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Office of Labor-Management Standards
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Office of Labor-Management Standards (OLMS)

U.S. Department of Labor San Francisco – Seattle District Office

Office of Labor-Management Standards 90 7th Street, Suite 2-825
San Francisco, CA 94103
OFFICE: (415) 625-2661 / FAX: (415) 625-2662

300 5th Avenue, Suite 1290
Seattle, WA 98104
OFFICE: (206) 398-8099 / FAX: (206) 398-8090

August 10, 2015

Ms. Cheryl Davison, President
AFGE LU 1764
Travis Air Force Base
Fairfield, CA 94535


Case Number: 530-6004221
LM Number: 501004


Dear Ms. Davison:

This office has recently completed an audit of AFGE Local Union 1764 under the Compliance Audit Program (CAP) to determine your organization’s compliance with the provisions of the Civil Service Reform Act of 1978 (CSRA), 5 U.S.C. 7120, and the Department's regulations, 29 CFR 458. As discussed during the exit interview with you and Vice President Lonnie Williams on August 3, 2015, the following problems were disclosed during the CAP. The matters listed below are not an exhaustive list of all possible problem areas since the audit conducted was limited in scope.
Recordkeeping Violations

Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section 206 of the LMRDA and Title 29 of the Code of Federal Regulations (C.F.R.) Section 403.7 require, among other things, that labor organizations maintain adequate records for at least five years after reports are filed by which the information on the reports can be verified, explained and clarified. Pursuant to 29 C.F.R. Section 458.3, this recordkeeping provision of the LMRDA applies to labor organizations subject to the requirements of the Civil Service Reform Act of 1978 (CSRA) as well. Therefore, as a general rule, labor organization must retain all records used or received in the course of union business.

For disbursements, this includes not only original bills, invoices, receipts, vouchers, and applicable resolutions, but also documentation showing the nature of the union business requiring the disbursement, the goods or services received, and the identity of the recipient(s) of the goods or services. In most instances, this documentation requirement can be satisfied with a sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently descriptive, a union officer or employee should write a note on it providing the additional information. For money it receives, the labor organization must keep at least one record showing the date, amount, purpose, and source of that money. The labor organization must also retain bank records for all accounts.

The audit of Local 1764’s 2014 records revealed the following recordkeeping violations:

1. Meal Expenses


Local 1764 did not require officers and employees to submit itemized receipts for meal expenses totaling at least $180. The union must maintain itemized receipts provided by restaurants to officers and employees. These itemized receipts are necessary to determine if such disbursements are for union business purposes and to sufficiently fulfill the recordkeeping requirement of LMRDA Section 206.

2. Per Capita Bills


Local 1764 did not retain the supporting documentation for the AFGE per capita bills showing the names and amounts billed for per capita.

Based on your assurance that Local 1764 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above violations.

Reporting Violations

1. Disbursements to Officers and Employees


Local 1764 did not include some reimbursements to officers and employees / payments to officers and employees totaling at least $2,000 in Schedule 11 (All Officers and Disbursements to Officers) and Schedule 12 (Disbursements to Employees). It appears that the local erroneously reported these payments in Schedules 15 through 19.

The union must report in Column F of Schedules 11 and 12 (Disbursements for Official Business) direct disbursements to officers and employees for reimbursement of expenses they incurred while conducting union business. In addition, the union must report in Column F of Schedules 11 and 12 indirect disbursements made to another party (such as a credit card company) for business expenses union personnel incur. However, the union must report in Schedules 15 through 19 indirect disbursements for business expenses union personnel incur for transportation by public carrier (such as an airline) and for temporary lodging expenses while traveling on union business. The union must report in Column G (Other Disbursements) of Schedules 11 and 12 any direct or indirect disbursements to union personnel for expenses not necessary for conducting union business.

2. Acquire/Dispose of Property


Item 15 [LM-2] (During the reporting period did your organization acquire or dispose of any assets in any manner other than by purchase or sale?) should have been answered, "Yes," because the union gave away t-shirts totaling more than $1,000 during the year. The union must identify the type and value of any property received or given away in the additional information section of the LM report along with the identity of the recipient(s) or donor(s) of such property. The union does not have to itemize every recipient of such giveaways by name. The union can describe the recipients by broad categories if appropriate such as “members” or “new retirees.” In addition, the union must report the cost, book value, and trade-in allowance for assets that it traded in.

3. Failure to File Bylaws


Pursuant to 29 C.F.R. Section 458.3, the requirement under 29 C.F.R. Section 402.4 implementing LMRDA Section 201(a) is made applicable to labor organizations subject to the requirements of the CSRA. This provision requires labor organizations to file copies of any revised constitution and bylaws when it files its annual financial report. The audit disclosed a violation of this requirement. Local 1764 amended its constitution and bylaws in 2012, but did not file the required copies with its LM report for that year.

Local 1764 will file a copy of its constitution and bylaws when it files its next LM-2 report.

I am not requiring that Local 1764 file an amended LM report for 2014 to correct the deficient items, but Local 1764 has agreed to properly report the deficient items on all future reports it files with OLMS

Other Violations

The audit disclosed the following other violation(s):

1. Inadequate Bonding


Pursuant to 29 C.F.R. Section 458.35, officers and employees of any labor organization subject to the CSRA are required to be bonded in accordance with Section 502(a) of the LMRDA. This provision requires that union officers and employees be bonded for no less than 10% of the total funds those individuals or their predecessors handled during the preceding fiscal year. Officers and employees of Local 1764 are currently bonded for $40,000; however, they must be bonded for at least $41, 276.

The audit revealed that Local 1764’s officers and employees were not bonded for the minimum amount required at the time of the audit. However, the union obtained adequate bonding coverage and provided evidence of this to OLMS during the audit. As a result, OLMS will take no further enforcement action regarding this issue.

Other Issues

1. Use of Signature Stamp


During the audit, President Cheryl Davison advised that though it is not Local 1764’s practice to use a signature stamp on union checks, numerous checks were signed using a signature stamp of former president John Santry. Article III of Local 1764’s bylaws requires that checks be signed by the president and a second executive board member. The two signature requirement is an effective internal control of union funds. Its purpose is to attest to the authenticity of a completed document already signed. However, the use of a signature stamp for the second signer does not attest to the authenticity of the completed check, and negates the purpose of the two signature requirement. OLMS recommends that Local 1764 review these procedures to improve internal control of union funds.

2. Personal Use of Credit Cards


The audit revealed that Local 1764 permits officers and employees to use union credit cards to pay for personal expenses. Although officers and employees promptly repaid Local 1764 for the personal expenses charged, OLMS does not recommend policies that allow personnel to make personal purchases with union credit cards because this may lead to misuse of union funds.

I want to extend my personal appreciation to AFGE LU 1764 for the cooperation and courtesy extended during this compliance audit. I strongly recommend that you make sure this letter and the compliance assistance materials provided to you are passed on to future officers. If we can provide any additional assistance, please do not hesitate to call.

Sincerely,




Senior Investigator