Thursday, March 4, 2004

The National Education Association confirmed yesterday that the Labor Department as well as the Internal Revenue Service are investigating whether the 2.7 million-member school union properly reported millions of dollars in political spending.

The probes were sparked by complaints of the conservative Landmark Legal Foundation, which provided both agencies with thousands of pages of internal NEA documents that disclosed political activities of high-level union officials and state and local NEA coordinators, which the legal foundation said were improper political expenditures by the tax-exempt union.

NEA General Counsel Bob Chanin said yesterday that the Labor Department investigation began in April 2002, when the Landmark complaints were filed.

“We believe we reported all political expenditures properly,” Mr. Chanin told the Associated Press. “We concealed nothing. I am confident we’ll get a clean bill of health and be able to move on.”

Mr. Chanin said the IRS informed him that the audit “will not be over quickly and could run 18 months to two years.”

The NEA must report political expenses “direct and indirect” on its tax return. Some of those expenses could be considered taxable by the IRS. Unions also file yearly forms with the Labor Department disclosing in detail how much they spend on politics, gifts and management, and report any expenditure above $5,000.

Last year, Labor Secretary Elaine L. Chao expanded union reporting requirements and won a lawsuit challenging the changes.

Mrs. Chao said previous reporting requirements were “virtually meaningless” — saying one union reported $3.9 million in “sundry expenses” and another reported $63 million in “grants to state and local affiliates for joint projects,” with no further details.

Mrs. Chao said the vague reports were one reason that officials of the Washington Teachers Union, who later were convicted, had been able to get away with illegal use of members’ dues “for designer clothes, lavish vacations and political activity to the tune of $5 million.

“The answer is simple,” she said in a speech last year. “Union members have almost no access to detailed information about their unions’ finances. Even the U.S. Labor Department has a difficult time getting this detailed information. Furthermore, we just don’t have the resources to carefully audit all the reports the unions must file. All that has got to change.”

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