Tag Archives: officer column

Hurricane Irma
Officer Columns, President's Message

Donate to AFM’s Hurricane Irma Relief Fund

On September 6, Hurricane Irma passed just north of Puerto Rico with ferocious winds of 185 miles per hour as a category 5 hurricane, then roared past Cuba and ashore onto the US mainland Sunday, September 10, battering the entire state of Florida with an enormous reach of more than 400 miles. Irma made landfall on the southern tip of Florida as a category 4 hurricane with sustained winds in excess of 130 miles per hour, causing massive flooding and storm surges, resulting in more than five million power outages, and creating catastrophic tornadoes. The fury of Hurricane Irma occurred on the heels of Hurricane Harvey, which made landfall August 25 on the Texas Gulf Coast, between Port Aransas and Port O’Connor, Texas, just east of Houston and Galveston as a category 4 hurricane as well, marking the first time in recorded history that two hurricanes as powerful as category 4 made landfall in the same year, in the United States.

These disasters have hit AFM members hard. Hurricane Harvey displaced more than one million people along the Texas Gulf Coast. The storm affected all Houston Arts District organizations, flooding Jones Hall, the home of the Houston Symphony. It totally devastated Wortham Center, which hosts performances by the Houston Ballet and Grand Opera. “No one knows when the opera and ballet can get back in there,” Local 65-699 (Houston, TX) President Lovie Smith-Wright reported.

The Houston Symphony has managed to continue operations by moving concerts to other locations around town, pending Jones Hall repairs. The homes of dozens of Houston AFM members were totally destroyed. In South Texas and across Florida, scores of freelance musicians who work steady and short-term casual club dates and single engagements in restaurants and nightclubs have suffered loss of work.

Hurricane Irma’s trail of wind and storm surge destruction in Puerto Rico, the Florida Keys, Miami, Naples, and up the east and west coasts of Florida resulted in a coast-to-coast pummeling. Officials are still trying to assess the extent of damage. A stunning
13 million Florida residents were without power for days. Irma’s parting blow to Florida, as it moved on to Georgia and South Carolina, was record flooding in the Jacksonville area. Together, Irma and Harvey may have caused up to $200 billion in damage in Texas and Florida, according to Moody’s Analytics.

In one bit of good news, Local 389 (Orlando, FL) Secretary Sam Zambito reported that Disney advised that it will pay its Orlando theme park employees, including musicians, for all shifts cancelled as a result of the storm. Bravo Disney!

How You Can Help

In an effort to respond to the epic devastation and to help affected AFM members and their families residing in federal disaster areas in Puerto Rico, Florida, and Texas who are fighting to recover from one of the most destructive US natural disasters in history, we have established the AFM Hurricane Relief Fund. It’s more important than ever that we stand together and help our brothers and sisters. Please open the afm.org home page and click the “DONATE HERE” link.

If you prefer to write a check, send it to:

AFM Hurricane Relief Fund
American Federation of Musicians,
1501 Broadway, Suite 600
New York, NY 10036

Please note: contributions to the AFM Hurricane Relief Fund are not tax-deductible.

How to Get Help

If you are a victim of Hurricane Harvey or Irma, here’s how you can get help.

AFM Hurricane Relief Fund

Download the instructions and application for hurricane assistance here:

http://www.afm.org/hurricane-disaster-
assistance/

The Actors Fund

Musicians affected by Harvey or Irma should contact The Actors Fund for information on emergency financial assistance and other resources.

For Harvey assistance: The Actors Fund’s Los Angeles office at intakela@actorsfund.org or 323.933.9244, ext. 455.

For Irma assistance: The Actors Fund’s New York office at intakeny@actorsfund.org or 212.221.7300, ext. 119.

AFL-CIO Union Plus

Musicians who have been impacted by Hurricane Harvey or Irma, and who are participating in certain Union Plus programs may be eligible for financial assistance through the Union Plus Disaster Relief Grant program. Please visit the Union Plus Disaster Relief Fund at unionplus.org/disaster to learn more about Union Plus benefits and eligibility requirements.

Texas AFL-CIO

Union musicians affected by Harvey may apply for assistance from the Texas Workers Relief Fund established by the Texas AFL-CIO here: http://www.texasaflcio.org/relief/

If we stand together and act now to take care of each other, we can make a difference. Please donate to the AFM Hurricane Relief Fund today by visiting AFM.org and clicking “DONATE HERE.”

Executive Board Members, Officer Columns

Music Makes the World Smaller

dave pomeroyby Dave Pomeroy, AFM International Executive Board Member and President of Local 257 (Nashville, TN)

These days, as I talk to young musicians on a regular basis, I see more and more awareness of the need to treat the music business as just that—a business. There’s nothing uncool about getting paid what you and your skills are worth. That’s where the AFM comes in. Otherwise, there would be no standards for wages and working conditions, and it would be an inevitable race to the bottom. Even in these times of technology overload and countless entertainment options, music has long-term, tangible value. Think about it. Imagine movies, TV shows, or even commercials without music—boring! Music brings people together under many different circumstances. It is still the common thread in the complex fabric of life in the 21st century.

One way that I describe this phenomenon is to say that music makes the world smaller. This became apparent to me in 1980, when I began working with Don Williams. I worked for Don on and off for 34 years. Don, who just passed away in September, was a Texas born and raised folk singer turned country artist with little or nothing in common with his huge following in the United Kingdom. Those fans hung on his every word as if he was the local priest giving out the secrets of getting to heaven. We played to big crowds overseas. Most of those folks had never been to America, yet they had a strong connection to the everyday truths contained in Don’s music. As they say, it all begins with a song, and Don instinctively understood what his audience wanted to hear. Talking to fans after a show, we soon discovered that they knew more about the minute details of our music and who made it, than we did!

I learned many things from Don Williams about music and life in our time together. I learned how to make records by watching Don and his co-producer Garth Fundis work their magic in the studio. I tried my best to be a fly on the wall and just observe their process. It was a great education. When I finally got my chance to work with Don in the studio, I was ready. I learned how to play fewer notes and make them mean more and to listen closely to the lyrics and complement, rather than compete with, their message. The old cliché, “it’s not what you play, it’s what you don’t play” is not only true, it applies to the whole record and not just the playing. Leaving space in an arrangement or final mix can enhance the power and message of a song. Just because you can fill every space with something, doesn’t mean you should.

Of all the lessons I learned from Don, the most important was respect. He always treated us as equals, and not just his backing band. When we would do TV shows, and the producers would want to push us to the background and put Don way out front, he would simply shake his head and say, “We’re a band. I’m just the singer. I need my guys.” It took me time to realize that not all my friends who worked the road were treated by their bosses as well as we were. As I transitioned into studio work and got off the road, those same lessons I learned from Don applied, no matter what kind of music I was playing.

Passing on the type of respect for musicians I received from Don was a driving force in my increased involvement in AFM Local 257, culminating in my election as 257 President in 2008 and to the AFM IEB in 2010. I am grateful to be able to pay it forward by helping younger musicians figure out this increasingly complex business and making sure that our older members’ work is protected in every way possible. That’s what the AFM does, and we are here to help you in every way possible.

BreakOut West
Officer Columns, Vice President from Canada

BreakOut West—Still No Deal Do Not Work for BOW

While talks have continued with the executive director of the Western Canadian Music Awards, which presents the BreakOut West (BOW) festival, there is still no appetite on their part to enter into an agreement for the services of musicians. While the CFM has pitched a three-year deal to cover minimum basic fees, pension, and distribution of recorded performances, BOW is refusing to bargain even one year.

The festival is employing a classic “divide and conquer” maneuver. Artists who they consider headliners and therefore essential to the visibility of the festival, are paid handsomely. But the vast majority of the musicians showcasing—in excess of 250—will receive no compensation. Additionally, they are presented with a contract that states they can be recorded and BOW will be held harmless from any payment for the use of any such recordings, in perpetuity.

Since the festival continues to be listed on the AFM International Unfair List. Musicians must not provide services for BreakOut West.

Let me repeat that: Do not perform at BOW!

As unsavoury as this is for everyone, there is much more at risk than what some musicians may consider valuable “exposure.” There are many important festivals in Canada, and failing to get an agreement with one, risks similar consequences elsewhere. All employers everywhere must be held to the same standards: if you engage musicians, they must be properly compensated and treated as professionals.

As AFM President Hair has stated many times, “An injury to one is an injury to all. Together, we are stronger.”

Another important factor in this scenario is the venues. While BreakOut West is not providing compensation, neither are the clubs that are being used for the performances. They can expect a packed house, high liquor sales, and no-cost entertainment. Free music. Anyone who performs under these circumstances is merely contributing to the “pay to play” problem.

Our issues with BOW are not so different from dark recordings that went on years ago, when there were several important recording studios in Toronto. The business representative at the time, Murray Ginsberg, would often visit studios to ensure that the employer on the gig was signatory to the Sound Recording Labour Agreement.

The players would, of course, be annoyed by a visit from Murray “the Mountie” and the disruption but, in the end, extremely grateful when they were paid appropriate session fees. In addition, there was the increase in the monthly pension payout upon retirement, and also the cheque from the Special Payments Fund, which arrived each year for five years after any such sessions. Not only that, but recordings that were properly documented on B4 Report Forms were subject to new use payments, for subsequent release in other medium or when otherwise repurposed. The promise of “50 bucks cash” could turn into tens of thousands, when it was done properly.

By not obligating the employer to sign a contract for appropriate fees and pension, you are letting them off the hook, cheating yourself, and making it that much harder the next time. By giving BOW your services for free, and not having a contract in place to protect any recording that ensues, you are doing yourself a huge injustice. It also sends the message that your product has no value. The minimum you perform for becomes the maximum employers are willing to pay.

The time for solidarity is now!

Officer Columns, Secretary-Treasurer

New Digs for Our AFM West Coast Office

The AFM maintains our headquarters in the heart of Manhattan’s Times Square (often referred to as the “crossroads of the world” and best known for the ball drop on New Year’s Eve). We also maintain offices in Los Angeles, Toronto, and Washington, DC.

Recently, our AFM West Coast Office in Los Angeles moved, along with AFM Local 47, to the local’s new office building in Burbank. We previously leased space from Local 47 in their old building and we will continue to lease space in their new building located at 3220 Winona Ave., Burbank, California 91504. While there may be some hiccups during the transition, we are making every effort to keep the workflow moving and the communications open. Currently, 12 employees work in the AFM’s West Coast office.

Our Canadian office in Toronto has 15 employees (including Vice President from Canada Alan Willaert). This office handles the national Canadian issues for all 10 Canadian provinces and three territories. This can be enormously complex as the labor laws in Canada often differ province to province.

Our Washington, DC, office coordinates all our legislative activities. AFM Diversity, Legislative and Political Director Alfonso Pollard, our official lobbyist, and Sandra Grier work to promote our legislative agenda, while building relationships with our elected representatives.

I am often asked why the AFM keeps our headquarters in New York City. After all, NYC is crowded and expensive. Indeed it is, but this is where the labor community is located, not to mention many employers with whom the AFM negotiates. Another exceedingly important reason for staying in NYC is our experienced and valued staff. Any move outside Manhattan would certainly mean losing a number of employees who bring years of experience, knowledge, and understanding of the music business to their work each and every day. Currently, we have 33 employees working in the New York Office, including AFM President Ray Hair and myself.

For years, we have had the desire to own our headquarters office space, rather than lease. Ownership builds equity and any extra space can be leased to third parties, which will generate revenue for the AFM. While owning an entire office building in Manhattan is beyond our means, purchasing a floor in a building may be possible.

A few years ago an attempt to purchase a floor in an office building was scuttled because the burden on our cash flow created doubt about our ability to meet all our financial obligations. We just couldn’t swing it. Today, we find ourselves in a somewhat improved financial position. Make no mistake—there are plenty of things that can quickly affect our financial position negatively.

However, there are good arguments to move forward with a purchase at this time. The lease of our current space will expire January 2019. We will have to move out of our current space regardless of whether we stay in the same building. The landlord has told us that a tenant wants to take over the entire floor, including the space we currently occupy. We would need to move to a different floor, even if we decide to stay in the building.

Additionally, the rent will go up considerably. Looking at purchase projections versus leasing, the first few years after the purchase things will be very tight financially. This is particularly the case in year one when we will be paying rent for our current space, while the interior construction build-out takes place in the newly purchased space. But as we get into years three through 10, purchasing becomes more advantageous when compared to leasing. Keep in mind, with each year of ownership, our equity in the purchased space grows.

This may well be the only opportunity we have in the near future to own our space. Interest rates are quite low and a space that meets our needs is available. At this writing, it is far from a done deal. We are still negotiating with the owner. Any purchase will be contingent on presentation, review, and approval by the AFM International Executive Board. I’ll keep you posted as things progress.

Ray Hair
Officer Columns, President's Message

Unallocated Contributions Support Each Participant’s Pension

Note: Fund updates appearing in this column are not applicable to the AFM’s Canadian pension fund, known since August 2010 as Musicians Pension Fund of Canada. 

To improve its funded status and restore its health over the long term, the American Federation of Musicians and Employers’ Pension Fund (Fund) needs additional employer contributions as well as good investment returns. For the plan year that ended March 31, 2017, higher employer contributions and strong investment performance kept the Fund out of critical and declining status for the plan year that began April 1, 2017. Whether the Fund can stay out of critical and declining status in the future will depend in part on income each year from employer contributions and investment returns.

Continue reading →

union plus
Officer Columns, Secretary-Treasurer

Union Plus Programs and Department of Professional Employees

Union Plus

Unions are all about improving the quality of life for hardworking men and women. The contractual gains enjoyed by bargaining unit members have a direct correlation to the solidarity within the unit. We are strongest and able to achieve maximum results in bargaining when we act together as one. Simply put, collective action translates into better contracts.

There are many ancillary benefits that come from being a union member. One such benefit is access to Union Plus. In 1986 the AFL-CIO founded a nonprofit organization called Union Privilege. The Union Plus programs harness the collective buying power of 13 million union members and their families offering a variety of exclusive consumer benefit programs. Credit card, mortgage, auto insurance, life insurance, and accidental death and dismemberment insurance are just a few of the programs offered by Union Plus. Participating in some of the programs bring additional benefits such as strike, mortgage, and hospital assistance, as well as credit counseling with a free budget analysis, savings on prescription drugs, and discounts on movie tickets, car rentals, gifts, and flowers.

A little known benefit is the Union Plus Scholarship Program. Since the program’s inception in 1991, more than 2,800 union families have benefitted from the $4.2 million awarded to students who want to begin or continue their post-secondary education. This year I am pleased to announce that we have an AFM recipient from Local 105 (Spokane, WA). Kristin Joham will be receiving a $1,000 scholarship. She was one of 160 recipients. Congratulations to Kristin! 

Next year’s scholarship application deadline is 12:00 pm (Eastern Time), January 31, 2018. More information about Union Plus scholarships and other Union Plus programs can be found on the UnionPlus.org website.

Department for Professional Employees

In 1977 the AFL-CIO formed the Department for Professional Employees (DPE) to meet the growing needs of professionals who are unionized. The DPE has 23 national union affiliates who represent more than
4 million professional, technical, and highly skilled workers. Musicians, actors, engineers, teachers, nurses, psychologists, and computer scientists are among those represented. DPE meetings provide a forum “to discuss matters of common concern and coordinate efforts to address them.”

Under the DPE umbrella is the Arts, Entertainment and Media Industries (AEMI). Entertainment unions that are AEMI affiliates meet regularly in New York City where we discuss issues that impact the entertainment industry such as federal funding for the arts (NEA, NEH, CPB), visas for artists entering the US and/or Canada, legislation that impacts Internet usage, and airline policies for musical instrument carry-on. These issues are important to musicians and AEMI enables the arts and entertainment unions to speak to the federal government with one clear and consistent voice.

Recently, I attended the DPE General Board and Quadrennial Election meeting in Washington, DC. I feel honored and privileged to have been elected one of the nine general vice presidents who serve on the DPE Executive Committee. I look forward to representing the AFM on the DPE Executive Committee and bringing our issues and concerns to that forum.

public radio
Officer Columns, President's Message

Public Radio, Live TV, and Relocation

I am pleased to report that, after two rounds of negotiations, the Federation has reached a successor public radio agreement with representatives of American Public Media and Minnesota Public Radio, which will set the pattern for wages and conditions for musicians who perform services for some two-dozen producers of public broadcasting programs, including Performance Today and Prairie Home Companion. Our successor public radio agreement becomes effective upon ratification and extends three years to January 31, 2019, with wage and applicable benefit contributions retroactive to February 1, 2016.

Important to this agreement are groundbreaking new media provisions that establish use fees and residual payments for musicians whose public radio performances are licensed to interactive digital service providers such as YouTube, Hulu, Amazon, and Netflix. In addition to a new use fee payable to each musician whose performance is embodied in any clip or program exhibited via new media, 5% of producers’ gross receipts derived from the license for exhibition of any clip or program will be distributed half (2.5%) to the AFM and Employers Pension Fund, unallocated to any particular individual, and half (2.5%) to musicians.

Thanks are in order to AFM Secretary-Treasurer Jay Blumenthal, In-house Counsel Jennifer Garner, Electronic Media Services Division Director Pat Varriale, Symphonic Services Director Rochelle Skolnick,
Symphonic Electronic Media Director Debbie Newmark, and Local 802 (New York City) President/AFM IEB member Tino Gagliardi for their invaluable help with
these negotiations.

Live TV Negotiations

The Federation will convene its fourth round of negotiations with the NBC, ABC, and CBS television networks August 14 toward a successor agreement covering musicians performing in live television variety shows like Saturday Night Live, The Voice, and Dancing with the Stars; late night shows like The Tonight Show Starring Jimmy Fallon, Jimmy Kimmel Live, and The Late Show with Stephen Colbert; and specials like the Academy Awards and Grammy Awards shows.

As we all know, employers in all quarters of the commercial television industry have continued the fight to deny fair compensation to musicians, to expand their own production rights, and to deny union jurisdiction (and thus the path to negotiating fair deals) over products made for new media platforms.

Unfortunately, with previous AFM administrations, television employer intransigence was never met with a firm union-like resolve to fight through to reasonable conclusions. As a result, my administration inherited a tangle of television agreements that were expired and/or enmeshed in years-long and seemingly endless negotiations.

It has taken time to put our television house in order, but we have done so. We took on the tough negotiations, fought nose-to-nose when necessary, and showed the various employer groups an unflagging commitment to asserting our rights and obtaining fair deals. Using an approach that has been both militant and deliberate, we worked through the AFM’s outstanding television agreements and concluded deals—including successors to the TV Videotape Agreement, the Country Music Television Agreement, and the Basic Television Film Agreement—that benefited musicians and put the Federation on a firm footing for the current round of negotiations.

Of highest priority in our current TV negotiations are our efforts to improve coverage and residual compensation for musicians when programs are exhibited and streamed in new media. With the viewing public transitioning away from traditional linear television, switching off their sets in favor of on-demand online video alternatives, the watching of regularly scheduled broadcast television is dying. Against this background, the Federation’s TV new media proposals, which mirror provisions bargained successfully by our sister entertainment unions, have taken on added importance.

We have advised the networks that any successor agreement must contain on-demand streaming revenue participation for musicians at least commensurate with levels enjoyed by other workers in the industry. We will be negotiating hard for fair TV new media provisions this month, and given the networks’ difficult attitudes, I expect additional negotiating sessions will become necessary later this year, most likely in Los Angeles.

Headquarters Relocation

With the Federation’s lease at 1501 Broadway in the heart of New York City’s Times Square set to expire January 2019, and with full authorization by the International Executive Board, Secretary-Treasurer Jay Blumenthal and I have entered into negotiations to purchase an office condo in the financial district in lower Manhattan to serve as the Federation’s new home.

After comparing the costs of leasing versus purchase, we have determined that owning our offices is significantly more cost effective and will stabilize and reduce office occupancy expenses in the years and decades to come, putting to rest the Federation’s decades-old struggle over acquiring and owning its International Headquarters.

Protecting the Federation’s long-term financial interests by owning our headquarters office is a no-brainer. We will create equity, and reduce costs. We will reduce liability and increase Federation assets, all made possible by the Federation’s improved financial condition—a direct result of the hard work of our staff and the diligence, dedication, and fiscal responsibility of our magnificent International Executive Board. Watch for more details in this column next month concerning Federation media negotiations and our relocation journey.

Executive Board Members, Officer Columns

Light Summer Reading: A Real-Life Fairytale

by Tina Morrison, AFM International Executive Board Member and Vice President of Local 105 (Spokane, WA)

Once upon a time there was a musicians’ local of the AFM. They didn’t really know much about the ways of the nonmusician or “civilian” world. The local did its best to assist member musicians. They were generally happy in their musician world, talking about music and instruments, telling and listening to stories about their lives and gigs, and solving problems in the symphonic workplace. But they weren’t satisfied. Musicians were still struggling to find work and they could tell the civilians were being deprived of the amazing art form that had been developed and passed along through generations.

The local knew they would have to do something different. They sent one of their officers out into the world to meet with civilians and start communicating through different, nonmusical means. The local wasn’t sure where they were going but knew it was the right path.

The officer ventured out slowly, testing the grounds and becoming braver. With the encouragement of another member musician, she joined a local service organization where she was one of only two musicians. She observed their meetings and learned to communicate with them. She told them the stories of musicians and the members of the organization became interested in supporting the musicians.

As the officer gained more knowledge of this strange world, she was introduced to the local arts community. She started attending and then volunteering for their events. She told them the stories of the musicians, the difficulties they faced, including a city ordinance that made it more expensive to have live music and dancing, which was influencing potential venues to choose other forms of entertainment.

She made friends and eventually was appointed by the mayor to serve on the arts council. She learned from the arts commissioners that politicians could make decisions that would help the musicians, so she volunteered to chair the legislative and lobbying committee.

Political figures were people on TV or in the newspaper but, nervously, she decided to treat them like people and quickly discovered they were flesh and blood just like musicians. One of her friends on the arts commission decided to become a politician, ran for a city council position, and was elected!

This friend quickly became very busy learning a new job and performing a new role in the community. A few years went by, but he never forgot the musicians and the problem created by a particular city ordinance. He stayed in touch with the local officer and eventually the time was right for them to go to work to change the ordinance. The local officer introduced him to the new generation of officers. They worked together rewriting the ordinance and the city council voted for their changes, supporting musicians in a way they never would have thought of themselves. The End … beginning!

Have an enjoyable summer and please be involved with your local and your community. Without the encouragement, support, and expertise of the musicians of the local, none of the above would have come true

jay blumenthal
Officer Columns, Secretary-Treasurer

All Things Symphonic!

This issue of the International Musician focuses on the symphonic field. Coming from the symphonic world myself, it is always a special issue for me. Symphonic musicians typically perform under collectively bargained local agreements. This has resulted in a field that has excellent union density due to union security clauses found in AFM symphonic contracts.

While some states have passed “right to work” legislation, most symphonic musicians understand the importance of an AFM contract and remain loyal, strong, and supportive union members. The important contractual gains achieved over many decades, are a testament to musician solidarity. Weathering the previous onslaught of bankruptcies, lockouts, and occasional strikes was made possible by hardworking teams of symphonic musicians represented by their local unions and elected orchestra/negotiating committees, with aid and support from symphonic player conferences and the Federation. 

While symphonic musicians still face challenging contract negotiations, it appears we have entered a period of relative tranquility. At the time of this writing, there are no ongoing strikes, lockouts, or pending bankruptcies. This is a moment that may allow for some contract rehabilitation for those musicians who were forced to make concessions due to the “great recession.”

When requested by a local officer (after consultation with the orchestra committee), the Federation will dispatch a Federation negotiator to lead and/or assist with orchestra contract negotiations. Additionally, the Federation provides an annual negotiating orchestra workshop just prior to the ROPA Conference for orchestra negotiating committees and local officers. For those new to collective bargaining or just needing a refresher, this workshop is for you. Some local officers attend annually and always leave the workshop saying they learned something new. 

The Federation also shares the cost with the local for financial analysis of the orchestra with whom the local will be negotiating. Contact the AFM Symphonic Services Division for details.

Integrated Media Agreement

Our national Integrated Media Agreement (IMA) covering live symphonic media work will soon, once again, be renegotiated. (The IMA does not cover work performed in the recording studio, which is covered by SRLA). The multi-employer representative for a growing number of orchestras, Employers’ Media Association (EMA), will be across the table from the Federation. Previous negotiations have been long and arduous but hope springs eternal.

The crucial recurring battle tends to be over our strong belief that there is added value associated with recorded product and that it is necessary and appropriate to compensate musicians based on this added value. We will not yield in our belief that recorded music must be compensated separately and apart from our live performance wage. The methods of product distribution may have changed (decreased physical product and increased digital steaming), but the additional stress of recording and creating a product that lives on in perpetuity has not changed. It requires appropriate additional compensation for musicians. Musicians have fought for and defended this basic tenet for decades and we will continue to do so.

I hope you enjoy this special symphonic issue of the IM. 

Now Available: AFM 2016 Annual Report

The 2016 AFM Annual Report is now available on the AFM website. After you log in, click on the Documents Library tab. Then click on the Financial Documents and Annual Report folder. Now click on the 2016 Annual Report PDF. This is a comprehensive report from the AFM officers, legal counsel, auditors, directors, some AFM staff members, and the editor of the International Musician. It also contains the 2016 year-end audit. This annual report is intended to be a retrospective, rather than forward-looking document. Local officers wishing to receive the print version should request a copy from AFM Assistant Secretary Jonathan Ferrone
(jferrone@afm.org).

Officer Columns, President's Message

Pension Fund Avoids Critical and Declining Status Due to Higher Investment Returns and Increased Employer Contributions

Note: AFM-EP Fund updates appearing in this column are not applicable to the AFM’s Canadian Pension Fund, known since August, 2010 as Musicians Pension Fund of Canada. 

At its May 2017 Board of Trustees’ meeting, AFM-EP Fund actuaries advised that better than expected investment returns and increased employer contributions—most notably, $20 million in new contributions over the next three years from the Sound Recording and Motion Picture industries negotiated by the Federation—enabled the plan to avoid “critical and declining” status for at least another fiscal year.

Although the odds are that the Fund may become critical and declining at some point in the future, even as early as the next fiscal year (beginning April 1, 2018), that status will depend on investment returns, employer contributions, and other results during this fiscal year.

Busting the Myths

With the speed of today’s Internet, inaccurate information can be disseminated quickly. Here are a few myths I’ve seen, along with the facts.

Myth #1: The Fund is not critical and declining so we’re “safe.”

Though plan status has been certified critical each year since 2010, avoiding critical and declining status this year doesn’t mean the plan is healthy. High investment returns coupled with innovative increases in Federation-negotiated employer contributions kept the Fund out of critical and declining status this fiscal year. As recently as the plan year concluding March 31, 2016, employer contributions covered only 42% of benefit payments.

Increases in the percentage of employer contributions are essential to the health of the Fund. This cannot be accomplished if members opt to work off-contract without pension contributions for signatory employers, rather than insisting that Federation and locally-negotiated agreements with pension benefits be honored.

Myth #2: The Keep Our Pension Promises Act (KOPPA) proposed by Senator Bernie Sanders is good for participants.

Fund trustees would strongly support legislative changes that would help the Plan secure participants’ pensions without relying on benefit cuts. Unfortunately, KOPPA as currently drafted and sponsored by Senators Bernie Sanders (I-VT), Al Franken (D-MN), and Tammy Baldwin (D-WI) provides the Fund with no relief whatsoever.

Why not? Because a key provision in the bill disqualifies the plan from coverage. Relief provided by KOPPA pertains only to plans with a certain percentage of their funding problem attributable to employers who withdrew from the fund without paying their withdrawal liability. One example of this was the 2011 Philadelphia Orchestra bankruptcy. However, because the plan does not meet the bill’s required threshold percentage, KOPPA, if enacted, would fail to provide any relief.

KOPPA would also eliminate the plan’s ability to avoid insolvency (running out of money) by reducing benefits. While no one wants to see benefit reductions happen, that option is important as a last resort. Benefit reductions could allow the plan to continue paying higher benefits than if it became insolvent. As written, Congressional adoption of KOPPA, though highly unlikely in the current Congressional climate, would shorten the life of the plan.

Local 802 (New York City) President and Fund Trustee Tino Gagliardi and I met with senior staffers for Senators Sanders, Franken, and Baldwin in Washington, DC, June 6 to discuss what changes to their proposed KOPPA legislation would be needed to permit the plan to benefit from it. Unfortunately, none of those staffers believed that KOPPA would ever move through required congressional committee hearings where amendments could be made, let alone be adopted.

Myth #3: The plan lost 40% in investment returns when other plans lost 25%.

The Plan lost 29% in investment returns for the 12 months (fiscal year) ending March 31, 2009, not 40% as some have alleged. This misunderstanding was tracked back to the trustees’ December 2016 letter to participants that said plan assets declined by 40% over 18 months. Some have read this to mean the plan’s investment return was negative 40% over that period—but that was not the case. 

Myth #4: The Fund office received huge staff pay increases in 2009.

This misunderstanding was tracked back to the change in IRS reporting requirements for the compensation numbers shown on IRS Form 5500 Schedule C. The rules changed in 2009 to expand the definition of compensation to include, not just salary, but all payments made on behalf of staff—including, for example, health insurance and other benefit costs, travel reimbursements, and other expenses incurred while performing their jobs.

Fund Office staff cost increases have averaged only 2.16% a year from fiscal year 2009 to 2016. This modest increase, only slightly more than CPI, includes an increase in staff health care premiums over a period when premiums rose on average more than 25%.

What’s Next?

Because the Fund remained in critical status this year, benefit reductions to already earned benefits, which might be necessary if the Fund becomes critical and declining, will not be considered this year. Next year, the Fund will go through the same process—as it has every year in the past—to determine the plan’s status. Critical and declining status could be in the Fund’s future at some point and appropriate preparations will be made. Until then, the Fund will continue to monitor its progress, review its investments, collect employer contributions, and manage expenses.

The Federation, in each of its negotiations, will push hard for increases in employer contributions to increase the plan’s overall funding percentages and improve assets available for distribution.

I am committed to keeping you updated with the most current information about the Fund’s status. In addition, please visit the Fund website, www.afm-epf.org, register and log on for easy access to FAQ’s and updated information as it becomes available.