I have received quite a bit of correspondence following my Post on Friday that included the legal opinion regarding the legality of proposed by-laws changes by the Teachers Association of Long Beach. Thanks to those who made their comments public on our new feature “Leave A Comment” at the bottom of all the posts. For those who accuse my opinion of being ‘one-sided’ or ‘biased”, you are right: my opinions are biased—so are yours—that is why they are opinions. This is an opinion site. I am hopeful the critics consider that my posts on TALB were, and will continue to be, based on documentation I have received from members of TALB or from their website.
What I received today indicates the battle for TALB that started last year with the firing of Executive Director Scott McVarish by the TALB board of directors is rapidly escalating and is now very public.
Prior to posting the legal opinion on TALB’s proposed by-law changes in last Friday’s Front Porch, I contacted TALB 2nd Vice President Marc Hyatt—as he was the source of the document having sent it to all recipients on the Long Beach Unified School District email server. Hyatt confirmed he sent the letter to the server list, and in fact received a reprimand from the District for unauthorized/non-contractual use of the “send all” feature to distribute information District-wide. His reasons for this action, he explained, were because TALB would not release to him the email addresses of TALB membership. Despite the fact that he has been elected by the membership to serve on the Board of Directors, and serves in the capacity of Membership Chair—per our conversation—he and other board members have been repeatedly denied requests for contact information for teachers who are members of TALB. Because of this he resorted to the one method he knew would reach the members of his organization, at risk of personal reprimand.
Today Hyatt again used the District-wide email list to disseminate information he and others feel is beneficial to teachers who are paying dues to TALB—and members he is still not able to communicate with directly due to the leadership at the union still denying him and others access to members’ email addresses. Below are the two attachments he sent. The first, titled “Dear Reps,” addresses an e-mail sent last week by TALB’s contract enforcement officer, Michelle Shipp. While I do not have a copy of her communication, one may infer much of its content from the “Dear Reps” letter.
The second communication is “TALB Is Insolvent” and is signed by the Treasurer of TALB, Davina Keiser, and two additional board members; one of whom, Sandy Patton, indicates she is—or was in June 2007—a member of the Finance Committee of the Board of Directors. This communication makes some very serious statements about the financial health of TALB, the fiscal management—or mismanagement—of TALB finances, deterioration of TALB assets, significant increase in liabilities and alleges serious misconduct and possible illegal donations for school board and city council elections using TALB resources and funds.
With the communications I have received and documents I have been able to review thus far it is very apparent that there is a serious rift in the leadership of TALB between several members of the board of directors and the Executive Director Scott McVarish, President Michael Day and General Council Gerrie Schipske and other members of the board. The fight has spilled into the Representative Council as a fight for power and control of the organization between “us” (the Reps Council loyal to McVarish and Day) and “them” represented by what appears to be a majority of the board of directors. On the sidelines are thousands of teachers who just want to teach, who pay their dues and until recently have been pretty lethargic about their union. Depending on how the current power struggle plays out, they may not be afforded the luxury of lethargy in the future.
Here is the first communication distributed throughout the District on Monday, 9/24/07.
Dear Reps: (while unsigned my assumption is the author is Marc Hyatt)
The purpose of this email to address the distortions published by Michelle Shipp, TALB’s contract enforcement officer, in her blog email dated September 17, 2007.
Distortion number one: The opinion letter provided by Russell, Mirkovich & Morrow (“RM&M”) is biased because they represent Dale McVey in his lawsuit against Michael Day.
Fact: The RM&M opinion letter addresses how the proposed by-laws will be prejudicial to the rights of the directors and other members of TALB. The areas of concern that are stated in that letter are consistent with the areas of concern that are stated in the letter of Beverly Tucker, Chief Counsel for CTA. Please compare the conclusions set forth in the letter of Ms. Tucker with the letter from the firm of Rothner, Segal & Greenstone, the firm who is representing Michael Day in the action brought by Dale McVey and also represented Michael Shane Ellis in the defense of the accusation of his drinking while chaperoning students, and form your own conclusions as to whether your rights and those of the directors will be seriously prejudiced if the proposed by-laws are passed.
Distortion number two: RM&M firm is an anti-labor law firm that sues labor unions on behalf of shipping companies.
Fact: According to the declaration of Joseph N. Mirkovich, which was filed in Superior Court on September 19, 2007, in the pending action, the RM&M firm has never previously sued a labor union. They were compelled to file the pending action, because TALB refused to deliver certain documents, mainly financial records and cancelled checks, to the nine directors who requested them. Mr. Mirkovich was one of the attorneys that represented the ILWU Marine pilots, ILWU Local 68, in their prolonged labor dispute with the City of Los Angeles in 1997. His firm has been continuously consulted by them from time to time. His firm has also represented the Master, Mates and Pilots Union, representing their members in license proceedings. On Wednesday, September 19, 2007, apparently after having read the declaration of Mr. Mirkovich, Scott McVarish apologized to Mr. Mirkovich for the comments that his firm was an anti-labor firm.
Distortion number three: the Jones Act is a law governing Maritime Union-Employee relations, implying that the RM&M firm handles Jones Act cases against maritime unions.
Fact: the Jones Act is not a law governing maritime union-employee relations. As the Jones Act applies to the RM&M firm, the act is a remedy by which an injured seaman can sue his employer to recover damages for his injuries. It does not concern union-employee relations. As the declaration further pointed out, last year, the RM&M firm recovered more than a $1 million in representing an injured seaman for his injuries against a shipping company.
Distortion number four: Ms. Shipp alleges that the petitioners have spent over $35,000 in legal fees for TALB and Michael Day implying that the petitioners are not paying these costs and further implying that some sort a deal has been made.
Fact: According to the declaration of Joseph Mirkovich, the legal fees paid to date amount to only $1,050.00 and were paid only by the petitioners. There is no “deal” that anyone other than the petitioners is responsible for the fees and costs of the pending action. There is a retainer agreement between the petitioners and the RM&M firm, which makes only the petitioners responsible for the fees and costs of this action. We petitioners were compelled to file this action because we believe that there has been financial mismanagement of TALB, which was kept hidden from the petitioners.
Distortion number five: the RM&M firm has filed more than one action against TALB.
Fact: the only action filed by RM&M against TALB is the pending action requesting TALB and its President to produce documents that the petitioners, as directors have, under California law, an absolute right to inspect and copy and which TALB and its President refused to produce at the time requested.
Distortion number six: the petitioners want the home phone numbers of all TALB members.
Fact: the petitioners have not requested the home telephone numbers of TALB members. They have asked for the home and e-mail addresses of TALB members, so that they can communicate the truth to TALB members. It is ironic that Ms. Shipp objects to the use of the addresses of TALB members, while her blog continues to communicate with TALB members using the TALB membership list. What the petitioners are seeking is balanced and fair communication with the TALB membership. This is an effective way to address the distortions of her blog and any others like it.
Second Communication title “The Insolvency of TALB”:
TALB Is Insolvent
How did we get there?
· When Scott McVarish was hired in Fall 2004, TALB had liabilities of $248.45 and equity of $1,030,528.40. Now, three years later, TALB has liabilities of $378,537.83 and equity of $610,975.11.
· TALB was financially drained to pay for the Schipske, Ellis, Deaton and Barton campaigns at the recommendation of the PAC committee, headed by Michael Day and Elizabeth Martinez. The following are samples, not a complete record, of TALB money spent on these 4 campaigns:
(1) $279,099.03 was spent from TALB/TAP FFCU checking account from 2/28/06 to 9/28/06;
(2) $221,443.24 was spent from TALB/TAP Farmers & Merchants checking account from 2/05 to 5/06;
(3) $237,000 was transferred out of the TALB general fund in 2006 and is being held as collateral by FFCU for TALB/TAP campaign loans;
(4) Legal fees of $43,682.36 were paid with TALB general funds in 2005-2006 of which 90% were campaign expenses, including $28,962.96 paid to lawyer Frederic Woocher for the Deaton recount and for Schipske’s vote count (these expenses were listed as “bargaining expenses” and thus paid by teachers who filed PAC waivers);
(5) An additional $28,460.75 was paid by TALB/TAP in 2005-2006 for legal fees pertaining to the four above candidates;
(6) TALB paid $305,108.58 to political consultant John Shallman at Shallman Communications for the 4 campaigns in 2006;
(7) TALB general funds were used to pay $97,044.95 (this does not include expenses from McVarish’s and Schipske’s TALB credit cards for the period of May through November 2006, as those credit card statements have not been produced by Schipske and McVarish and could not be located at the TALB office);
(8) Although TALB received a CTA grant of $22,662.81, to help with campaign expenses, those funds were used for odd things such as $1,200.00 paid to TALB member Elizabeth Martinez for “child care” and in no way even scratched the liabilities incurred by TALB for the campaign.
· In 2004, TALB added an assistant executive director. In 2005, TALB added a full time contract enforcement officer. Since 2004, TALB membership has dropped by a significant amount. The salary and benefits for McVarish costs TALB approx. $220,000 a year and for Schipske approx. $140,000. Within the last month, McVarish has hired another executive director whose name and salary is unknown to the BOD and the TALB treasurer.
· When McVarish’s employment was terminated in June 2007, he was given a termination check of $21,422.18. McVarish cashed the check on July 10, 2007, and has refused to return the money despite the treasurer’s request that he do so.
· In 2006, McVarish made two significant financial settlements, totaling $48,000, with TALB bookkeepers that left the employment of TALB.
Why didn’t the membership, the BOD and the treasurer know of TALB’s dire financial condition?
· Finance Committee 07-08 did not receive complete reports and did not receive reports on accounts payable or accounts receivable.
· With inaccurate reports and no accounts payable or accounts receivable, the committee did not receive a true financial picture on which to base recommendations to the board and rep. council. Bookkeeper, CPA, and Executive Director (as supervisor of all TALB employees) are responsible for the accuracy of these reports.
· On Sept. 10, 2007, at the finance committee meeting, Craig Kotani (CPA from Sawin and Kotani), prepared a packet of information including projected cash flow through the end of the calendar year.
· The balance sheet supported the fact that we have a $394,000 bill from LBUSD for the past two years release time for Tony Diaz, Michael Day, and Wendy Eulo and verification that we cannot pay this by the date due, which is the end of September. It showed that we are projected to be $100,000 short.
· At the Sept. 10th finance committee meeting, Sandy Patton queried the CPA “Do you mean to tell me since I have been on the committee in 06-07 not one of these reports have been correct?” Craig Kotani said, “That is correct.”
· Even though it appeared that the money to pay the district’s bill was being set aside, Craig reported that in reality the money was used for TALB’s other expenses and to cover deficit spending for the last three years.
· The release-time amount did not appear as a liability in the report, therefore the finance committee and treasure had no way of knowing that we were not paying the money to the Long Beach USD and that the money was in the general fund.
· The Board and the finance committee were led to believe that “the reserve” was for emergencies and special one-time expenses and as such were not aware of the accounts payable of $394,000.
· Steve Donnenfield, a finance committee member, made a motion, that the monthly finance committee reports reflect the accounts payable and accounts receivable. The motion passes unanimously.
· The committee noted that in June there was a large expense for a check paid to Scott McVarish. This check was for accrued vacation time, payable at termination, and was included with a termination letter. Scott McVarish has cashed this check.
What can we do now?
· Remain vigilant and demand full disclosure of the use of TALB monies.
· TALB BOD was compelled to file legal action to obtain basic financial documents that should be available for any member.
· Examine the need for TALB to employ two lawyers as executive directors. Notably, neither McVarish nor Schipske make any type of accounting for their time. The BOD has been unable to obtain legal advice from Schipske as she states that she reports only to McVarish. It appears that Day and/or McVarish hired an outside firm to comment on the proposed bylaws. Why? Wouldn’t you expect a legal analysis of the proposed bylaws from the general counsel for TALB for TALB? What are we paying for? What are the exact duties of the executive directors (2) and the general counsel and the contract enforcement officer? Are there overlapping duties?
· Closely scrutinize campaign expenditures and ensure that such expenditures are approved by the BOD and fully disclosed to the members.
· Limit campaign contributions to those candidates who can further the interests of the TALB members, as required by the Internal Revenue Code for non-profit entities. In the Schipske campaign, TALB paid approximately $29,261.30, out of one account alone. Yet, Schipske is a city council person with no jurisdiction over the district, the teachers, etc. Was this money properly spent by TALB?
· Require BOD approval for paying legal fees or retaining lawyers. As an example, in June 2007, McVarish hired a lawyer to review his TALB employment contract and threaten to sue TALB. In July 2007, Mike Day, without seeking BOD approval, reimbursed McVarish for those personal legal fees.
Prepared by Davina Keiser, TALB Treasurer; Sandy Patton, TALB Board Member, Finance Committee 06-07; and Nina Jackson, TALB Board Member
Sept. 20, 2007
Interesting that a union whose members were a critical cog in the LBUSD receiving the Broad Prize a few years ago and being a finalist this year is in such disarray; as a student of leadership I have learned that this much dysfunction generally does not percolate up but rather seeps down.
Your thoughts welcome, click here to email me or on “Leave A Comment” below for public response.