Waiting for ‘Superman’

Davis Guggenheim, director of An Inconvenient Truth, addresses another thought-provoking topic—American public education reform—in his recent documentary, Waiting for ‘Superman’. Waiting for ‘Superman’ follows the stories of five young children who despite entering different grades, being of different backgrounds and attending different public schools throughout the country, all find themselves in the same situation: hoping to gain entry into a high performing charter school in their areas through a random and competitive lottery system.

Teachers unions are also a key character in this film. Among other topics, Guggenheim touches upon two widely discussed issues: first, the statistics showing that teachers unions accounted for some of the largest monetary contributions in the 2007-08 political campaigns; second, the vote holdout by an American Federation of Teachers (AFT) local chapter, Washington Teachers Union (WTU), on a new salary plan proposed by D.C. Schools Chancellor Michelle Rhee to give teachers up to double their salary—up to $140,000—on a merit based system in exchange for giving up their tenure.

To understand how these types of events operate within nonprofit law, we should first lay out some basics about unions. Labor organizations are nonprofit, tax-exempt entities. In California, they are governed by a section in the Nonprofit Corporation Law dedicated to “Nonprofit Mutual Benefit Corporations.” Under federal law, organizations such as the AFT can be recognized as 501(c)(5) tax-exempt labor organizations. The general definition of a labor organization is:

  • An association of workers
  • Who have combined to protect or promote the interests of the members
  • By bargaining collectively with their employers
  • To secure better working conditions, wages, and similar benefits.

(IRS 2003 EO CPE Text).  In other words, they are exempt entities because they have the primary purpose of representing their members in matters as wages, hours of labor, working conditions and economic benefits. (See, e.g., Rev. Rul. 67-7, 1967-1 C.B. 137; Rev. Rul. 62-17, 1962-1 C.B. 87).

Political campaign contributions made by labor organizations such as teachers unions implicate the federal level laws. Two national teachers unions, the National Education Association (NEA) and AFT, outspent all other unions in the 2007-08 election cycle, distributing $71.7 million on candidate and issue campaigns across the country. (See "The Long Reach of Teachers Unions" by Mike Antonucci). This substantial figure raises the often-discussed topic of nonprofits and political campaign activity. A 501(c)(5) tax-exempt organization may engage in political campaigns on behalf of or in opposition to candidates for public office provided that such activity does not constitute the organization's primary activity. (See G.C.M. 34233 (Dec. 3, 1969)). Therefore, one is left wondering what amount equates to “less than primary.” Unfortunately, there are no exact answers from the IRS and this question continues to be asked during the current midterm elections.

With respect to the vote holdout, news stories such as “Pay Dispute Continues as Classes Near" by Bill Truque of the Washington Post indicate that there was some WTU member support of Rhee’s proposed plan but WTU President, George Parker, decided to not have the union vote at that time. This raises an interesting question with respect to member rights of a teachers union as defined by state laws. For example, under the California Corporations Code section 7510(e), 5% or more of the members of a nonprofit mutual benefit corporation can call a special meeting of members for any lawful purpose. Therefore, it is conceivable that such a vote could still happen under California law despite not being called by the President of a labor organization if enough members wanted to vote on the matter and could successfully mobilize together.

Other provocative moments of the documentary included shocking statistics about American public education generally, such as:

  • America ranks only 25th in Math and 21st in Science among 30 developing countries.
  • Our nation’s capital, D.C., has the lowest eighth-grade reading proficiency in the country at 12%.
  • It is estimated that only 50 million Americans will be qualified to fill the 123 million high-paying, high-skilled jobs that will be available by 2020.
  • In Pennsylvania, the cost to support 4 years in state prison is more than it costs to support 13 years of private school (K-12) by over $20,000.
  • In New York, the disciplinary hearing process for tenured teachers takes longer than the average criminal trial.
  • More than 2,000 American high schools are “dropout factories” (meaning more than 40 percent of the students do not graduate).
  • The achievement gap between student performance above the poverty line and below the poverty line has not changed but some schools in low income areas such as Kipp Schools show the possibility of closing the gap by statistically outperforming public schools above the poverty line.

As a viewer, I appreciate that “Waiting for Superman” is helping to include more people, both critics and fans alike, into this discussion by showing at least one person’s perspective about the competing forces that many American families, teachers, and legislators attempt to navigate each year in the American public school system.

More information about “Waiting for ‘Superman’” is available at www.waitingforsuperman.com.