Investigative Report: Taxpayer-funded hypocrisy

The Washington State Labor Council (WSLC), state affiliate of the AFL-CIO, released a position paper last year decrying the consequences of contracting government services to the private sector.(1) Citing the potential for "corruption and cronyism" and reduced public accountability, the Council stated it "will oppose efforts to contract out government services."(2)

That is, unless the WSLC is the recipient of those contracts.

As a taxpayer watchdog, EFF monitors state contract performance, and we discovered the WSLC holds several contracts for government services. In the Council's own case, the fears of its officials are justified: It looks like they do benefit from cronyism and reduced public accountability.

A look at some of the Council's contracts also sheds light on the militant opposition to unemployment insurance reforms mounted by Rick Bender and other labor leaders recently. The WSLC is benefitting from taxpayer-funded efforts to expand unemployment benefits for workers.

Here's a peek at two of the Council's contracts:

1. Employment Security Department (ESD)
Taxpayers will pay the WSLC $771,995 this year to act as an advisor for the state's "Rapid Response" program, which provides transitional services for unemployed workers.(3)

In its advisory role, the WSLC works with the department to identify the demands of labor unions across the state. The Council's two full-time "labor liaisons" intervene to encourage the rehire of laid-off employees, promote union goals for job promotion, monitor potential closures and layoffs, and publicize union and government services for unemployed workers.(4)

Detailed activity logs filed by Rapid Response liaisons thus far include:

• Workshops to encourage unemployed workers to file for state unemployment benefits.(5)

• Sessions to encourage a state meat packing plant to hire "almost 80 limited-English-speaking workers."(6)

• Petitions filed with the U.S. Department of Labor calling for an investigation of Kaiser Aluminum for relying too heavily on imported materials, which the union blames for Tacoma and Spokane layoffs.(7)

Much of the time and cost billed to taxpayers for Rapid Response, aside from the salaries of labor liaisons, is spent on a variety of union activities, networking and travel. Expenses thus far include:

• A June 2002 trip for WSLC officials to the AFL-CIO convention in Oregon.(8)

• $400 in expenses for one labor liaison to attend Governor Locke's Economic Development Conference in Spokane.(9)

• Salary and costs for a liaison to conduct a workshop at the WSLC Convention that would be a "benefit to the movement and system" by teaching "case law theories that may be of use in runaway corporation situations."(10)

• Labor liaisons attended the AFL-CIO's Working for America Institute Convention in Philadelphia.(11) (Registration, miscellaneous bills, three nights lodging at the Wyndham Hotel.)

• Labor liaisons attended a union conference in Scottsdale, AZ.(12)

2. Department of Labor and Industries (L&I)
The WSLC holds a $354,301 contract with L&I for a workers' compensation program called "Project Help."(13) The goals of Project Help are: 1) to expedite claims resolution, 2) to ensure that all rights are preserved and protected, 3) to reduce unnecessary litigation, and 4) to provide information and assistance free of charge.(14)

Interestingly, all of these services are already provided by two separate L&I claims assistance offices.(15) This has prompted some, like former Governor Mike Lowry, to seek an end to Project Help.(16) In 1996, L&I was asked to conduct an internal audit of the program to determine its effectiveness.(17) The audit revealed that of an average 11,102 inquiries each month, only eight percent were handled by Project Help.(18) The rest were taken care of by the two L&I offices. The audit concluded that "the cost of Project Help providing this service is higher than the cost of either [state office] providing claims assistance."(19)

In addition, the audit identified numerous Project Help activities "not associated with a specific contract deliverable.(20) These included:

• Participation in the Seattle Chapter of Women in Workers' Compensation.(21)

• Coordination of activities for Worker Memorial Day, which includes planning and coordinating several union-sponsored events that celebrate the lives of deceased workers.(22)

• Annual WSLC Workers' Compensation Conference, which covers the broad theme: "Learning How the System Works." In 1996, L&I concluded: "There is no contract deliverable that pertains specifically to organizing and planning this conference."(23)

• Five-day WSLC convention.(24)

• Expense-paid trips to labor conferences around nation, with funding including registration, meals, travel, membership dues, and regular salary during the events. The audit's conclusion: "The direct benefits [of conference participation] to the Department are not clear."(25)

Project Help recently began to focus its services on illegal immigrants. In a presentation earlier this year in Yakima, representatives of the Mexican Consulate were trained to obtain workers' compensation from the state, and they have requested that Project Help conduct bi-monthly sessions with a Spanish interpreter for farm workers.(26)

Currently, the L&I contract with WSLC pays for two full-time and one part-time staff positions. Salary costs are the bulk of the contract's cost to taxpayers.(27)

L&I calls its contract with WSLC a valuable partnership, but continues to provide the same services at a lower cost.

3. Brief summary of other contracts held by WSLC
The WSLC holds three other major government contracts, totaling nearly $5 million.

The U.S. Department of Labor Employment and Training Administration contracts to the WSLC for the Welfare-to-Work Recovery and Work Retention Program.(28) The purpose of the $4,619,684 contract is to "provide services to assist substance abusers to initiate and maintain an alcohol and drug-free recovery lifestyle.(29) Through life-long skill building, personal empowerment training, job preparation and support services, WSLC and its partners will assist welfare recipients achieve and maintain life-long self-sufficiency."(30)

Another agency that awards two contracts to the AFL-CIO in Washington is the State Board of Community and Technical Colleges. This year, SBCTC gave $75,000 to the AFL-CIO Worker Center of King County and $100,000 to the WSLC for community and technical college liaisons.(31)

According to Jim Grabbe of the SBCTC, the purpose of the liaison is to develop a "work plan to acquire a union representative for college advisory committees."(32) While labor officials may have legitimate reasons for taking a seat at the table to discuss the direction of Washington's community and technical colleges, should it really be costing taxpayers $175,000?

Conclusion
Competitive contracting in the private sector can provide increased efficiency and quality for taxpayers, and legislators should pursue it where appropriate. Clearly, the contracts held by the Labor Council are not in the best interest of taxpayers.

Hans Zeiger, a research analyst for the Evergreen Freedom Foundation, contributed to this report.

SOURCES

1. Washington State Labor Council. "Legislative Position Paper: Contracting Out Government Services." http://www.wslc.org/legis/contract.pdf. Jan. 25, 2001.

2. Ibid.

3. Washington State Labor Council. "Services provided by the WSLC." http://www.wslc.org/services/index.htm, Feb 26, 2002.

4. Washington State Labor Council. "Services provided by the WSLC." http://www.wslc.org/services/index.htm, Feb 26, 2002.

5. Office of Adult Services, National Dislocated Worker Workgroup. "Quality Rapid Response Principles." http://www.doleta.gov/usworkforce/documents/tein/x3-01-a.htm
Sep. 2001.

6. Province, Lori. "Washington State Labor Council (WSLC) Monthly Activity Report." Sep. 2002, p 3.

7. Tusler, Jim. "Washington State Labor Council (WSLC) Monthly Activity Report." Nov. 2001, p. 2.

8. Tusler, Jim. "Washington State Labor Council (WSLC) Monthly Activity Report." June 2002, voucher

9. Province, Lori. "Washington State Labor Council (WSLC) Monthly Activity Report." Sep. 2002, voucher

10. Tusler, Jim. "Washington State Labor Council (WSLC) Monthly Activity Report." July 2002, p 3

11. Province, Lori. "Washington State Labor Council (WSLC) Monthly Activity Report." April 2002, p 5.

12. Province, Lori. "Washington State Labor Council (WSLC) Monthly Activity Report." April 2002, p 1.

13. Department of Labor and Industries. "Project Help Annual Expenses." Sep. 27, 2002.

14. Project Help. "Project Help: A Cooperative Effort." informational brochure

15. Department of Labor and Industries. "Project Help Program Evaluation." 1996, p. 6

16. Ibid. Cover

17. Ibid. Cover

18. Ibid. p. 7

19. Ibid. p. 9

20. Ibid. p. 19

21. Ibid. p. 19

22 Ibid. p. 28

23. Ibid. p. 21

24. Ibid. p. 21

25. Ibid. p. 23

26. Smith, Vicky. "Project Help January Monthly Report." Memo to Doug Connell. Jan. 31, 2003.

27. Project Help. "Project Help: Total Salaries and Benefits." Sep. 2002.

28. U.S Department of Labor Employment & Training Administration. "Welfare-to-Work Competitive Grants." http://www.doleta.gov/competitive/round2/wa-514.asp. May 14, 2002.

29. Ibid.

30. Ibid.

31. Grabbe, Jim. Phone interview by Hans Zeiger. June 11, 2003.

32. Ibid.

The Evergreen Freedom Foundation is a non-profit public policy research organization dedicated to preserving and advancing individual liberty, free enterprise and limited and accountable government.

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org