In a series of three complaints filed yesterday with state and federal authorities, the Freedom Foundation alleges that the Pennsylvania State Education Association (PSEA) and the Democratic Governors Association (DGA) executed an illegal scheme during the 2022 Pennsylvania general election to surreptitiously use nearly $1.5 million in teachers’ union dues to back then-candidate Josh Shapiro’s gubernatorial campaign.
Presumptive Democratic nominee for president, Vice President Kamala Harris, is reportedly considering Shapiro as a potential running mate.
Pennsylvania campaign finance and collective bargaining laws prohibit unions from using their general treasury funds to make contributions to political candidates, though federal court rulings allow unions to use such funds to independently purchase their own advertisements supporting or opposing candidates for office.
Nevertheless, the complaints document how PSEA made two, six-figure contributions from its general treasury to the Fund for Student Success (FSS), a little-known political fund operated by the union, which then contributed the funds to the DGA in May 2022 which, in turn, contributed heavily to Shapiro’s successful campaign for governor.
Additionally, the transactions were not publicly disclosed as required by the Pennsylvania Election Code. PSEA failed to register the FSS, which it quietly launched in 2018, as a political committee with the Department of State, meaning none of its contributions or expenditures — including the two contributions to the DGA in 2022 — have been publicly disclosed as required. While the DGA has registered as a political committee and files the applicable disclosures, it failed to report receiving the two contributions from the FSS in May 2022.
While the transactions do not appear anywhere in Pennsylvania campaign finance records, both the FSS and DGA acknowledged they occurred on obscure disclosures filed with the Internal Revenue Service.
However, in an additional attempt to mask the illegal contributions, the FSS fraudulently claimed on its 2022 federal tax return that its contributions went to Put Pennsylvania First — an independent expenditure political committee to which it could have legally contributed — not the DGA. However, Put Pennsylvania First did not disclose receiving any funds from the FSS.
“PSEA’s scheme to secretly launder nearly $1.5 million in members’ dues through the Democratic Governors Association to support Josh Shapiro’s 2022 candidacy appears to have violated both an array of Pennsylvania laws and the Internal Revenue Code,” said Maxford Nelsen, the Freedom Foundation’s director of research and government affairs.
“In the process, PSEA executives displayed as much contempt for their own members as they did for Commonwealth law and voters. Pennsylvania teachers deserve to know that their union’s assurances that the dues deducted from their hard-earned paychecks aren’t being used to back political candidates are worth no more than a politician’s campaign promises.”
Willful violations
The exhaustive complaints show that PSEA officers were well aware of the applicable laws, but chose to ignore them anyway, deceiving Pennsylvania teachers in the process.
PSEA maintains two political committees: PSEA-PACE and the Fund for Student Success. PACE is public-facing, and PSEA regularly solicits voluntary contributions to PACE from its members in addition to their regular dues. PACE registered as a political committee in 1968 and has disclosed its contributions and expenditures to the Pennsylvania Department of State ever since, showing that PSEA is aware of and familiar with state campaign finance reporting rules.
Additionally, when soliciting membership and PACE contributions, PSEA has repeatedly, publicly and correctly noted that Pennsylvania law prevents it from using members’ dues to contribute to political candidates or parties. In past litigation, and referencing the applicable Pennsylvania laws, even PSEA’s own in-house attorney admitted that, “…states like Pennsylvania can, and sometimes do, permissibly prohibit unions from using general treasury funds to make contributions to candidates or political parties in connection with elections.”
Created in 2018, the Fund for Student Success is both far newer than PACE and less visible to PSEA members.
The only reference to the FSS on PSEA’s website is found in a brief article from the September 2018 edition of the union’s membership newsletter, which notes that, “The Fund for Student Success will not – and legally cannot – provide campaign contributions to candidates, elected officials, or campaign committees.”
Despite their knowledge of Pennsylvania campaign finance registration and reporting requirements, as evidenced by their management of PACE, and their understanding of the prohibitions against using members’ dues for political contributions, PSEA executives nonetheless dipped into the union’s general treasury for almost $1.5 million in funds to back Shapiro. This was both in addition to and dwarfed the $800,000 legally contributed to Shapiro for Pennsylvania by the voluntarily funded PSEA-PACE.
Implications for the debate over lifeline scholarships?
As has been widely reported, Gov. Shapiro differed from candidate Shapiro on whether the state should fund lifeline scholarships to allow families with children in the Commonwealth’s poorest performing public schools to pay for private alternatives.
After initially supporting a lifeline scholarship proposal offered by Senate Republicans last year, Shapiro ultimately line-item vetoed the budget appropriation for the program after the PSEA blasted the proposal as “unacceptable.” The debate over lifeline scholarships continued this year but again failed in the face of opposition from teachers unions and House Democrats. Critics chided Shapiro for failing to expend the “political capital” necessary “to sway his fellow party members.”
While the PSEA’s strong support for Shapiro is well-known, the fact that the teachers union spent $1.5 million more backing his 2022 candidacy than has been previously reported is, if nothing else, important added context for the governor’s change of heart and the debate over lifeline scholarships in Harrisburg.
The complaints
The first complaint — alleging violations of the Election Code and certain criminal statutes by the PSEA, FSS, and DGA — was filed with the Pennsylvania Department of State, the Pennsylvania Office of Attorney General, and the Dauphin County District Attorney. A copy of the complaint is available here.
The second complaint was filed with the Pennsylvania Labor Relations Board and alleges violations of the Public Employee Relations Act by PSEA. A copy of the complaint is available here.
And the third complaint, which alleges the Fund for Student Success submitted a fraudulent 2022 tax return, was filed with the Internal Revenue Service, the U.S. Attorney for the Middle District of Pennsylvania, and the Federal Bureau of Investigation’s Philadelphia field office. A copy of the complaint is available here.
Under both applicable Pennsylvania law and the Internal Revenue Code, some of the alleged violations may result in civil fines, while most of the alleged violations, if done willfully, are treated as criminal misdemeanors or even felonies punishable with financial penalties and/or imprisonment.
A graphic depicting the transactions and primary allegations in the complaints is available here.
Contact:
Maxford Nelsen
mnelsen@freedomfoundation.com
(360) 956-3482
