Union Makes Gain of Over $240,000

Also: Building Upgrades, Credit Card UseFinancial Vice President's Report

Volume CVI, No. 6June, 2006

Jay Blumenthal

I am pleased to be able to inform you that at year-end in 2005, the Local 802 audited financials indicate a gain of $240,639. As you may remember, the membership approved a work dues increase in October 2003 due to concerns that expenses at the union were outpacing revenues which, if not addressed, would have resulted in an adverse financial position for the union. The increased work dues coupled with the implementation of a six-month temporary hiring freeze in early 2005 resulted in our year-end surplus. Of course, as we are all painfully aware, there has been a diminution of work in recent years impacting both the finances of most musicians as well as the revenues of the union. Future budgets must take this into account.

Union expenses remain a constant challenge. As we all know from our personal lives, costs rise continually. The same is true for the union. Despite our efforts to manage costs, there are areas where we have little or no control, like heating fuel and electricity. In addition, we are upgrading three important areas of technology — computer cabling, proprietary computer software and telephones.

The internal computer cabling throughout the building has reached the end of its useful life. It is time to replace it. The new cables are “Category 5-e” and should serve us well into the future.

In addition, there is an ongoing initiative to upgrade the proprietary computer programs we use at Local 802. Our aging proprietary computer programs were written in an old language that will no longer be compatible with newer computer operating systems in the very near future. Writing these programs in a newer language will allow us to continue to maintain our records while vastly improving our reporting capabilities. 

We also will be upgrading our telephone system. The telephones at Local 802 are so old that replacement units are no longer available. Repairs to the existing telephones have become increasingly more expensive and problematic. Replacement of our old telephones will be taking place shortly.

With all of these initiatives, we have endeavored to accomplish them in the most efficient and cost effective manner. Both the re-cabling and the telephones were put out for bid. In the end, our current vendor made the most attractive bid and was awarded the job. With regard to the writing of our proprietary software, it is currently being done in-house.

On a different note, in recent months many Local 802 members have expressed their concern upon learning of President Lennon’s personal use of his Local 802 credit card. Because of the serious issues raised by this situation, Local 802 employed independent counsel Larry Cary to assist in remedying and guiding us in the prevention of similar issues in the future.

On pages 14 and 15 you will find the 2005 and 2004 year-end audited financials for Local 802. Both years should be compared. In addition, this issue includes a more detailed accounting of President Lennon’s personal use of the union credit card and repayments.

The union also incurred an ancillary expense as a result of the president’s personal use of the union credit card: the cost of independent counsel Cary’s report. President Lennon has implemented payroll deductions (June 1, 2006 through Dec. 31, 2006) to fully reimburse the union for this expense.

The Cary report, published in the March issue of Allegro, makes several recommendations. The Local 802 Executive Board has adopted these recommendations unanimously. The full-time officers are currently meeting with our accountant and Local 802 counsel Harvey Mars to develop a comprehensive financial policy. Once this has been completed, the policy will be presented to the Executive Board for their consideration and implementation.