Teachers Union Contract Is a Big Budget Unknown

Teachers Union Contract Is a Big Budget Unknown
President of the United Federation of Teachers Michael Mulgrew (R) and Mayor Bill de Blasio announce a contract deal at City Hall in Manhattan on May 1. (Seth Wenig/AP)
Petr Svab

NEW YORK—With only a month to finalize the city’s budget, the administration is shy on details on how much the new contract with the teachers’ union would cost.

The contract with the United Federation of Teachers (UFT), is yet to be ratified by its 110,000 members. It was the first big contract settlement for Mayor Bill de Blasio, who needs to settle with the other 150 city unions left for years without contracts by the Bloomberg administration.

The unusually long contract reaches back to 2009 and extends out to 2018, offering retroactive pay and raises totaling 18 percent for public school teachers and other school staff that were on board since 2009 and will stay until 2020. The total cost to the city would be over $5.7 billion.

If the contract gets ratified, the teachers will immediately get a $1,000 bonus and a 2 percent raise for the current school year, a budget burden worth as much as $275 million. Another $725 million in retroactive pay for teachers who are expected to retire before 2018 was pushed in the 2014 budget by the city Comptroller. But the costs are not yet included in the Department of Education (DOE) budget highlights released Wednesday.

“The fiscal impact of the pending contract is not included in the DOE’s executive budget, rather it will likely be included in the fiscal 2015 adopted budget,” the budget highlight report states. The budget must be adopted by July 1. The results of the UFT membership vote should be known in about a week.

The report states that the money to fund the contract demands is set aside in the city’s collective bargaining reserve budget. There’s about $2 billion allocated in the reserve for 2014 and the mayor still has 150 contracts to go.

The IBO released a report on the mayor’s executive budget on Friday, but refrained from including the impact of the UFT contract as well. “We’re still making sure that we understand all of the different aspects of it,” the office spokesman Doug Turetsky said.

Indeed the contract includes a number of unknowns. Starting next year, teachers would be able to apply to become model teachers for a $7,500 bonus, or master teachers for an extra $20,000. Some other work rule changes can increase costs for schools as well “of which the impact on the DOE’s budget is not known,” the budget highlights report states.

The contract also promises to offset the cost of the raises by saving $1.43 billion on medical expenses. It is not clear how exactly the savings will be achieved. If not enough can be saved an arbitrator can change the agreement. That would happen “[o]nly after all other attempts to negotiate health plan savings have failed,” the UFT website states.

Correction: The article was updated to reflect that there is $2 billion in the collective bargaining reserve budget for 2014. Also, the article was updated to include the budget change requested by city Comptroller.

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