Oleksa v. Murray

February 24, 2011 – 1851 Victory: OSFC agrees to eliminate Prevailing Wage and Project Labor Agreements

The Ohio School Facilities Commission (OSFC) agreed to adopt OSFC Resolution 11-16, marking the conclusion of a lawsuit brought by the 1851 Center for Constitutional Law, a public interest law firm representing Ohio taxpayers. The Center argued that OSFC’s funding of school projects with Prevailing Wage was unconstitutional, and that the Strickland Administration and labor unions engaged in corrupt activity in procuring, at great taxpayer expense, Prevailing Wage (PW) and Project Labor Agreements (PLAs) on school building construction projects around the state.

Under the Resolution, the agency will no longer fund Ohio public school construction projects that implement Project Labor Agreements (PLAs) or Prevailing Wage (PW). The move is expected to save Ohio taxpayers tens of millions of dollars, and level the playing field between union and non-union contractors.

“Project Labor Agreements” require non-union contractors to enroll their own employees as dues-paying members of a local union hall and abide by union work rules for the duration of the project. It is typically infeasible for non-union contractors to bid on projects with PLAs, which results in the elimination of competitive bidding, and drives up the costs of projects.

“Prevailing Wage” is a wage rate that is set based upon the average wage paid to union workers in a particular locality. It is typically well above the market wage rate, and its use reduces competitive bidding and drives up costs on projects.

Richland County taxpayers in Shelby and Madison school districts brought the lawsuit against OSFC, former Governor Ted Strickland, former OSFC Director Richard Murray, and Laborers’ International Union of North America. The lawsuit alleged that Strickland and Murray pressured school districts to use union labor, at taxpayer expense, to ensure union donations to Strickland’s campaign.

“The adoption of this resolution is a monumental victory for the taxpayers of Ohio, who can expect to save tens of millions of dollars now that they won’t be subsidizing inflated union wages on multi-million-dollar school construction projects, and for non-union workers, who can now compete for these contracts on a level playing field,” said 1851 Center Director Maurice Thompson. “Ohioans and non-union workers across the state should be very pleased with this outcome, and the Kasich Administration and Attorney General DeWine are commended for their cooperative approach in resolving this matter.”

The Resolution OSFC will:

Prohibit the use of Prevailing Wage on state-funded school projects;
Prohibit the use of PLAs on state-funded school projects;
Repeal all of OSFC Resolution 07-98, the Resolution implemented under the Strickland Administration that favored use of PW and PLAs;
Review existing contracts with PW and PLAs, including contracts in Madison, Shelby, Washington-Nile, Clay Local, and Euclid school districts, where 1851 has alleged rampant corruption;
Allow OSFC to rescind PLAs and PW terms on existing school construction projects that OSFC is funding;
Commit OSFC to the belief that “open contracting for publicly funded construction projects aids in lowering costs of such projects.”

The Resolution halts a practice outlined in the 1851 Center’s Complaint, whereby local construction unions would ensure the victory of a school district’s tax levy campaign to build new schools in exchange for the school district’s promise to implement union-friendly PW and PLAs.

“Higher quality schools can now be built for less, and tax levy elections in Ohio will now more accurately reflect taxpayers’ wishes, rather than construction union clout,” said Thompson.

As a result of the Resolution, the 1851 Center earlier today voluntarily dismissed its lawsuit, Oleksa v. Murray, which was pending in the Richland County Court of Common Pleas.

October 18, 2010 – 1851 Center Lawsuit alleges Strickland administration and OSFC placed union financial interests and remaining in office above fiscal responsibility in building schools

Tax dollars have been wasted and continue to be at risk due to an unlawfully cozy relationship between the Strickland administration and labor unions, claim a group of Mansfield-area taxpayers. The residents today filed an Ohio Corrupt Activities Act complaint against Gov. Ted Strickland, Ohio School Facilities Commission (OSFC) Executive Director Richard Murray, the Laborers’ International Union of North America (LIUNA) and others. The suit will demonstrate members of the Strickland administration, organized labor, and Murray used the OSFC and school building construction contracts to engage in pattern of corrupt activities expressly prohibited under Ohio’s RICO laws.

The complaint, filed with Richland County Common Pleas Court, is available here.

The taxpayers charge that labor unions and Murray used bribery, intimidation, and obstruction of justice to further union financial interests, through projects funded by the OSFC, while the Strickland administration aided and abetted the conduct for its own political gain. The lawsuit seeks to prohibit future distribution of state tax dollars by the OSFC to fund union-friendly “Project Labor Agreements” (PLAs) and prevailing wage-only projects.

The complaint also details how Murray orchestrated secret meetings between labor union leaders and school superintendents. At the meetings, unions offered political support in facilitating passage of local school district tax levies for building school buildings in exchange for the superintendents’ promises to use expensive union-only labor when later building those schools.

The 1851 Center for Constitutional Law, a nonpartisan public interest law firm, is representing taxpayers in Madison Local School District and Shelby City School District, where district officials:

Engaged union leaders through Murray and the OSFC;
Received substantial contributions from unions in passing their levies;
Passed a levy for a new school building in August; and
Will soon formally decide whether to implement union-friendly provisions in building their schools.

“It certainly appears as though union influence over the Strickland administration caused the firing of the prior OSFC director, and the hiring of Murray, with either the instructions or the implicit understanding that Murray would run rough-shod over taxpayers and school districts to benefit union allies,” said 1851 Center Executive Director Maurice Thompson. “School districts are making construction decisions within this troublesome framework. This suit aims to clean up the process before additional tax dollars are wasted.”

According to the complaint, OSFC Executive Director Murray is at the center of the corrupt activity. Specifically, Murray has attempted to pressure school districts, when building school buildings, into using PLAs, unduly rewarding those who do and retaliating against those who do not. PLAs require contractors to employ union workers or require their non-union employees to pay dues to local unions for the duration of a construction project.

Additional allegations of bribery and intimidation by the union are corroborated in the complaint by former OSFC executive director Michael Shoemaker. The complaint alleges LIUNA was displeased with Shoemaker’s unwillingness to strong-arm school districts into using PLAs.

According to Shoemaker, organized labor interests threatened Gov. Strickland that they would withhold nearly $400,000 in political contributions to the governor’s re-election campaign if Shoemaker remained OSFC executive director. Gov. Strickland then removed Shoemaker and appointed the union-friendly Murray upon the recommendation an Ohio union leader.

In 2006, LIUNA contributed over $326,000 to Gov. Strickland’s election campaign – making it his single largest political contributor. In 2010, LIUNA reportedly contributed over $500,000 to the Democratic Governors Association, which in turn spent over $1.75 million supporting Gov. Strickland’s re-election campaign.

In addition to Madison and Shelby schools, the complaint cites instances of corrupt activity by the parties in the Clay, New Boston, and Washington-Nile Local School Districts in Scioto County, and the Fremont City School District in Sandusky County.

The complaint also seeks to declare as unconstitutional an OSFC regulation promoting PLAs and prevailing wage, insofar as it attempts to override Ohio statutes that forbidding them.

Also charged in the complaint are Strickland Chief of Staff John Haseley, LIUNA official Ralph Cole, and the Madison and Shelby City Local School Districts.

This fall, organized labor union interests in the construction industry have contributed $582,000 to Strickland’s re-election and $463,000 to the Ohio Democratic Party.

Construction union contributions to help pass local school building levies are public records, and are available at your county board of elections.

April 23, 2011 – Columbus Dispatch Editorial: Outline Limits

October 21, 2011 – Columbus Dispatch: Suit Alleges Strickland Favored Unions

October 21, 2011 – Associated Press: Suit Against Ohio Governor Alleges Favoritism

October 21, 2011 – Gannett News Central Ohio: Lawsuit claims Strickland, Ohio School Facilities Commission engaged in corrupt activity

WSPD AM 1370 Fred LeFebvre Show