AFM-EPF Drops the Hammer

While it comes as no surprise, the recent announcement from the American Federation of Musicians and Employers’ Pension Fund (AFM-EPF) heralding massive cuts to member benefits is sure to bring more than its fair share of angst among AFM members who are part of the plan.

Adaptistration People 173While the plan has to be approved by the US Treasury Department before it goes into effect, the 1/7/2020 edition of The New York Times published an article by Michael Cooper that highlights the proposed cuts:

  • Approximately 45 percent will see up to 19 percent in benefit cuts.
  • Approximately two percent will see anywhere from 20 to 40 percent cuts.
  • The remaining members, mostly those at the top of the age groups, will likely see little to no reduction.

We’ve been examining this issue over the past few years and the NYT article reports on many of the same core issues. This includes an ongoing class-action lawsuit against the AFM-EPF Board of Trustees and Investment Committee of the Board that alleges “breach of fiduciary duties and other violations of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq.

Given the depth of issues related to the request, you shouldn’t expect news of the Treasury Department’s decision until summer 2020. If approved, the proposal must then be put to a vote among plan members.

While that may seem like a challenging hurdle on the surface, the article points out an intriguing loophole in Federal law the AFM-EPF leadership may be relying on in order to get their members to approve the cuts.

But the law makes it difficult to reject cuts: Such a rejection would require a majority of all the plan’s participants, not just a majority of those who vote.

“This means that not voting counts the same as a vote to approve the reduction,” the plan noted in its email to members.

This is the point where process matters.

It will be fascinating to see if lists of members eligible to vote are shared or kept locked up. Add to that, it’s unclear what sort of measures the AFM-EPF must undergo to make voting as easy and reliable as possible while certifying they are doing everything possible to make members aware of and participate in voting.

Given the degree of acrimony that exists between segments of the AFM-EPF members and the leadership, it wouldn’t be surprising to see members demanding increased transparency in the voting process and conducting a fair amount of their own get-out-the-vote grass roots efforts. They could even go so far as to demand an independent oversight and review of the entire voting process.

If that weren’t enough, additional variables exists in the form of how much control AFM Locals have compared to the National structure. Locals are in a strong position to suppress or encourage voter turnout based on their own internal political and communication structure.

For those with a horse in this race as well as everyone on the outside looking in, this could be one of the best examples we’ve seen in decades for mapping how power and influence flows through the AFM.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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