MAKING THE BEST OF AN 'UNFAIR' SITUATION: United Federation of Teachers President Michael Mulgrew explains to his members via Zoom how a clause from its 2014 contract guaranteeing expedited arbitration of any dispute over language in that deal produced an award that assured half of the $900 million in back pay they were supposed to receive in October will be paid by the end of the month, and the deferral of the remainder until next July was offset by a guarantee that a 3-percent raise will be implemented on schedule next May and they will be protected against layoffs for the remainder of the school year. 

When Mayor de Blasio and the United Federation of Teachers announced a nine-year contract deal May 1, 2014, it was clear it had solved serious problems for both sides.

The union had finally gotten the two 4-percent raises it was denied by Michael Bloomberg throughout his third termsometimes known as his Mayor Muttonhead period—that other unions representing more than 60 percent of the city workforce had negotiated by 2008, and with full back pay attached.

In return for honoring the bedrock municipal-labor principles of pattern bargaining and retroactivity, the new Mayor had gotten an unprecedented delay in payment of the retro money, which traditionally comes in the second employee paycheck after a contract is ratified. In this case, to avoid weighing down the city budget with a huge outlay stemming from the previous Mayor's fiscal foolishness, the payout covering 54 months of working under an expired contract was largely backloaded, with 75 percent of the moneywhich for some senior Teachers would exceed $50,000not coming due until equal installments were provided in October 2018, 2019 and 2020.

By design, the late payments had the effect of sweetening the back end of the contract, which ran through October 2018. The final seven years of that contract provided raises totaling just 10 percent that were certain not to keep pace with the inflation rate. But for Teachers who had been on the payroll going back to November 2009, when the first of the two 4-percent raises came due, the retro money would push them past the rise in the cost of living, and continue to do so under a subsequent 43-month contract with raises averaging slightly more than 2 percent annually.

The raises were modest enough, however, to be disappointing to those unions that had gotten their members the two 4-percent raises as far back as 2007, thus making Mr. de Blasio's life easier in terms of what they could reasonably expect from the city. So when a veteran government official who had worked for the two prior Mayors was asked what made the UFT willing to settle relatively cheaply when it came to wage hikes, her response was that union President Mike Mulgrew wanted a better relationship than the hot-and-cold one the UFT had with Mr. Bloomberg and the frigid one it experienced with Rudy Giuliani.

That's Why You Take Out Insurance

But when First Deputy Mayor Dean Fuleihan sent a letter to Mr. Mulgrew Oct. 8 saying the city did not have the wherewithal to make the scheduled $900-million payment the following week, it seemed Mr. de Blasio was just as ready to dispense with good-faith bargaining as Mr. Bloomberg had been a decade earlier. That led Mr. Mulgrew to invoke a clause from that 2014 agreement stating that any disputes over contract obligations would go immediately to arbitrator Martin Scheinman, who had served as a mediator assisting the two sides in reaching the original deal.

By the end of the following day, Mr. Scheinman issued a compromise: half the $900-million payment would be made this month, with the other $450 million deferred until the second paycheck in July, the start of the next fiscal year. In return, the city would guarantee no Teacher layoffs for the remainder of this fiscal year, and would implement a scheduled 3-percent raise from the contract reached in 2018 next May, regardless of its fiscal straits.

It was a relatively painless solution that offered union members an extra layer of job security that could, under terms laid out by Mr. Scheinman, extend into the fiscal year that runs through June 2022. While it seems unlikely at this point that the city will be looking to lay off Teachers, given the scrambling it has recently done to adequately staff both in-person and remote classes, that could change if, as Teamsters Local 237 President Greg Floyd put it Oct. 14, "we see the end of the world as we know it," meaning President Trump's re-election.

After all, 45 years ago, even as the city's fiscal crisis deepened, no one imagined that close to 50,000 city workers, many of them cops, firefighters and Teachers, would be laid off to stave off bankruptcy. Then-UFT President Al Shanker briefly took his members out on strike, and later in 1975 required a visit to his home from Richard Ravitch on behalf of Gov. Hugh Carey before signing off on the commitment of union pension funds to purchase $2 billion in city bonds to keep it afloat.

Mr. Mulgrew didn't need the same kind of in-person pressure to come around, because he felt the contract provision giving Mr. Scheinman the power to find a middle ground meant he wouldn't be trampled in the name of the Mayor's need for significant savings.

'The Definition of Unfair'

In a Zoom broadcast to his members after the compromise was handed down following a hearing  that lasted more than four hours, he said the city's attempt to unilaterally defer payment of the retro money until Mr. de Blasio deemed it affordable fit "the basic definition of the word unfair."

The UFT leader added, "If the city feels they can claim financial hardship whenever they need to meet an obligation, then what's to stop them from saying [about] our raise next May [that] they can't meet that obligation? Because, is our economy gonna get better?" 

He reminded union members that the UFT in 2014 agreed to stretch out the retro payments because "we knew the city didn't have the money" to cover them at that time. But, he said, when the union insisted then that Mr. Scheinman be deputized as the arbitrator who would settle any disputes that arose, city officials had questioned the need to do that when both parties were "getting along so well."

He said his explanation for that condition had been "in case something happens and you try to do something stupid," which had just come to pass. When finances get tight, Mr. Mulgrew continued, "We know who ends up giving up the most: it's always the workers."

It seemed clear that if the union hadn't had a role in crafting Mr. Scheinman's award, his familiarity with its needs going back at least to its 1985 contract arbitration gave him the understanding to minimize the damage by offering sturdy no-layoff language.

Where the $900-million retro payment had been scheduled for Oct. 16, the award requires that half be paid no later than Oct. 31, and that the delay on the other $450 million "constitutes an acceptable and appropriate contribution towards alleviating the COVID fiscal challenge faced by the city."

No-Layoff Language

Through next June 30, the award stated, "no person holding a position represented by the UFT shall be laid off due to budgetary reasons or abolition of programs or positions...The [Department of Education and city] shall be prohibited from declaring a 'layoff' or 'citywide excess condition' in any license area during the specified period and shall not abolish any positions due to budgetary reasons," which applies to probationary employees as well as those with civil-service tenure. 

They will gain an added year of job security through the 2021-22 school year "if the City receives authorization for a net $5 billion of budgetary relief whether as a result of stimulus funding and/or long-term borrowing without requiring additional oversight controls..." 

Early in his Zoom address to his members, Mr. Mulgrew had lamented that "the new normal now seems to be that everything's unfair," from the efforts the union has had to exert to protect their health as they returned to classrooms, to the delay in receiving final payment on money that is already a decade overdue. He concluded that this would not be "the last fight," given "the pandemic and an economy that is basically in a depression. The unfairness is still there."

But the language in Mr. Scheinman's award made clear that the union had already given its share to buy time for the city as it accelerated its talks with other unions, using the UFT compromise as a benchmark. Conversations with other labor leaders including Mr. Floydwhose members are already up to date on raises and therefore have no pending payments to deferindicate they may have to struggle a bit more to produce acceptable savings, whether by delaying scheduled wage hikes or improvements in member benefits.

'An Easy Lift, Considering'

One person not involved in the bargaining, speaking conditioned on anonymity, said, "When you think about the city's financial mess, this is a pretty easy lift. It does solve the problem of what you do while you're waiting for something to happen in Washington."

And whether as a result of Mr. Scheinman's skill or a pre-arranged agreement between the parties that he signed off on, the terms don't figure to rupture the relationship built between the de Blasio administration and the UFT with that initial contract deal. For better or worse, both sides are likely to need each other to make it through the financial crisis and the strains it has placed on the education system.

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