DC 37 Retirees Association taken over by AFSCME

This story was updated Saturday afternoon to include comments from the Retirees Association's president.

District Council 37’s Retirees Association has been put under administratorship for allegedly failing to file tax returns for the last six years. The association's president and others, though, say its opposition to the city’s effort to switch municipal retirees to a Medicare Advantage plan was an overriding factor in the takeover. 

Ann Widger, the international retirees director for the American Federation of State, County and Municipal Employees, informed members Thursday that AFSCME President Lee Saunders has placed the Retirees Association under “emergency administratorship” and that she would serve as the association’s administrator. Terri Brady, AFSCME’s retirees field coordinator, will serve as deputy administrator.

“The International Union recently became aware that the DC 37 Retirees Association was not following AFSCME’s Financial Standards Code or Internal Revenue Service (IRS) requirements, which jeopardized the Retirees Association’s funds and assets,” Widger’s message notes. “Unfortunately, the IRS has revoked the Association’s tax-exempt status for failure to file its annual tax return for the past six years.”

The association has reportedly also not conducted an outside audit “since at least 2017,” according to the international.

“These are serious failings. In pursuing these matters with the Association, it became clear that there was no significant effort or progress being made to correct them,” Widger wrote. “While there is no evidence of any individual financial wrongdoing, these matters cannot go unaddressed.”

In a letter to the Retirees Association’s executive board obtained by The Chief, Saunders stated that the association’s officers were suspended and must turn over all records, funds, books and property belonging to the group, citing “an emergency situation … in that dissipation or loss of funds or assets is threatened.”

DC 37 represents approximately 80,000 retired city workers. The Retirees Association counts more than 25,000 members who typically pay $36 in annual dues that are deducted from their monthly pensions.

A spokesperson for DC 37 declined to comment on the announcement. AFSCME did not immediately return a request for comment inquiring why the international was unaware the association allegedly had not filed its taxes or been audited for several years.

Several officers of the Retirees Association, including the recording secretary, Bruce Heigh, and a former president, Edward Hysyk, who served in the position from 2018 until 2022, did not immediately return requests for comment.

Did Medicare Advantage play a role?

A source who wished to remain anonymous said there was another reason for the administratorship — notably the Retirees Association’s $2,000 monthly payments to the NYC Organization of Retired Public Servants, which is leading the fight against the city’s effort to switch retired municipal workers’ health-care coverage to a Medicare Advantage plan.

In a June email message obtained by The Chief, Widger wrote to the association's president, Bob Gervasi, and cited a portion of the international union’s constitution that notes, “no property of any subordinate body … shall be given, contributed, assigned, donated or result to … any seceding, dual or antagonistic labor organization group … which is in violation of the International Constitution.” 

The email did not reference the association’s failure to file its taxes.

Speaking to The Chief Saturday, Gervasi said the Retirees Association had in fact been making the monthly contributions to the retirees’ organization. 

Out of caution, though, he asked for the NYC Organization of Retired Public Servants’ financial statements and eventually decided to stop making the contributions. He also sent the language in AFSCME’s constitution to members of his executive board. But several board members pointed to the Retirees Association’s own constitution, which requires them to protect the retirees’ health care. The board voted in December to resume payments to the organization.

Gervasi said he found out that the association had lost its tax-exempt status soon afterward. 

“If AFSCME had called me up and told me ‘You have 30 days to fix this,’ I would have done so. The tax exemption could have been fixed — we would have paid our penalties. It’s really a shame it had to go down this way,” he said.

Gervasi added that he was told that other DC 37 locals using the same accountant as the Retirees Association reportedly had a similar problem with their tax status, and had fired the individual. He did not indicate which locals those were.

He believes that the association’s loss of its tax-exempt status was an excuse for the administratorship. “In my opinion, this is all about the resumption of the payments to [the retiree group],” he said. “Now AFSCME has control of the association’s money, and it all stops. That was the ultimate goal.”

Ray Markey, the former president of DC 37’s Local 1930, and a former DC 37 staffer, Gregory Heires, said in a statement on social media on behalf of Labor for Traditional Medicare, a group within the NYC Organization of Retired Public Servants, that “the true reason for the takeover” was because of Retirees Association’s support of the fight against the city’s Medicare Advantage effort.

“We condemn the [blatant] takeover of the retirees association by its national union, AFSCME. It’s an outrageous anti-democratic and anti-union power grab,” the statement said.

Widger, though, denied that AFSCME’s decision to place the association under administrationship was tied to the Medicare Advantage matter.

“I realize that some will say this is about the current debate around retiree health care for New York City retirees. Make no mistake: It is not,” the message reads. “It is about serious violations of AFSCME’s Financial Standards Code and the International Constitution, which has resulted in the IRS revoking the Retirees Association of DC 37’s tax-exempt status.”

Gervasi said he was angered by the way AFSCME officials came into the association’s office Thursday morning. “They were rude to my staff, who were in that office everyday during Covid helping people, and they changed the locks,” he said. “My employees didn’t deserve that.”

He added that, “Nobody did anything wrong. Nobody’s money is in danger.”

Gervasi blamed the mayor, the Municipal Labor Committee and former labor Commissioner Bob Linn for the rollout of Medicare Advantage. “I’m not totally against the Medicare Advantage plan, but I want choice,” he said. “The city picked the most vulnerable people to pick on. Our retirees, they need help. My concerns have always been for the retirees and their benefit.”

clewis@thechiefleader.com

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