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Janus vs. AFSCME: New Fiscal Survival Strategies for Public Unions

For today’s labor unions, smart fiscal strategies are paramount to their long-term survival. However, the recent Supreme Court arguments surrounding the Janus v. American Federation of State, County and Municipal Employees (AFSCME) Supreme Court case brings a stronger sense of urgency for implementing the right fiscal strategies.
With an expected 5-4 ruling in June, the case challenges whether public employee unions can collect fees from workers who choose not to join the union – ultimately slashing the amount of money public employee unions can collect from their workers.

Janus vs. AFSCME will simply push many U.S. labor unions over a financial precipice by significantly reducing both their funding and membership. New ways of operating from a fiscal perspective need to be embraced right now. Fortunately, there are strategies that can help labor unions weather the potential storm on the horizon.

Empower the Next Generation

The upcoming Janus vs. AFSCME ruling comes at an inopportune time, as many senior union officers are currently developing succession plans. As such, fostering and empowering the next generation of labor union leaders is vital, and can be done by training young leaders to have the savvy operational, business, and financial skills to ensure long-term survival.

This can cover everything from “Finance 101” educational efforts to understanding accounting laws to getting a full handle on audit and compliance requirements. The right financial audit and compliance efforts can ensure that funds and other assets are properly accounted for and used solely for the benefit of your union and its members.

In addition, beyond training the next-generation of leaders, getting younger members involved can help build a youthful foundation for strengthening mission efforts, and increasing dues income. This will give public unions greater resources for advancing members’ and workers’ rights.

 Follow Three Fundamental Duties

In order for labor union officers to anticipate the Supreme Court ruling, they should follow three fundamental duties: duty of care, duty of loyalty, and duty of obedience.

An officer’s duty of care ensures that board members are actively participating in the organization. They’re educated on the industry they serve, attend meetings regularly, provide strategic direction, and have the accountability to oversee management and salary employees on staff.

Through the duty of loyalty, executive board members must remind themselves that their first obligation is the success and operations of the labor union, not personal advancement.

Lastly, the duty of obedience, which raises the most concerns for accountants, relates to knowing the state and federal laws and regulations that apply to the organization and remaining compliant with the Department of Labor (DOL) and Internal Revenue Service (IRS). Officers must also comply with their international constitution and Local bylaws.

Leverage New Technologies

Being more fiscally savvy can be very challenging, especially with normal-day-to-day operations typically taking priority. However, there are technologies for every organization to implement to ease the burden surrounding these fiduciary responsibilities.

Leveraging new technologies can also alleviate major threats to the industry, which include cyber attacks, the economic environment, the political environment, and fraud or misappropriation of assets.

It’s All About the Bottom Line

Just as any traditional business operates, it’s all about the bottom line and ensuring that there’s more money coming in than going out.  Janus vs. AFSCME reinforces how this simple approach needs to be embraced at all levels.

All operational costs should be scrutinized, with an eye towards a “cost savings as revenue generation” vision.  This means developing comprehensive processes for identifying any and all areas of savings, which could even mean effectively renegotiating all supplier and vendor contracts.

With a looming Supreme Court case that could create a truly existential threat to public unions, now’s the time to get their fiscal houses fully in order. By embracing the right fiscal and operational strategies, it is possible to weather a brewing storm.

About the Author:

Scott Rodgville, CPA, is an Officer at Gorfine, Schiller & Gardyn, a Maryland-based full-service certified public accounting firm. With more than 20 years of experience, Scott focuses on financial statement preparation and audit and tax services for not-for-profit organizations and labor unions. For more information about Gorfine, Schiller & Gardyn, please click here.

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