over this area are most critical.
Recommendation: An individual other than the person processing the payroll should review it for accuracy prior to issuing pay checks. Documentation should include date and initials of the reviewer.

3. Accounting procedures manual finding: PEF still has not developed a complete and formal accounting policies and procedures manual.
Recommendation: All informal procedures should be documented for review and approval by the Secretary-Treasurer. Once approved, these procedures should be compiled into a formal manual that all employees may reference to insure consistency and accuracy in PEF's financial office.

4. Fixed assets inventory finding: The audit disclosed that PEF has not performed a physical inventory of fixed assets nor has a reconciliation of such assets to the general ledger been done.
Recommendation: We found that the Director of Finance is responsible to perform this task at PEF's main office and that it is the responsibility of the Field Directors to do the inventory for the regions. 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.

5. Concentration of credit risk finding: The audit pointed out that as of 3/31/99 PEF had cash deposited in excess of federally insured limits. The amount subject to credit risk is $2,227,000.
Recommendation: A discussion ensued regarding the solvency of the Amalgamated Bank of NY. While all were in agreement that this bank is solvent and that the likelihood of this bank going under was practically non-existent, Secretary-Treasurer Jane Hallum agreed to look into this matter further.

Investments
Last year we recommended that the Secretary-Treasurer look into investing a portion of PEF's surplus. We can report that the Secretary-Treasurer is looking into 6 month CDs and has investments with the State Employees Federated Credit Union (SEFCU).
PEF invests in US Treasury Notes and Bills, US Treasury Zero Coupon Bonds and GNMA Pass-Thru Securities.

Our investments are with Stacy Braun Associates, Inc. Since October 1992, our assets have increased in value by $1,000,743. This is an overall increase of 51.2% and out performed Merrill Lynch by 2% during this same timeframe. Our monies are invested 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%.

As our investments mature they are sold and reinvested.

PEF has a responsibility to its members to be fiscally responsible. For this reason, PEF continues to follow a conservative approach when investing our money. While the return on investment may not be as high as that which might be gained from more aggressive stock market investments, the risks associated with our current investments are much lower and our money much safer. The Trustees are in agreement that this conservative approach is the more prudent path to follow to enhance and safeguard our member's money.

Membership
PEF has a membership totaling 52,930. Of that 49,333 are members and 3,597 are fee payers. Dues income is based upon the pay period for which members' salaries are paid by New York State. Biweekly dues and fees are calculated based on .8% of a members annual salary not to exceed $640 annually. PEF's revenue from dues paid by members and fee payers for fiscal year 98-99 was $19,702,444.38. Of that, $928,119.00 was distributed to Divisions.

Union Affiliations
PEF is a dues paying member of both the American Federation of Teachers (AFT) and the Services Employees International Union (SEIU).

The outstanding judgment in favor of the AFT against PEF is still the only liability that threatens PEF's solvency. The AFT continues to forgive a percentage of our debt and the interest for the current year. In a June 7, 1999 letter to PEF President Roger Benson, Sandra Feldman, President of the AFT wrote that "Since December 11, 1991, the AFT has reduced PEF's debt by $14,337,070.00. On March 31, 1999, calculating on the basis of a 9% annual rate of interest, PEF's debt amounted to approximately $9,773,854.10." Hopes of formalizing this agreement in writing continues to elude us.

All employees of PEF are eligible to participate in the SEIU Affiliates' Officers and Employees Pension Fund. Total pension expense was $802,000 for fiscal year '98-99. This amount is based upon a contribution rate of 14% of total eligible employee compensation. The SEIU conducted an audit of this pension fund. It found no discrepancies for the current year but did find that PEF owed $7,000.00 more for 1998 and a total of $141,000.00 for prior periods. PEF had been calculating this benefit only for its permanent employees. The SEIU audit pointed out that PEF must also calculate this benefit for temporary employees who received $4000.00 or more in salary. President Benson has requested that the SEIU 'forgive' PEF the $141,000.00 owed for prior periods.

During the past year, both the AFT and the SEIU have been extremely supportive of PEF with regards to our contract fightback activities. Both affiliates have aided by providing PEF with research information. Each will provide to PEF $250,000.00 to be used for member mobilization and contract fight back activities. The AFT funds are earmarked for PEF's media campaign specifically. The SEIU funds are earmarked for member mobilization and contract fight back activities. In addition, The SEIU has made one of their top contract negotiators, Joe Buckley, available to PEF which will result in cost savings to the Union.

Divisions
A resolution was passed at the 1998 convention that mandated that a Division's per caps be increased at the same rate of salary increases to PEF members. As of this date, division per caps have increased by 3.5%.

Divisions are required to submit, on a timely basis, quarterly expenditure reports and a fiscal year end audit to PEF. Failure to do so may result in forfeiture of a Division's current per cap allotment. PEF has approximately 230 Divisions. At the time of this report approximately 84 divisions had not submitted their 1998-1999 year end audit. Another 5 have not submitted their 1997-1998 or 1998-1999 year end audits.

We would like to reiterate that if you are a division in need of assistance, there are a number of resources available to help.

Regions
Unlike Divisions, Region funding is not directly tied to the number of members it represents. Regional Coordinators are required by the PEF Constitution (Article VI.G.3) to submit a yearly budget. These budgets are then submitted to the Secretary-Treasurer for approval. Regional Coordinators are also required by this same Constitutional Article (VI.G.3) to share this plan with the stewards in their Region.

Currently, should the Secretary-Treasurer exceed any of PEF's budget lines by more than 10%, the Secretary-Treasurer must come before the Executive Board for approval. The Trustees recommend that this standard be applied to the Regional budgets as well. This will insure accountability and justification of PEF monies.

We recommend that Division Treasurers and Regional Treasurers/Coordinators send copies of their quarterly and year end audits to all their stewards and council leaders respectively. And, that these reports be posted on PEF bulletin boards for membership information.

Education and Training
PEF helps formulate and administer our Article 15 training programs for our members. Funding and participation is dependent upon contract approval. While a majority of Article 15 programs are multi-union funded, the following are those funded only by PEF:

1. Work Force Initiative Program
This program supports services that are not provided for in other training programs offered. Agencies can describe their needs and have a training program tailored to meet their specific objectives.

2. Public Service Training Program (PSTP)
This program provides tuition reimbursement members. For fiscal year '98-99: (A) 4,251 employees received vouchers to participating colleges (B) 768 employees submitted 1006 applications for reimbursement under the Voucher Alternative Program (VALT) (C) 199 colleges participated in the Voucher Program (D) NO vouchers were denied due to lack of funds.

3. Public Service Workshops Program (PSWP)
Provides non-credit workshops on current topics and issues of interest to our members. It is interesting to note that this forum has been used to provide our members with courses necessary to meet their Continuing Education requirements to maintain their employment.

4. PC Stat Plus
This was a new benefit that was made available to our members between January 21 and March 31, 1999. PC Stat Plus used a limited pool of money to fund one free personal computer software course for PEF employees during that time. Cliff Merchant, PEF Director of Education and Training felt it important to note that,"48% of the participation in this program was PEF represented employees. In addition, 85% of the applications were for introductory level software applications training."

Other Issues
It is our duty and responsibility to report those issues that may have a negative impact as well as those that are of benefit to our membership.

This year we report that the transition remains an issue that impact our Officers, our treasury and our members. PEF filed a lawsuit in an attempt to recover monies paid to the State of New York to purchase sick leave credits retroactive to 1980. This money was paid by former President James Sheedy, on the day before he left office, for outgoing Officers and one (1) appointee. In the absence of an approved Executive Board policy, Secretary-Treasurer Jane Hallum had to carry out her fiduciary responsibility and file a lawsuit to recoup these funds.

At the August 24-25, 1999 meeting, the Executive Board passed a Sick Leave Buy Back policy. The policy states that "Only sick leave that is permitted under Time and Attendance rules or the PEF contract, will be reimbursed to the officer's or staff member's accruals. Sick leave will be reduced by all sick leave used while employed by PEF. Retroactive payments will be made from the PEF Reserve. Beginning October 1, 1991, sick leave will be purchased every six months at the most economic rate." Negotiations are under way to recover funds not included in this policy. Secretary-Treasurer Jane Hallum is currently working to resolve this complex task.

It was our recommendation that the Sick Leave Buy Back policy take effect August 1, 2000 or no earlier than January 20, 1994 -the date that the GOER made this benefit available to PEF. The cost of this policy is $300,000.00 to cover the retroactive period and approximately $40,000.00 thereafter to cover those individuals currently on staff at PEF on full-time union leave. The monies will be taken from PEF's reserve.

During the past year, the Trustees wrote an article for the Communicator that expressed our feelings about the importance of a formal transition policy. We also met with and provided to the Constitution and Special Rules of Order Committee an in-depth set of proposals for transition. It was our hope that these proposals would be accepted and presented as Constitutional amendments.

At the August 24-25, 1999 Executive Board meeting, the Chair of the Constitution and Special Rules of Order Committee, submitted for approval, a proposed Special Rule of Order on Transition. The Trustees spoke in support of this as it encompassed most of the proposals we had originally submitted to this committee. A Special Rule of Order has more weight than PEF policy and must be adopted at two consecutive Executive Board meetings before taking effect. It was adopted at the August Board meeting and will come before the Executive Board again in December, 1999.

At the June 1999 Executive Board meeting a proposal was passed to fund PEF's extensive Member Mobilization initiative. The cost is approximately $230,000.00 for the first year. Future expenditures on this line will have to be evaluated and addressed each fiscal year.

1998 Convention Resolutions
Action was taken on the following items:
- Resolution No. 17: The issue of allotment of union dues to local Divisions per member was corrected in April by the Divisions, which are responsible for maintaining membership lists and reporting changes to PEF headquarters in order to be properly credited for per-capita payments.

- Resolution No. 8: The push for adoption of an OSHA ergonomics standard was addressed by PEF President Roger Benson in a letter to state congressional members asking for their support of passage of the standard.

- Resolution No. 18: A division funding increase was put in place in January.
Several other resolutions were considered by PEF convention delegates and referred to appropriate committees for additional study.

To receive a complete description of all convention resolutions and their status, contact the PEF Office of Public Relations at (518) 785-1900 or e-mail the department at : emailto:prpc1@pef.org

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