Where Can Mayor de Blasio Find $8 Billion? The Legacy of Michael Bloomberg

UPDATE (May 1, 9:00am): Newspapers report an announcement of a contract settlement later today

In November, 2009 your mortgage bill didn’t arrive – you put the dollars aside, must be some kind of a glitch. As the months go by the mortgage bill continues not to arrive, you really did want that extra pair of shoes, the really nice dress, those playoff tickets on Stubhub way beyond what you can afford. The months turn into years and you incorporate the dollars into your day-to-day expenses. Suddenly, last month the mortgage bill arrives along with an arrears bill for the four and a half years of missed payments – how the hell can you come up with four and half years of mortgage payments?

Mayor de Blasio faces the same dilemma – his predecessor, Michael Bloomberg, simply allowed every union contract to expire and incorporated the “saved” dollars into the city budget. There are currently 152 expired city unionized employee contracts – well over 300,000 employees.

The UFT, the teachers union, is the first union to enter into negotiations, and, whatever is decided will set the pattern for all other unions.

The NY Daily News, citing “sources,” suggests “one deal being discussed,”

One deal being discussed with the United Federation of Teachers would give them retroactive raises for most of the five years the contract has been expired at a rate of 4%, 4%, 0%, 1% and 2% — although it is unclear how the payout would be distributed to ease the punch to the city’s pocketbook. Teachers would then get raises of 2% and 2%, the source said.

“The reports are not accurate,” Wiley Norvell, a spokesman for de Blasio, said.

Salary decisions are based upon principles within laws governing public employee bargaining in New York State established by the Public Employee Relation Board (PERB). Under PERB regulations expired contracts remain in effect until the successor agreement is negotiated – teachers earning less than maximum continued to receive step and longevity increases after the contract expired on October 31, 2009. The rates being negotiated, both retroactive and prospective are based on two principles, “pattern bargaining” and “ability to pay.”

The negotiations in New York City have moved from mediation to impasse to the appointment of a fact-finding panel. The fact-finding process, basically an arbitration-like proceeding has moved through the steps: both sides have submitted documents, witnesses testified, and, with the election and a new administration, the fact-finders reverted to a mediation role. The fact-finding panel can issue a public non-binding decision, while not binding it is almost always the basis for the final settlement. It is commonplace for fact-finding reports to contain items that both sides agreed to during negotiations and the fact-finders essentially “take the heat” for items that either side feels they could not agree to publicly. Ideally agreements are made by the parties; both sides always worry about allowing “outsiders,” the arbitrators, to make decisions for the parties.

Take a look at a fact-finding report from a small school district: http://www.perb.ny.gov/pdf/m2010-300.pdf

The Mayor, similar to the guy who wasn’t paying his mortgage is faced with finding the dollars to fill the “holes” that have been filled by not granting raises and using the “saved” dollars for day-to-day operations and somehow finding both billions of dollars “owed” for retroactive raises and dollars for prospective raises.

Both the new Mayor and the union leaders are friendly; both sides agree that employees are entitled to raises – both retroactive and prospective – the Mayor – accurately – asks: where can I find the billions? The union argues, quite correctly, that members should not be punished for excesses of the former mayor.

The leader of the City Council, Melissa Mark-Viverito, in the draft City Council budget asks for an increase of a thousand police officers and both the Police Commissioner and the Mayor respond: we’d rather use the dollars for raises for current employees.

While there is no statutory date for completing negotiations both sides are anxious to complete the negotiations before the end of the fiscal year – June 30th.

The Municipal Labor Coalition (MLC) hasn’t even begun negotiations over city employee health plans – city costs continue to escalate sharply, and, the current health plan costs are over a billion bucks a year. The MLC health plan negotiations will be tough with the city asking for “savings” and the unions resisting transferring salary increases to paying to maintain health benefits.

Parallel to the “dollar” negotiations with the city are the non-budgetary negotiations with the Department of Education. On the top of the list are changes in the teacher evaluation law, these are three-way negotiations – the plan must be approved by the State Education Department and falls under state law. Both the union and the department are unhappy with the state-imposed teacher evaluation plan so one can expect a settlement that results in a much simpler plan.

The core issue: $$$$

Stretching out retroactive payments two, three or four budget cycles is obvious – how many more budget cycles are necessary so that the city has the “ability to pay”?

There is a narrow window: the union leader, the mayor and the chancellor actually appear to like each other – the union members like their union leader, the mayor and the chancellor – this is a rare moment – on the other hand teachers ask: “show me the money.”

Teachers would love a saner teacher evaluation plan, reducing of the current testing fiasco, removing the fear of school closings and exile into the ATR pool and generally leadership that supports and respects teachers; teachers are not willing to attribute a dollar value to these issues.

How do you come to a “fair” agreement, and define “fair” as an agreement that both sides accept as “fair” along with the larger public, remember the day after you win an election you begin running for the next election. The mayor cannot afford to be pilloried by the press and the elites, he needs a settlement that is widely accepted as fair to the city.

If an agreement is not reached by June 30th the window could close, the “warmth” turn to a “chill,” and a fact-finders’ report can contain items anathema to the union and its members.

This is not a New York City only event – mayors, union leaders, teachers, electeds, policy-makers, the media, across the nation are taking a deep look at New York City. Can unions and city leaders negotiate contracts that are both fiscally responsible and educationally ambitious and inventive?

A couple of years down the road Detroit, Philadelphia and Newark may no longer have public schools with other cities not far behind.

Without being overly dramatic the future of unionized public schools in urban school districts across the nation may be decided in the next two months in New York City.

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4 responses to “Where Can Mayor de Blasio Find $8 Billion? The Legacy of Michael Bloomberg

  1. That is overly dramatic, and a completely buried lead.

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  2. Peter:

    Let me remind you we are not Detroit, Newark, or Philadelphia. New York City is an economic powerhouse with hidden budget surpluses that will cover the retroactive raises and modest raises going forward. as stated by financial gurus Mel Levy and James Parrott.

    Since we will be establishing a “City pattern”, how will the other Municipal unions feel about a measly 1.4% annual raise for the new 5 year pattern? Not good if you ask me. I believe our union can do better than that.

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  3. “I believe our uion can do better than that.” I cannot remember a proposal or settlement in the 47 years since I joined the UFT that someone didn’t allege that. Of course that’s not to say that it’s impossible that none have been correct, but I’ve always wondered what the motivation for accepting an inferior package has been.

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  4. not sure about the part about the union members liking their union leader, Mulgrew has disappointed many teachers since his appointment.

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