EXCLUSIVE: Freedom Foundation Researcher Details Campaign Finance Perfidy of Pennsylvania Teachers Union

Money laundering allegations indicate union camouflaged true level of support for Democratic Gov. Josh Shapiro

Pennsylvania teachers who have been told that their union dues are not being used for political activism they do not support should know there is a palpable money trail that says otherwise, the lead researcher with the Freedom Foundation told Restoration News in an exclusive interview.

In a series of complaints filed with federal and state officials, the Freedom Foundation, which bills itself as an “action tank,” alleges that the Pennsylvania State Education Association (PSEA) and the Democratic Governors Association (DGA) engaged in an “illegal scheme” during the 2022 general election to funnel almost $1.5 million in union funds to support Josh Shapiro, then the Democratic party’s gubernatorial candidate. 

Pennsylvania’s campaign finance and collective bargaining laws prohibit unions from using their general treasury funds to make contributions to political candidates, making this a big problem. Moreover, it appears the union did not properly disclose the transactions in compliance with the requirements of the Pennsylvania Election Code. On the federal level, some evidence indicates a fraudulent tax return filed with the Internal Revenue Service may have figured into the scheme. 

“At a minimum, Pennsylvania teachers should know that the PSEA is simply deceiving them when it claims it doesn’t use their dues for politics and to influence elections for office,” Max Nelson, the director of research and government affairs for the Freedom Foundation said in an interview. “So, is this really the kind of organization Pennsylvania educators deserve to have advocate on their behalf? At the end of the day, if it is found that PSEA did violate the law, any fines that are imposed are most likely to be paid indirectly by PSEA members through their dues and this just adds insult to injury.”

Organizations Operating In the Shadows

Sitting at the epicenter of the allegations is a largely unheralded political action committee (PAC) attached to the PSEA known as the Fund for Student Success (FSS), which the union established in 2018. The complaints document how the PSEA used the fund as a conduit for making two six-figure contributions from its general treasury, which then moved the funds into the coffers of the Democratic Governors Association (DGA), a PAC that supports the election of Democrats as state governors. After receiving donations from FSS, the DGA then contributed several million dollars to Shapiro’s campaign.

The Freedom Foundation created a map of the PSEA’s alleged money laundering operation, along with links to the complaints directed against the PSEA, FSS, and DGA. The map helps to explain how the union operated through subterfuge to conceal the hefty amount it was donating to Shapiro’s campaign. 

Legally, the union may make independent expenditures and purchase political advertisements that urge voters to support or oppose a candidate, but with the caveat that it does not coordinate this activity with any particular candidate. The PSEA can and does make independent expenditures through another PAC it founded in 1968 called the Political Action Committee for Education, commonly described as PSEA-PACE. The union regularly solicits voluntary contributions from its members to PACE on top of their normal dues. Furthermore, PSEA has consistently disclosed its contributions and expenditures through PACE to the Pennsylvania Department of State. 

Nelson makes the point that these disclosures indicate PSEA is well aware of Pennsylvania’s campaign finance rules and should not be permitted to plead ignorance.

“The existence of PACE and the way the union has operated it and describes it is a pretty strong indication in the culpability for the violations surrounding the fund for student success,” Nelson said. “They can’t say they didn’t know the Fund for Student Success should be registered as a political committee. We believe based on the filings and documentation we’ve been able to accumulate that the PSEA created a political organization registered with the IRS to be an opaque conduit for using members’ dues political activity in Pennsylvania and that is the Fund for Student Success.”

The union was not exactly forthcoming with its own membership about the nature of the FSS. In fact, there only a brief reference to the FSS appears on the PSEA’s website, in the form of an article from the September 2018 edition of the union’s membership newsletter. In that particular edition, the newsletter claims the union cannot use the fund for campaign donations. The article even acknowledges that to the union cannot legally use the fund to provide campaign contributions to candidates, elected officials, or campaign committees.

“A member reading from the archives would be led to believe that membership dues would not be flowing through the Fund for Student Success for political purposes,” Nelson said. “I think PSEA has been extremely deceptive with its members. Reasonable people would assume based on what they’ve been told in writing that funds don’t get used for political activity, but that is clearly not the case.”

How Far Does the Union Subterfuge Go?

According to the Freedom Foundation complaints, he PSEA failed to register the FSS as a PAC with the Pennsylvania State Department, which means the made none of the legally required public disclosures on its contributions, including the two contributions made to the DGA totaling almost $1.5 million. 

Anyone checking Pennsylvania campaign finance records would find the PSEA legitimately, and legally contributed $800,000 to the Shapiro campaign through PACE. Not an insignificant amount, but as Nelson explains, it pales in comparison to the actual figure Shapiro received from the teachers’ union. 

“Behind the scenes, the PSEA was deploying far more to the Shapiro campaign, in the amount of about $1.5 million, through the Fund for Student Success and the Democratic Governors Association,” Nelson said. “So as large as its influence seemed in that election, it was even larger.”

Although the transactions in question do not appear in Pennsylvania campaign finance records, the FSS and DGA acknowledge they occurred in what the foundation calls “obscure disclosures” with the IRS. The intrigue doesn’t end there. In its 2022 tax return, the FSS fraudulently claimed that it sent its contributions to Put Pennsylvania First, an independent expenditure outfit, and not the DGA, according to the complaints. 

Any contributions made to Put Pennsylvania First would have been legal. However, Put Pennsylvania First does not report receiving any contributions from FSS. 

“The PSEA Fund for Student Success Tax Return says the money didn’t go to the DGA, but instead went to this other political fund, but there’s no corroborating reports from this other fund,” Nelson said. “So, where did the money actually go? I’m pretty sure it went to the DGA.”

What’s next?

The Freedom Foundation has received confirmation from Pennsylvania’s attorney general and secretary of state that they have received the complaints. As to the federal tax violations, it’s entirely up to the IRS to determine how to proceed. 

Even before Democratic presidential nominee Kamala Harris considered Shapiro as a potential running mate, public sector unions viewed him as a long-term investment. During the 2021-2022 election cycle, Shapiro was the number one recipient of public sector union money in the entire country, receiving more than $4.5 million. The National Education Association (NEA), the American Federation of Teachers (AFT), the American Federation of State, County, and Municipal Employees (AFSCME), and the Service Employees International Union (SEIU) top the list of Shapiro’s contributors. 

The PSEA is an affiliate of the NEA. 

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