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Whence SAG's $6M Debt? Union Calls for Dues Hike to Cover Shortfall

The Screen Actors Guild (SAG), in calling for its first proposed dues increase in 12 years, has projected a $6 million deficit for fiscal 1999. The guild leadership has indicated it will have to cut services if members don't approve the dues hike.

The guild's more than 95,000 members are currently receiving, marking, and returning ballots on the proposal, with a ballot deadline of Sept. 13.

In an attempt to get a handle on the reason for the deficit, Back Stage last week sought specific financial data from guild officials. SAG's communications department didn't have the final financial data for fiscal '99, which ended Aug. 31. But it was able to provide general budget figures for that period. And Richard Masur, SAG's national president, called to provide an overview on SAG spending and improved services over the last three years.

In that context, Back Stage is able to include specific financial data from SAG's last two fiscal reports-FY98 and FY97-to the federal Labor Department. The reports are public record.

SAG's most recent budget figures showed an anticipated FY99 deficit of $6.4 million, which is $2.8 million higher than FY98's $3.6 million debt.

Masur said that the deficit has resulted primarily from "the putting in place of additional staff" to upgrade services for members.

Added employees for this fiscal year cost SAG $2.5 million, computer upgrades $300,000, while commercial monitoring pilot programs and other service upgrades came to $500,000.

In ballot information mailed to members, SAG noted that in 1998 it had collected claims of more than $18.2 million for principals and background actors, and resolved 1,944 legal actions, collecting another $2 million. The commercials monitoring pilot has brought $500,000 in unpaid residuals.

Other expense figures for FY99 included increased national project costs, such as merger activity, government relations, runaway-production research, member outreach, and affirmative action.

A Three-Year View

"When I first came here as president, one of the first things I did was sit down with department heads and senior staff and said, "I get the feeling that you guys cannot do the job you're expected to do because you don't have the resources.' They said that's absolutely true. So I said, "Tell us what you need to get the job done, and let the board of directors make the decision about whether or not we can fund that.'

"And that's exactly what happened," he continued. "The vast majority of new hires were for the areas of contracts, contract enforcement, residuals, and the legal department. We've increased the size of staff by almost 25% in my tenure. For that reason, we've really transformed this organization from being reactive and sluggish to being proactive and really responsive to members."

The second factor contributing to increased expenses has been making guild salaries competitive with the rest of the entertainment industry, Masur explained.

"Our salary rates were extraordinarily low in a lot of basic positions like field reps that visit sets and basically take care of our members," he said. "We tripled the number of field reps in Hollywood, probably close to quadrupled them. And we more than doubled the number of field reps in New York. So we now have an effective presence on the working sets in New York and Hollywood, and have made a substantial difference."

To "normalize our salary pool," Masur said that the guild performed "an exhaustive study...about comparable salaries and where various positions fit in." The guild's national board responded by approving salary increases.

"Our experience had been, prior to doing that, that we lost good people shortly after they had become trained and proficient," Masur said. So, SAG would train the personnel, who then would go to "another union or one of the companies who are our employers," i.e., producers.

The guild's imposing competitive salaries has led to "having people who are very good and who stay with this organization. I'm talking about exempt positions, not union positions which are clerical and negotiated through collective bargaining. I mean all the exempt staff, which is all the people with authority and responsibility."

The three-year staff expansion, which Masur stressed is "absolutely vital to the health and effectiveness of this union," has involved "not only more salary and fringe benefits, but more space, more furniture, more office equipment." The growth has been primarily for the New York and Los Angeles' offices, he said.

The guild has based its ability to fund the expansions on "a reserve of available funds that have built up over time," Masur said. "The reason we had built the reserve was that the board was keeping tight reign on staff expenses."

The board used that money to improve services, Masur said, and "decided when the reserves depleted sufficiently so that we have to address additional income, we'll study the best way to structure a new dues formula. So rather than going to members and saying, "We can't do for you what you want because we don't have the money.' We instead said, let's show them what additional staff and a different way of thinking in this more service-oriented organization can do. We'll say, "If this is the way you want the union to operate, we'll need additional funds.' "

Masur added, "It would have been, in my opinion, irresponsible to go out with a dues raise until we had reached the point where we had used up a substantial portion of the reserves. We have a formula in place, mandated by the board some years ago, which says we have six months of operating capital available in reserve, or we have to revisit the dues schedule.

"We hit that point in July," he continued. "Without the dues raise, we'll be way below in very short order. We're already below. We have the option of reducing costs dramatically, which we'll have to do" if the dues proposal fails.

SAG's Form LM-2 report to the Labor Department for FY98 shows that the guild saw net assets fall from $21.2 million in FY97 to $18 million. Total FY98 receipts came to $44.9 million, with $20.4 million derived from dues and $7.7 million in initiation fees. Expenses totaled $44.4 million.

For FY98, the guild spent $14.38 million in salaries for 430 employees, including a handful of temporary help. That compares to $12.1 million for 358 employees reported for fiscal 1997. Specific figures for FY99 weren't available by press time.

FY98 figures showed that 10 SAG executives earned six-figure salaries, ranging from a high of $249,186.38 for the national executive director, Ken Orsatti, to $101,810.35 for the director of research, Roger Lateiner. Five staff members earned in the $99,999 to $90,000 range. Six garnered between $89,999 and $80,000, and four took in between $79,999 and $70,000. Nine earned from $69,999 to $60,000.

Also in FY98, 21 staff earned from $59,999 to $50,000; 59 brought in from $49,999 to $40,000; 135 garnered from $39,999 to $30,000. Another 61 staff made from $29,999 to $20,000.

Board Members' Expenses

In that same fiscal year, 173 board members, officers and branch executives spent $597,721.02 on travel and $6,711.95 on auto expenses, including taxis and mileage, for a total of $604,432.97. Masur led that group with $43,484.16 in travel. He was followed by seven board members who expended between $15,000 and $10,000. They were Hugh Lampman (Dallas, $14,889.93), Michael Arkin (New York, $14,745.89), Chuck Dorsett (6th national vice president, 14,018.75), Roy Costley (New Mexico, $11,090.51), Jordan Derwin (New York, $10,819.69), Jim Hutchison (Hawaii, $10,530.68), and Bill Cordell (Florida, $10,457.96).

The board and officers' overall FY98 travel and mileage actually was lower than the year earlier. In FY97, 194 of that group totaled $741,171.28, with $730,018.03 going for travel. Masur led with $41,277.10 in travel.

Masur explained that he flies regularly to New York and Washington and to nationwide appearances, always on guild business. He said that, while authorized to fly first class, "I rarely if ever pay more than the best available coach fee," and then may, on occasion, upgrade.

SAG staff spent $565,938.03 for travel and $89,673.71 for auto expense in FY98, led by John McGuire (national associate executive director in New York, $80,238.80), Orsatti ($65,939.41), and Sallie Weaver (director of production development and performers' rights, $69,131.50). The three executives have been involved in contract negotiations nationwide and the World Intellectual Property Organization treaty meetings held in Europe.

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