America’s teachers’ unions exploited the COVID-19 pandemic to maximum effect, leveraging school lockdowns for which they lobbied to pursue political demands stretching far beyond their salaries and benefits – and helping drive a $190 billion windfall in taxpayer dollars to K-12 schools.
The public bore that cost, in children’s learning loss and mental health struggles; in the burdens the closures placed on parents already struggling to make ends meet in an economy crippled by government decree; and on the literal costs that the teachers’ unions passed on to taxpayers.
Adding insult to injury, some teachers’ unions also apparently defrauded Americans under a pandemic relief program never intended for them. Now, thanks to a Michigan court case, one union is finally facing a modicum of justice for it.
Earlier this month, the Michigan Education Association (MEA) and Michigan Education Special Services Association (MESSA), its health insurance arm, reached a settlement requiring the entities to pay the U.S. government more than $200,000 in reimbursements and fines, and the Mackinac Center $77,000, covering the legal fees the think tank incurred in taking the union to court over its alleged misconduct.
That alleged misconduct occurred in 2020 when the union entities applied for $12.5 million in federal loans, which they ultimately received, under the Small Business Association’s (SBA) Paycheck Protection Program (PPP). The Mackinac Center argued that the entities were ineligible for such loans, that they knew this when applying for and obtaining them, and that they had therefore violated the False Claims Act.
The nearly $800 billion in forgivable loans extended pursuant to the PPP program were largely intended as relief for small businesses struggling under the dire economic conditions wrought by the government-driven shutdown of the U.S. economy. The assistance would help such concerns make payroll, re-hire laid-off employees, and cover overhead.
Labor organizations like the MEA, and voluntary employee-benefit associations like MESSA, were not among the types of entities that qualified for such loans under the program at the time they applied for them.
So, in January 2022, the free-market and limited-government-oriented Mackinac Center sued them.
Prior to filing suit, The Mackinac Center said that it had confronted the MEA with evidence of its legal violation, and that the union falsely claimed it had returned the PPP funds – only to do so four days after being apprised of its infraction.
Despite the union’s returning of those funds, the SBA – which is to say, the public – had incurred processing fees, which the agency paid to the lenders who extended the government-backed PPP funds. The Mackinac Center bore the cost of litigation. Hence the settlement that the parties reached.
“Those who violate the False Claims Act by fraudulently receiving SBA pandemic program funds meant for eligible small businesses will be held accountable,” said Special Agent in Charge Sharon Johnson of SBA OIG’s Central Region. “Today’s settlements send a strong message that those responsible will be held accountable.”
Time will tell if that holds true. The government’s COVID-19-related programs have proven rife with fraud, and efforts to prosecute are ongoing. Michigan’s teachers’ union was not alone among organized labor groups in seeking out PPP funds for which it was apparently ineligible.
According to a January 2022 Freedom Foundation report, labor unions and related organizations procured some 223 loans totaling $36.1 million during the period between the passage of the CARES Act in March 2020, which created the PPP program, and the American Rescue Plan in March 2021, which modified it.
Leading recipients included teachers’ unions, government employees’ unions, and AFL-CIO advocacy groups.
As the Freedom Foundation asserted in its report:
The ineligible loans diverted resources away from the purpose of the PPP, namely helping businesses keep employees on payroll. Further, given that union revenue derives primarily from dues deducted from members’ paychecks, direct support to unions was unnecessary; to the extent the PPP loans to businesses allowed union employees to keep working, it also allowed unions to continue collecting dues from their paychecks.
While the Mackinac Center successfully pursued a case against what appears to have been the largest teachers’ union recipient of such funds, no other such party is known to have faced a similar fate.
The Mackinac Center told RealClearEducation that it was not aware of any other such cases pending or completed, though it noted that other suits could have been filed under federal seal.
