While the leadership of the City University of New York’s faculty union has been organizing protests against the Republican Party, and defending a Florida professor indicted for allegedly funneling money to a terrorist group, a key health-benefits fund the union controls has plummeted in value.

Cash reserves of the health and welfare fund of the Professional Staff Congress, according to sources who are familiar with the fund but declined to be identified, have sunk to $432,867 from $15.4 million in the past five years – with only a trickle of money remaining for faculty members’ prescription drug, dental, and medical insurance plans.

In addition, the union’s leaders have been unable to negotiate a new contract with the administration, leaving thousands of faculty members at America’s largest urban university without a contract for nearly three years.

The vanishing welfare fund and the failure to hammer out a new contract have seemingly put union officials in their weakest position since they came to power in 2000 with pledges to mobilize faculty members against the academic standards reforms pushed by a CUNY trustee, Benno Schmidt; the university’s chancellor, Matthew Goldstein, and Mayor Giuliani. During the period in which the reserves of the fund fell by 97%, union leaders have focused heavily on political activity unrelated to the fund’s management.

In 2002, the union sprang to the defense of an alleged supporter of the Palestinian Islamic Jihad, Sami Al-Arian, who currently is on trial in Tampa, Fl., with union officials claiming that the University of South Florida had no basis for firing him.

The union also has boasted of having spent two months in 2002 “using chapter meetings, the Delegate Assembly, chapter newsletters, the union newspaper and the website” to formulate its position against the American military and President Bush’s war on terror.

The CUNY union’s delegate assembly passed a resolution urging members to “mobilize for and participate in the protests against the Republican agenda” during last year’s Republican National Convention in the city. And in March, it sponsored a conference called Educators To Stop the War that encouraged dozens of high school and college teachers to develop anti-war curricula.

“They are using other people’s money to pursue their own political agenda, and we suffer as a result,” a professor of geology at Brooklyn College and longtime antagonist of the union, David Seidemann, said.

The current leadership of the union, headed by a Shakespeare scholar, Barbara Bowen, was elected in April 2000, after the retirement of the union’s longtime president, Irwin Polishook.

Calling itself the New Caucus, the insurgent group told members it would instill a spirit of activism in the ranks and would better manage the union’s budget of $8 million.

Ms. Bowen denied that the union’s level of activism has hampered its ability to secure a contract for its more than 20,000 members, or that it has diverted attention from the welfare fund.

“The record shows that by becoming more active, the PSC has become more – not less – successful in winning material gains for our members,” Ms. Bowen, an associate professor of English at Queens College who earned her Ph.D. from Yale University, said in an email to The New York Sun.

“What critics call political activism contributes to the strength of the union and has enabled us to make significant advances in salary, benefits, and legislation affecting our members,” she said.

Among the achievements for which Ms. Bowen said the union under her leadership can take credit are securing research grants for professional staff and tuition support for graduate employees, and being “instrumental” in obtaining increases in city funds for the university. The union, she said, has become a “significant force in State and City politics.”

The union is giving no indication of backing down from its aggressive posture toward CUNY officials. The New Caucus has promised a “militant” stand against the administration. Even so, members of the university’s management expressed surprise and consternation when the union, to protest CUNY’s contract offer, staged an evening rally in May in front of Mr. Goldstein’s home.

“Unlike their predecessor leadership, the union has proven itself more than capable of conducting its business in a low-class fashion,” a CUNY trustee, Jeffrey Wiesenfeld, a former executive assistant to Governor Pataki, said. “If they would spend less time on revolution and more time on their jobs, this whole thing would be resolved by now.”

The union might have to resort to more extreme tactics if it’s going to get concessions from CUNY, one of the union’s top officials, Stanley Aronowitz, said. A professor at CUNY’s graduate center and director of the Center for the Study of Culture, Technology, and Work, Mr. Aronowitz said the union would have more leverage if it took “direct actions,” such as staging an illegal strike.

“I’m ready to go to jail,” he said. “People have to know how weak our position is.” Mr. Aronowitz serves on the executive council of the union.

The union’s financial problems, some CUNY faculty members said, have been a key obstacle for the union during negotiations. The previous contract, the only one negotiated by the New Caucus, expired in October 2002.

Union leaders attribute the welfare fund’s sinking resources to ballooning health-care costs and to what they say is stingy support from Mr. Goldstein’s administration. They also note that the fund was running a deficit before 2000.

Nevertheless, critical observers of the union, as well as Mr. Goldstein, in two letters to the university community providing an update on contract negotiations, have raised questions about budgeting decisions made by the union that they say have exacerbated the problems over health coverage.

When the union and university officials negotiated the last contract in 2002, union officials said the city boosted its annual payments for the welfare fund by $200 for every active or retired faculty member.

That money, however, did not come through contract negotiations with CUNY but was negotiated through the Municipal Labor Committee, an umbrella group of city unions of which the Professional Staff Congress is a member. The additional money for the welfare fund came from the labor committee’s health stabilization fund, which provides health benefits for CUNY faculty members and other municipal workers that aren’t part of the city’s basic health plan, according to a source.

All the unions in the labor committee agreed to put some money that was already earmarked for benefits into their welfare funds. The Professional Staff Congress, as well as other unions, attempted to alleviate some of the strain on the welfare fund by taking money out of the stabilization fund. Money, in effect, was shifted from one fund to another, according to the source.

“In other words, there was no new money,” the source said. “We lost other potential benefits that would have been provided to the membership through the MLC and funded through the stabilization fund.”

In her message to the Sun, Ms. Bowen said the union did not overlook the welfare fund in its negotiations with CUNY.

“Taken together, the 2000-02 con tract amounted to more money per capita, per year, than any contract during the 1990s – the two contracts preceding our leadership,” she said.

In any event, the transfer of the funds did little to curb fund deficits. A former executive officer at the welfare fund, Mohamed Yousef, a professor of computer science at the College of Staten Island, said the union also mistakenly assumed the city would include adjuncts in the New York City health plan. When the city did not cover the costs of the plan, the welfare fund continued to bear its costs, which were rising.

“They had undue optimism about the fact that the city would assume the financing of the adjunct plan and resolve the problem once and for all,” Mr. Yousef said of the union leaders. “They had a blind commitment to funding the adjunct medical plan on equal footing of the rest of the city’s part-time workforce.”

By 2003, with funds evaporating, CUNY’s union decided to restructure the welfare fund health coverage, most significantly by slashing dental benefits, with Guardian as the new dental administrator. The union has been hit with complaints from faculty members whose dental coverage no longer includes routine procedures.

In a message to the university posted on CUNY’s Web site on June 21, Mr. Goldstein suggested that the union is at least partly responsible for the fund’s cash shortage, saying the “fiscal problems are the result of the escalating costs of health benefits and decisions made by the Welfare Fund.” The chancellor noted that the union appoints to the welfare fund’s board 10 of its 12 members, with the remaining two appointed by CUNY.

CUNY’s administration has offered to bail out the fund with a cash infusion of $30 million – money that would be allocated for higher salary packages for faculty. As a result, even taking into account the increases in salary packages proposed by the administration, CUNY professors will be making a smaller percentage of what their counterparts made at other New York universities in 1998, in the last years of the 24-year tenure of Mr. Polishook.

Compiling data supplied by the American Association of University Professors via the Chronicle of Higher Education, the Sun has discovered that in the 2004-05 academic year, CUNY professors at senior colleges on average made 90.6% of the average salary earned by professors at the State University of New York at Stony Brook. That proportion is down from 93.2% in 1998.

In 1998, CUNY professors earned 71.2% of what New York University professors earned, and six years later they earned 70.2% of NYU salaries. Those figures have factored in increases in salary rates that have been proposed by the CUNY administration in the latest round of negotiations – a 2.5% retroactive salary increase for the 2003-04 academic year and a 2.75% in crease for 2004-05. A major portion of the increase in salary rates for 2003-04 is likely to be given to the welfare fund in a one-time cash payment, as part of the $30 million cash bailout.

CUNY officials said a slew of early retirements in the last few years, coupled with hundreds of new full-time hires, have depressed the average salary.

Ms. Bowen, in the union’s Clarion newsletter, said the administration’s offer of salary increases doesn’t even “approach the increase in costs of living,” saying the union would accept a contract proposal once it “meets our needs.” It is demanding a 10.6% across-the-board hike over four years.

The lack of increases in faculty salaries and the problems with the welfare fund has not weakened the union’s base support. A serious opposition slate has yet to emerge to face off against the union in next April’s elections.

Close observers of the union said the New Caucus has cultivated power by appealing to the thousands of adjunct scholars who teach a large proportion of CUNY courses. The union says the adjunct scholars are being treated by the university as cheap labor and has demanded “parity pay” for them, which would essentially mean paying part-time scholars at the same rate as full-time professors.

When the New Caucus came into power, it required adjuncts who were not members to pay an agency fee, which previously was imposed only on full-time faculty members who opted out of the union.

By requiring adjuncts to pay a fee, the union gave them a strong incentive to join the union and obtain voting rights. The adjuncts benefited from the 2000-02 contract, which guaranteed them an additional hour of pay for every six “contact hours” worked. The money was intended to pay adjuncts for professional duties, particularly office hours to meet with students.

Those hoping that CUNY teachers will replace the New Caucus with a leadership less involved in one-sided political activism said the New Caucus is vulnerable.

Mr. Wiesenfeld, a CUNY trustee, said he suspects that the union’s silence after the Association of University Teachers, a British teachers union, voted to boycott two Israeli universities, Bar-Ilan and Haifa, would “ignite opposition to” Ms. Bowen’s regime.

Faculty members “can coalesce around a specific issue that reminds them why they hate these people,” Mr. Wiesenfeld said.