Unionized public sector employees in Michigan pay hundreds and sometimes thousands of dollars per year in dues to unions. These unions have a duty to use this revenue in ways that benefit union members. Unfortunately, under current Michigan law, union members cannot easily assess whether their union is making good use of their money to effectively represent their interests, because the state lacks effective financial reporting requirements for public sector unions.

This report shows how Michigan policymakers could fix this problem. There is a model in place of union financial transparency requirements that Michigan could easily adopt — they are the federal government’s long-standing reporting requirements of private sector unions, established by the Labor-Management Reporting and Disclosure Act of 1959. These disclosure rules provide timely and detailed information about how private sector unions are spending their members’ money, and they have been instrumental in uncovering financial corruption by union officials.

Michigan currently has in place some financial reporting requirements of public sector unions, but these are woefully inadequate. They only require unions to disclose spending on three broad areas: collective bargaining, contract administration and grievance adjustments.  And, based on publicly available information in 2013, it appears that many public sector unions in Michigan do not even provide these data, though they are required by law to do so. Unionized public employees in Michigan are not provided the opportunity to determine how well their hard-earned dues money is being spent by their union.

The federal requirements, on the other hand, provide a meaningful and appropriate level of financial disclosure. Among other things, unions must report all of their assets, liabilities, receipts, loans, investments, gifts and grants. The salaries and disbursements of union officials and employees must also be reported. Further, certain disbursements must be itemized, so that union members can see precisely how the union is spending their money. For instance, the federal disclosure laws require unions to itemize their spending on political contributions and lobbying. Finally, current and past data are easily accessible online and may be downloaded for thorough analyses.

Appendix A of this report provides model legislation for implementing these well-established federal financial reporting requirements. Michigan policymakers should consider adopting these rules. Bringing financial transparency to public sector unions in Michigan will make it more difficult for union officials to misuse members’ money and allow members to make better decisions about whether they should continue financially supporting the union operating in their workplace.