updated 3/4/2004 6:54:29 PM ET 2004-03-04T23:54:29

A teachers union that spends heavily to support political candidates is acknowledging for the first time that the government is investigating whether all its expenditures have been reported.

National Education Association general counsel Bob Chanin confirmed the Labor Department investigation began in April 2002, the same month a conservative law firm complained to the Bush administration that millions of dollars in political spending went unreported.

“We believe we reported all political expenditures properly,” Chanin told The Associated Press. “We concealed nothing. I am confident we’ll get a clean bill of health and be able to move on.”

The Labor Department is the second agency to investigate the way the 2.7 million-member NEA reports its expenditures to the government.

In November, the AP reported the Internal Revenue Service was auditing the largest teachers union, which has said on tax forms that it does not spend union dues on political activity. AP first reported the union’s decision to report no political expenses on its tax returns back in 2000.

Chanin said the IRS informed him the audit “will not be over quickly and could run 18 months to two years.”

The NEA has tax-exempt status as a union but must report political expenses “direct and indirect” on its tax return. Some of those expenses could be considered taxable by the IRS.

Complaints were filed with both agencies by the Landmark Legal Foundation, a law firm that obtained extensive internal NEA documents with details of political spending.

Unions are required to file annual forms with the Labor Department. The most detailed report, an LM-2, requires labor organizations with annual receipts of $200,000 or more to disclose financial activities including assets, liabilities, receipts and disbursements.

The last publicly available NEA filing, for 2002, runs 198 pages.

It is difficult to determine from the report alone whether the political expenditures are reported. There are numerous pages of disbursements to individual officers and employees, and totals for broad expense categories, including amounts of grants to state and local affiliates, administrative expenses, office expenses, travel, communications, promotion and advertising.

Mountains of documents
Chanin said he could not tell whether the investigation is focused on political expenditures because, in four or five meetings, the Labor Department auditors requested and received “mountains of documents” covering the entire filing.

“The general statement was, it’s a review of the report and they wanted to see backup material,” Chanin said. “It was anything but focused. We’ll keep giving them data and they’ll keep asking questions.”

Chanin said he had no evidence that the NEA was singled out, but added, “The NEA is a very large and powerful union. The price we pay is that we’re under scrutiny and investigated.”

The Bush administration’s Labor Department, headed by Elaine Chao, has issued regulations requiring unions to report in greater detail how they spend members’ dues.

On New Year’s Eve, with the rule about to take effect, a federal judge ruled that unions needed more time to comply and delayed the effective date for a year. Subsequently, the court upheld the rule and set a new effective date of July 1.

The AFL-CIO had sued the Labor Department to block the regulation, which would make unions disclose in detail how much they spend on politics, gifts and management and report any expenditure above $5,000.

The Labor Department argued that current reporting requirements lack sufficient transparency to tell rank-and-file union members how their dues are spent.

Hundreds of pages of internal NEA documents provided by the Landmark firm showed the teachers union spent millions of dollars to help elect candidates, produce political training guides and gather voting records.

For instance, a July 1999 strategic plan stated the union budgeted $4.9 million for the 2000 election for such things as “organizational partnerships with political parties, campaign committees and political organizations.”

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