De Blasio’s historic U.F.T. deal, with gaps

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Bill de Blasio announces an agreement with the United Federation of Teachers. (Rob Bennett for the Office of Mayor Bill de Blasio)
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Mayor Bill de Blasio announced a $5.5 billion, nine-year contract with the United Federation of Teachers on Thursday that offers 18 percent raises.

It's a major step in the administration's ongoing negotiations with the entire city workforce. But it's also a deal that is short on specifics about how the city would cover the cost, what health care concessions they extracted from the union and what the total cost will be in the upcoming Fiscal Year 2015 budget.

The administration's deal with the teachers is tentative until officially ratified by the U.F.T. De Blasio now has 151 more contracts to settle.

Standing with schools chancellor Carmen Fariña, U.F.T president Michael Mulgrew and several top administration members, the mayor emphasized the collaborative nature of the deal, called it "landmark," "historic" and "profound" and insisted the city has found savings to pay for raises, which will begin kicking in for teachers in 2015.

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"Today represents a great victory for the taxpayers of New York City, because this agreement is entirely funded within the city's current budget framework," he told reporters at the Thursday afternoon press conference. "It is funded because working together, we identified significant health care cost savings, the kinds of savings that have been talked about for years but never achieved until this group of individuals got together and found common ground."

He and his top aides were reluctant to detail, when asked repeatedly, what those savings are. They said they would provide more details when the FY2015 executive budget is unveiled next week. (It must be adopted by June 30.)

Robert Linn, the city's labor relations director, said the administration will get "savings in health care of specific targets," which he identified as $400 million in FY15, $700 million in FY16, $1 billion in FY17 and $1.3 billion in FY18.

"We feel certain those targets are achievable," Linn said.

When pressed for details, he referred to "perhaps radiology and blood work done centrally and not in a doctor's office, central purchasing of prescription drugs, centers of excellence for providing services … all sorts of items together we think are certain that we will achieve the targets and we'll go beyond the targets."

Budget director Dean Fuleihan said the deal would cost $4 billion between FY2014-2018, and added that the impact would be lessened by savings through union givebacks. A mayoral spokesman later said the total for that period is actually $5.5 billion, which is offset by $1.3 billion in projected health care savings and another $1 billion in savings in the upcoming budget plan, leaving the city to find a way to pay for at least another $3 billion.

The cost to the city in FY2019-2020, the last two years the raises will be disbursed, is not yet known, the spokesman said.

"I just want to emphasize, again, over the next day or two we'll be able to fill in a lot more blanks," de Blasio said, before once again noting "the spirit of cooperation."

De Blasio, a labor ally who did not get any municipal union campaign endorsements last year, has long said he would seek health care givebacks from workers during negotiations.

The overarching Municipal Labor Committee is expected to meet in the coming days to make a decision on the medical benefits portion of the U.F.T. deal.

On his way out of City Hall, Mulgrew said, "We feel very strongly there will be no need for" members to pay more toward their health care premiums. 

It is unclear how much money the city will spend each year from 2015 through 2020, the span of time the raises will actually be doled out to teachers, who have been working without an active contract since Nov. 1, 2009, due to a lengthy and hostile stalemate with the Bloomberg administration.

Accounting rules for the city require the administration to cover the cost of raises within the fiscal year in which they are given, which is why the mayor is spreading out the increases through 2020.

The terms of the contract itself include two years of 4 percent raises for the 2009-2010 and 2010-2011 school years. That 8 percent bump, which will not be realized in full for teachers until 2018, merely gives them a wage increase the Bloomberg administration awarded to nearly every other municipal union.

A source with knowledge of the negotiation said the 8 percent bump will be portioned out in 2 percent increments a year, beginning in 2015.

In addition, the mayor announced the teachers would get no raise for the 2011-2012 school year, but each union member would instead receive a $1,000 bonus to compensate for the year of flat salary.

Teachers will receive 1 percent raises each year for the school years ending in 2013, 2014 and 2015, 1.5 percent for 2016, 2.5 percent for 2017 and 3 percent for 2018. That totals 18 percent in raises, though the total is higher when compounded.

The source said Mulgrew was willing to take the zero-percent increase for one year because of the bonus. He also agreed to let the city give the raises on salaries as of May of each year, even though the U.F.T. contracts begin on Nov. 1, a move that buys the city more time.

"Basically the deal is, we came up with a way to give you the two 4s, but you got to wait a long time … and then we're going to give you 10 percent over seven years," the source added.

A U.F.T. attorney, Adam Ross, told reporters the union does not believe it agreed to any zero-percent increases because of the $1,000 bonus. This is a sticking point with other unions, who are likely to get deals following the pattern de Blasio sets with the U.F.T.

Ross also said current retirees who left their jobs before June 30, 2014 would get the back-pay in a lump sum, and all teachers would get the 1 percent increases awarded for May, 2013 immediately.