NYC accounting move to pay for retroactive teacher raises now

Mayor Bill de Blasio visits a fourth-grade art Mayor Bill de Blasio visits a fourth-grade art class at P.S. 69 in Queens on Monday, May 12, 2014. Photo Credit: Bryan Smith

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City officials said Monday they would use labor reserves in the current budget to pay for the salary hikes of future United Federation of Teachers retirees -- an accounting tweak recommended by Comptroller Scott M. Stringer and accepted by Mayor Bill de Blasio.

The city would budget the estimated $725 million in retroactive raises owed to UFT members eligible to retire between July 1, 2015, and Oct. 31, 2018 -- about 10,000 employees -- in this year's spending plan, officials said.

It had previously planned to cover the expense in future years, as the retirees leave the workforce, officials said.

The accounting change is needed because the liability expense is part of a UFT deal struck this fiscal year and should be covered this year, the comptroller's office said. It does not affect the terms of the UFT agreement as set by de Blasio and union leaders earlier this month, officials said.

"This adjustment has no impact on the total cost of the agreement since the majority of these expenses were already shown in the plan, but it does affect the timing of the booking of these expenses," de Blasio and Stringer said in a joint statement.

The nine-year UFT contract, projected to cost at least $5 billion, still awaits ratification by rank-and-file members. It has a 10 percent pay increase over seven years and retroactive raises of 4 percent for 2009 and 2010. The UFT -- 75,000 teachers and 110,000 employees overall -- has been without a contract since 2009.

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Current teacher pay ranges from about $45,000 to $100,000. Teacher pay in 2018 under the contract would range from about $54,000 to $119,000. Members would receive their retroactive raises in increments between 2015 and 2020.

De Blasio also backed measures Monday to boost funding to ease overcrowding and expand arts education in his executive budget and in the tentative UFT contract agreement.

The capital plan he unveiled includes $4.4 billion over four years to reduce the use of trailers as classrooms and other issues related to overcrowding in central Queens and lower Manhattan. The executive budget for the upcoming fiscal year includes $20 million for arts education, he said. And the nine-year UFT deal, not yet ratified, doubles the number of parent-teacher conferences to four, he said.

Also Monday, Moody's credit-rating agency designated de Blasio's labor contract plan as "credit negative," saying the plan "shows how personnel costs drive the city's budget and challenge its finances, even in a strong economy."

Though the de Blasio administration has so far reached a deal with only the UFT, "pattern bargaining" dictates that similar raises would be agreed upon by 150-plus other unions now without contracts.

De Blasio has committed about $17.8 billion to labor deals, and Moody's projected the city's budget deficit would be $7.4 billion between 2016 and 2018.

The "credit-negative" designation does not change the city's strong "Aa2/stable outlook" credit rating, said Amy Spitalnick, a spokeswoman for the city Office of Management and Budget.

"In a document unrelated to the City's formal credit rating process, an analyst at Moody's pointed out that we added expenses for the contract settlements -- just as they also pointed out the prior week that those same settlements eliminated a major risk from the City's financial plan," Spitalnick said in a statement.

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