The Art of Negotiations: Keeping the Eye on the Prize – Staying Focused in a World of Conflict

This has been a bad week for Bill de Blasio.

After opposing co-location of charter schools in public school buildings de Blasio only reverses a handful of Bloomberg co-location decisions, and is sharply criticized by his supporters. Eva and company spend half a million to plaster TV ads shredding the new mayor, and, his “friend” in Albany, Governor Cuomo, after blocking his universal pre-K plan shows up at the charter school rally praising his new-found allies, who , BTW, contributed hundreds of thousands to his campaign chest. Chancellor Farina “misspeaks” a few times over finding space for the “un-co-located” new charter schools.

Whispers about a one-term mayor ….

Teachers howl, “Where is the union? Why aren’t they buying ad time to counter Eva? Why don’t they attack the Governor?”

The answer is simple: The goal of the union is to negotiate the best possible contract, not be sidetracked by other issues, not picking new fights.

Mayor de Blasio and the union will benefit greatly by a contract, however, that said; it has to be the “right” contract. The specter of David Dinkins hangs over the process. With the strong support of the union Dinkins defeated three-time incumbent Koch in the primary and a hard-charging Rudy Giuliani in the general election. Negotiations with the UFT, the teacher union dragged on and on – eighteen months beyond the expiration of the contract – the UFT ran radio and TV ads chiding Dinkins, a contract was finally reached a few months before the election. The union membership was hostile to Dinkins, the union made no endorsement, and twenty years of Republican mayors followed.

Both union president Mulgrew and the Mayor have made it clear – they want a contract for the end of the fiscal year – June 30th.

Dean Fuleihan, the new Budget Director, clearly signaled one direction for the negotiations,

“We’re going to treat the workforce with the respect that they have not been treated with, but at the same time protect the taxpayers and do something that’s affordable,” Dean Fuleihan said at the first hearing on de Blasio’s proposed $74 billion budget.

“There have to be offsetting savings. And (de Blasio) specifically mentioned and has repeatedly mentioned health savings.”

All 300,000 city employees have been working under expired labor contracts, some for more than five years. The unions are demanding more than $7 billion in retroactive pay hikes.

Fuleihan repeatedly stressed that saving money on the skyrocketing cost of health benefits would have to be part of any deal with the unions.

We’re looking to sit down and see if we can come up with some ideas that can save everybody money,” said Harry Nespoli of the Municipal Labor Committee.

But he said he would resist making workers pay more for premiums, noting they already are responsible for co-pays.

“That’s going to be a problem. … We want to make sure that whatever changes; the quality of the health care stays the same.”

Are health plans part of the teacher contract negotiations?

No and Yes.

The UFT does not negotiate health plans, the Municipal Labor Committee (MLC), a coalition representing the 300,000 city employees negotiates, however, health plan costs are part of the size of the package. “Savings” in health coverage adds potential dollars to the retroactive pay/salary rate increase pool.

The cost of city employee health plans have been skyrocketing and the Affordable Care Act complicates an already thorny issue.

For teachers a major item is retroactive pay, the teacher contract expired on 11/1/09 – over four years ago. The union retroactive pay claims, for all city employees, reportedly would cost the city $7 billion: well beyond what is possible in one budget cycle (7/1 until 6/30).

Unions argue that “pattern bargaining” requires retroactive pay at a rate of 4% – the last raises prior to the mayoral decision not to negotiate with any union. Clearly the city will point to the fall 2008 fiscal crisis and use an “ability to pay” claim. The long overdue fact-finders report will probably address the issues, the report is not binding.

Much of the “negotiations” involve the number crunchers from both sides, gaining an agreement on a wide range of statistical projections.

An example: If the city and the union had negotiated a union what would have been the rate? What are projected tax revenues over the next year(s)?

Once the city and the union agree upon a dollar package, how will it be paid? Pensionable? Nonpensionable? A combination? Paid over one, two or three budget cycles?

After dealing with the past, the retroactive – what is the rate going forward – the increase in the new contract and the length of the contract?

The union wants a “going-out” rate as high as possible; the rate on the day before the new contract begins, the new rate, and the “going-forward” rate is built on the “going-out rate.”

While the budgetary issues are the core of the negotiations there are a range of non-budgetary issues.

* Should the ATR pool be eliminated, and, if so, what is the dollar savings for the city? A win-win issue, both sides would benefit.

* If both sides want to increase “collaboration” at the school level, can you “mandate” collaboration through contract language?

* Can the grievance process/dispute resolution process be streamlined? Instead of disputes taking months, or a year to resolve can disputes be resolved in weeks?

* Can the teacher discipline procedures also be streamlined? The current time frames have been reduced on paper; however, too many cases drag out, partially due to the former administration’s reticence to go before an arbitrator.

In each set of negotiations the parties have discussed a simpler contract, sometimes referred to as a “thin contract.” Some schools use the School-Based Option section of the contract to “amend” contract provisions while others modify the contract quietly below the radar.

Charter school advocates aver that rigid contract provisions impede innovation – a “thin contract” zone would counter that assertion.

At the end of weeks of long intense sessions the sides will move closer and closer, and, one side says, “We need a “sweetener,” something to make the contract more acceptable, more saleable to their side.

The mayor is an enormous advocate of affordable housing – his platform included building 200,000 new units. How do you pay for the housing? Developers want to build high income housing – there is a much higher return on investment. One suggestion: unions allow pension fund dollars to be invested in bonds to pay for affordable housing and that units are carved out for union members. Currently affordable housing uses AMI (Area Median Income) – an amount which would bar new teachers, they earn too much money – a “carve out” for teachers would achieve both purposes – pension fund dollars for affordable housing and units for teachers. Not part of a contract, however, an agreement that would gain support for the contract among the cognoscenti.

For the union, members have to vote to accept the agreement and for the city the agreement has to have the support of the influence makers – the New York Times, the Citizen’s Budget Commission, the City Council, the range of advocacy organizations, and, the public at large, Governor and candidate Andrew Cuomo announcing “This contract agreement is fair to teachers and a win for the City of New York” would be a wonderful plus.

Teacher opinions range from, “I’m retiring soon, I only care about money,” to “I have a long way to go – I’m mostly concerned with professionalism, with working conditions.”

In the final days negotiations move from a science, parsing numbers, to an art, the crafting of a settlement.

Michael Mulgrew and Bill de Blasio, hopefully, will become the best of friends

See pages 20-23 of the NYS Comptroller February 2014 Report on NYC finances re labor negotiations, health plans and pensions: http://www.osc.state.ny.us/osdc/rpt12-2014.pdf

A Virtual Look at Contract Negotiations: A Long Spring for the Negotiators on Both Sides.

Contract negotiations are multi-faceted and complex.

Different teams sitting in different rooms mulling over printouts, offers and counteroffers; distressing amounts of time is spent caucusing with your team plotting/creating responses, crafting arguments supporting positions and waiting, waiting, waiting for a response/counter offer from the other side. The process is laborious and incremental, with many trips down the wrong path, with frequent dead ends.

As the sides close in on a settlement the negotiations tend to become round-the-clock, pushing for that last comma and semi colon in the right place.

Years ago I served on the negotiating team – the final, lengthy session, the presentation to the union executive board, the delegate assembly … I think we went fifty-four straight hours.

Under the previous administration negotiations never began, our former mayor chose leaks to the press and unkind op eds in lieu of actual negotiations.

In the “money” room the sides have to decide on the numbers – what would each percentage point cost in each year? How much would each percent from 11/1/09 until 6/30/10, and each subsequent budget cycle (7/1 till 6/30) cost out? Is the time pensionable, and, if so, how much would this add to the cost? Remember: the city contributes a rate determined by actuarial calculations each year; if teachers retired between 11/1/09 and the date of the new contract are they entitled to retro pay and a recalculation of their pension? If the answer is “yes,” how much would it add to the dollar cost of the agreement?

Before you can reach a resolution you have to agree to price tag of each negotiated segment.

The union numbers people parse past city budgets, current budget proposals, revenue and expense projections, tax receipt projections and on and on … How many new buildings are in the pipeline and how much in taxes will they generate? Can we anticipate increasing tourism and place a price tag on the anticipated additional revenue?

In another room the health plan negotiators representing the Municipal Labor Coalition (MLC) are engaged in the enormously complex discussions. It is a three-way discussion: the city, the union and the feds. How does the Affordable Care Act impact health plans for NYC active and retired employees? Are current active and retired employee health plans “Cadillac” plans, and, if so, are elements of the plan taxable?

How will retroactive salary be paid out? All at once? Over two or three budget cycles?

In another room the “non-budgetary” issues are on the table.

Management is wary about relinquishing managerial prerogatives; unions defend what has been previously embedded in the contract.

Once the parties have an agreement the union has to “sell” the settlement to the membership and the mayor has to “sell” the settlement to the media/the elites and the broader public.

Will the headline praise or pan the settlement?

Teachers have told me, “Who cares what the settlement costs, that’s not a concern of the union, the city will just have to figure it out, we’re entitled to a raise, we earned it, and the city just has to pay it?

My answer is: Wisconsin.

Scott Walker, the Governor is Wisconsin, and a cooperative legislature, effectively ended collective bargaining in Wisconsin. Public employee unions in Wisconsin are beyond life support – they are moribund.

Read the frightening story: http://www.nytimes.com/2014/02/23/business/wisconsins-legacy-for-unions.html?hpw&rref=business

Some of you may have gone to Wisconsin to support our brothers and sisters, participated in recall elections for state senators who voted on “the wrong side,” all to no avail. The public was not sympathetic to the unions, and, Scott Walker is now mentioned as a possible presidential candidate.

The “unofficial” voters on any contract settlement are the people of the City of New York.

The teachers union has spent years working with communities across the city: parents, civic associations, and other unions, block associations, electeds on the local level, faith-based leaders, in the parlance of labor, an “organizing model.” Thousands upon thousands of union members participating in local campaigns, from volunteering to spending time in Louisiana after Katrina, to working right here in New York City on Hurricane Sandy relief, from going to Haiti to work on field hospitals to trekking with parents to fight for a stop light on a corner or to prevent a school from closing or to fight against co-locating a charter school in a public school building.

The work of the union has paid off, Sol Stern in the Manhattan Journal (Special Issue, 2013) wrote,

… according to a poll of city voters commissioned by the Manhattan Institute and conducted earlier this year by Zogby Analytics … New Yorkers now trust the oft-maligned teachers more than they trust the mayor’s office: almost half of all respondents said that teachers should “play the largest role in determining New York City’s education policy,” compared with 28 percent who thought that the mayor-appointed schools chancellor should.

The public is fickle, to continue the support of the populace union leadership has to craft a contract that is viewed by the public as fair to teachers and fair to the city.

Mayor de Blasio’s State of the City speech addressed affordable housing,

“In total, we pledge to preserve or construct nearly 200,000 units of affordable housing – enough to house between 400,000 and 500,000 New Yorkers — to help working people by literally putting a roof over their heads” … Mr. Bloomberg invested heavily in affordable housing, but Mr. de Blasio won office promising to do more. He has said he would require major residential projects to include units for low- and moderate-income residents. He has also said he would invest $1 billion of city pension funds in creating lower-rent units.

Decisions on the investment of pension funds are controlled by the trustees of the funds and require the approval of the union-appointed trustees who have a legal fiduciary responsibility. While there is no connection whatsoever between the contract negotiations and the pension fund trustees the enthusiastic support of the investment by the union could resonate well with New Yorkers.

In 1975 as the city was teetering on the edge of bankruptcy Al Shanker supported a plan in which the Teacher Retirement System purchased city bonds to avert default, a default that could have freed the city of all contractual responsibility, a la Detroit today.

In one room a team is discussing the teacher evaluation plan.

The elements of the plan are set in law and regulation and a final plan must be approved by the state commissioner. The current New York City plan is a mess – the plan was written by the commissioner and basically is much too complex. Both management and labor want to simplify the plan; however, the plan must be approved in Albany.

Yes, complex with many, many moving parts.

At the same time the negotiators are engaged the city budget plans are moving forward. The mayor’s proposed budget is silent on dollars for collective bargaining. The City Council will hold hearings, the fifty-one council members will argue for projects for their districts, Community Planning Boards will support or oppose budget initiatives and in the waning days of June a budget will be agreed upon.

The unions and the mayor want to reach an agreement – there are no guarantees – the economy impacts negotiations – so – don’t spend that retroactive salary just yet.