How U.S. Taxpayers Subsidize Teacher Unions

Published October 1, 1999

American taxpayers are unknowingly providing substantial subsidies to the nation’s largest teacher unions through items incorporated into collective bargaining agreements with local school district officials, according to Myron Lieberman, chairman of the Education Policy Institute in Washington, DC, and senior research scholar at Bowling Green State University in Ohio.

To safeguard the interests of taxpayers, Lieberman recommends states make it unlawful for an employer to provide money or things of value to labor organizations and their employees–a provision similar to standards that have applied at the federal level since 1947.

The nation’s two largest teacher unions, the National Education Association and the American Federation of Teachers, together represent more than 3 million teachers and other school employees. Their combined local, state, and national revenues in 1998-99 topped $1.3 billion, with other revenues coming from grants and for their political action funds, foundations, and special-purpose organizations. In addition to this direct income, which comes mostly from union members, the two unions have been very successful in obtaining subsidies from taxpayers in thousands of school districts.

Lieberman provides a description of these subsidies in a July 9 policy paper from the National Taxpayers Union Foundation, “The Fruits of Labor: Taxpayer Subsidies for Teacher Unions.” He cautions school boards against viewing subsidies simply in terms of their cost to the school district. Instead, subsidies should be considered in terms of their value to the union and negotiated as such. For example, the cost of the payroll deduction of union dues is minimal for the district, but its value is enormously important to the union.

Since the school district’s collection of union dues, agency fees, and union PAC contributions is so critically important to the financial health of the unions, “any school board determined to reduce its union subsidies has ample leverage to elicit union acquiescence to a cap or reduction in its subsidies,” says Lieberman. Payroll deduction of union dues is in effect in every state except South Carolina.

Without the payroll deduction, unions would be forced to develop a costly procedure for collecting monthly dues payments, and for keeping records of every member’s payments. The school board could even charge the union a small fee per teacher per month for collecting the dues.

Regardless of how much it costs school districts to process PAC contributions, recommends that payroll deductions for that purpose be eliminated as soon as possible.

“Government agencies should not collect political funds for anyone,” says Lieberman. “It is not an appropriate function of government.” School boards should not be involved in collecting contributions for any candidate, party, or political action committee.

Other union subsidies result in considerable costs to the school district. For example, union contracts frequently contain several provisions for teachers to be given paid leave to conduct union business. While this is occurring, the district is not getting the services of a paid employee and must pay out additional dollars to hire a substitute. But should the taxpayer pay a teacher while that teacher is working for another employer?

“If a school administrator were caught working for a different employer on school time, the school board would consider the practice to be the basis for disciplinary action,” notes Lieberman, questioning why teachers should be treated any differently.

One taxpayer subsidy that creates costs at the state level is the preservation of salary scale increases and teacher retirement benefits while a teacher takes a prolonged leave of absence to accept employment as a union officer. Although the union pays the teacher’s salary and fringe benefits, the state continues to contribute to the teacher’s retirement account and the teacher accumulates service credit and seniority as a teacher while working for the union. Such benefits are unknown in the private sector.

Other taxpayer subsidies of teacher unions:

  • federal grants;
  • union use of school facilities for meetings, mailings, copying, and posting bulletins;
  • time slot at faculty meetings for union announcements, etc.;
  • payments for training courses taught by union personnel;
  • administration of health insurance benefits.

“Instead of trying to eliminate low-cost taxpayer subsidies that are of great importance to the unions, school boards should make these subsidies, such as payroll deduction of dues, contingent upon the absence of egregious union conduct,” advises Lieberman. But first, the school board should take account of all the subsidies they pay to teachers unions. Only then can they appreciate the full cost of taxpayer subsidies.

For more information …

Myron Lieberman’s report, “The Fruits of Labor: Taxpayer Subsidies for Teacher Unions,” is available at the National Taxpayers Union Foundation Web site at