The management of CEU finances is guided by general principles of fiduciary responsibility. This is similar to being managers of a trust fund. As CEU elected Executive Board members we are entrusted with the care of your CEU money and CEU property. The CEU membership as a whole are the beneficial owners of these assets, but the elected Executive act as the legal owners. As a result, our duty of care of care is owed both to the assets themselves and more so to the CEU members as a whole.
There are two parts to this financial management: the income of the union (based on dues and investment returns); and, the spending authorized by the union (annual operations of the CEU office). Generally, the Treasurer monitors income/spending and makes financial recommendations to the Executive Board.
Michael Hess was elected CEU Treasurer in November 2019. As Treasurer, he is the Chairperson of both the Finance Committee and the Investment Committee.
Under the CEU Constitution (Article 6(c)) the Treasurer is responsible for the preparation of the annual budget. However, as a matter of business practice, the Treasure chairs the Finance Committee who provides guidance in preparing the proposed budget. Currently there are four people on this committee (CEU Treasurer, CEU President, Chairperson of the Shop Stewards, and Chief of Labour Relations Office of the CEU). The budget preparation includes reviewing the previous spending; the anticipated income; and, the expected expenditures of the union. As Chairperson, the Treasurer presents the proposed budget to the Executive Board who finalizes and approves the annual budget each fiscal year.
This budget process is completed again six months into the year. The Finance Committee re-reviews the income and expenses to date; considers modifications to the original budget for the remainder of the year; and makes recommendations to the Executive to reflect any required budget changes.
Under CEU Executive Policy (“policy”) FI-016, the Treasure chairs the Investment Committee. The Committee membership also includes the CEU President and any others appointed by the President. Currently there are four people on this committee (CEU Treasurer, CEU President, 1 additional CEU Executive member, and 1 CEU member from the general membership).
The CEU holds two investment funds: the Surplus Fund and the Defense Fund. Each fund has a different purpose.
In the early years of the CEU, any remaining budget surplus at the end of the fiscal year was put into a Compensation Employees Credit Union account. In the 1990s the CEU Executive made a decision to invest that “surplus” money in order to get a better return. The Surplus Fund was established.
The Surplus Fund is managed according to policy FI-014. This fund consists of assets which are not anticipated as being required for operations in the next 12 months. The fund itself may be periodically used for capital acquisitions. The annual investment returns from this fund are used as income for the union’s operating expenses/annual budget.
The CEU had a strike in 1989. At that time, we did not have a strike fund so there was no strike pay. When the two-week strike ended the CEU Executive went to the membership with a recommendation for a Constitutional change. As a result, union dues were increased by .25% to create a Defense Fund.
The Defense Fund is managed according to policy FI-015. The fund was initially created with the sole purpose of providing income support to CEU members in the event of a strike or lockout. With the increased litigious nature of WCB from 2007 – 2015, the CEU experienced repeated significant impacts on our operational budgets. This was seen in increased legal expenses, increased denial/termination of Long Term Disability (LTD) benefits, and increased costs through our Medical Review Committee. The legal costs to defend our members each year went from approximately $40,000 to $350,000 and the number of LTD appeals rose from 3 per year to 18 per year. In order to remain fiscally viable on the annual budget, the CEU Executive went to the membership and a Constitutional change was passed in 2016. This now allows for a portion of the Defense fund to also be used for a Legal Defense budget. Policy FI-023 defines this as costs of arbitrations; legal opinions; WCB Appeal representation; job evaluations; and Medical Review Committee (who makes determinations arising from disputes regarding a member’s LTD claim).
Although the CEU Executive Board members hold the fiduciary responsibility of both the Surplus and Defense Funds, both policies FI-014 and FI-015 authorize the Executive to delegate duties of these funds.
The Executive formed the Investment Committee (per policy FI-016) and delegated duties from these policies to that Committee. The Investment Committee monitors both funds to help ensure they are prudently invested. The Committee helps ensure the requirements of the policies are met by the investment manager of the funds. Currently the investment fund manager is Vancity. Twice per year the Committee meets with the fund manager regarding the investments. The Chairperson of the Committee reports those findings to the Executive. The Committee also considers policy changes for recommendation to the Executive Board. Recommendations are intended to facilitate the protection of the invested funds and reasonable returns on those funds. However, the elected Executive Board itself has the ultimate responsibility for the prudent investment of the funds.