"Sticks" commented on the posting which outlined how EBM Ron Elliot sees the OPSEU Strike Fund:
"Yes he said we have a HUGE deficit, which when taken into account as a whole means that our assets (read Strike fund) are only worth 18 million."Let's look at the facts.
Money goes into the strike fund in a few ways. The Constitution requires that 5% of all dues collected go in to the Strike Fund - Art. 20.1.3 (b). A supplementary assessment of 0.2% can be added when the Strike Fund falls below $50 million (measured in 2001 dollars) - Art. 20.1.2. Additional supplemental dues can be assessed for essential and emergency workers - Art. 20.1.1. Interest and dividends from investments also go into the Strike Fund, but only by past practice not by Constitution.
Money comes out of the Strike Fund only in very specific ways governed by the Constitution. That's for strike pay and expenses due to a work stoppage, and for interest-free loans to other striking unions. Art. 23.1.
(Up to $10 can be "encumbered" to secure debt but that is not money out of the fund)
If you own a house worth $220,000 but have credit card debts of $20,000, that reduces your total net worth, but does not somehow make your house worth $20,000 less. Even more, if your asset is something that you cannot liquidate, that asset is not worth $20,000 less. You have debts. Your net worth is reduced, but the value of a fixed asset is not changed.
OPSEU cannot take money from its Strike Fund to pay off debts. It MUST find another way. In simple terms, the value of the Strike Fund cannot be used to offset operating deficits or debts no matter what some EBMs might suggest.
Therefore to say, as Elliot does, that the Strike Fund has a value of only $18 million is just wrong. The only way, in fact, the strike fund could be worth $18 million, without being depleted by a massive strike or lockout, is if Convention by a 2/3 vote changed the Constitution to allow all or some of our Strike Fund to be converted to general use. The facts are clear and inescapable.
The asset which is our Strike Fund remains what it is - over $60 million. If I had a vote on the matter, I would not support taking money out of the Strike Fund to reduce deficit.
Sticks adds:
I would like to point out that it is our current VP that is taking the money from the Strike Fund to cover the deficit.This is a shocking allegation. It would be a violation of the OPSEU Constitution and a serious breach of fiduciary duty by the Treasurer. Accordingly, the Insider looked into this allegation in depth. We checked the minutes for the Board and Officers meetings on the OPSEU website, and made inquiries with reliable inside sources.
Not a word of truth to this rumour!!
The Treasurer has not taken any money from the Strike Fund to cover deficit - not a penny.
The Treasurer is not proposing to take any money from the Strike Fund to cover deficit.
There is a resolution that will probably hit the Convention floor to allocate all or some of the interest and dividend monies to deficit reduction. That slows the growth of the Strike Fund. It does not take money out. Such action would not violate the Constitution. I am not saying it's a good or bad idea - the Convention delegates will have to decide if its the way they want to tackle the deficit.
Solidarity
WHOA indeed! Judging by the posts on this subject, the authors don't seem to think it is a big deal if deficit keeps growing, and that it has no impact on the only real collateral the union has -- or strike fund (which already includes the Union's real estate).
ReplyDeleteI guess they weren't listening at the last few conventions when Patty Rout and Maurice Gabay (OPSEU's accountant) explained that the growing debt and its impact on our balance sheet could affect the interest rates charged on further borrowing -- and whether lenders will be willing to lend to us at all if things get much worse.
If the ratio of our debt to our assets keeps rising, we risk insolvency. This can happen if our debt continues to grow -- for example if we continue to rack up annual deficits, or if we need to borrow for a big strike. It can also happen if we spend a big chunk of our only real asset -- the strike fund -- in a major strike.
So it is dreaming in technicolour to think that our growing deficit won't affect our ability to draw on the strike fund. To use the author's homespun metaphor. If your mortgage and line of credit are worth more than your house, good luck trying to borrow to fix the roof. And if you decide to live on your credit card, you better get used to 18% interest rates.
What's more, the plan to divert investment income from the strike fund won't help. It really is like burning the furniture -- and the floor boards -- to heat the house. And what happens if our investments loose money -- like they did in 2008?
So what's the solution? First, we need to keep the strike fund strong, rather than diverting investment income into the general fund.
Second, we need to take a close look at the way we spend our $85 million general fund to make sure it goes to key priorities -- like fighting to defend public services and our members jobs, maintaining services to members and locals, and keeping the lights on at OPSEU's offices.
Conferences with television stars and politicians we pay to come, and cabinet ministers who then turn around and freeze our wages and cut our jobs? Not so much.
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