New York City Seeks to Shortchange Teachers on $900 Million of Back Pay

We’ve been keeping an eye on how New York City is faring in the Covid-19 new normal, in part out of personal interest, and in part because many other communities are facing budget stresses, albeit not on the same scale. As you may recall, cities and states are unlikely to get any Federal assistance unless and until the Democrats win the Presidency in November and gain seats in the Senate.

The latest fiscal shoe to drop in the Big Apple is the city reneging on $900 million of back pay to teachers, the fourth installment in a deal struck by Mayor Bill de Blasio in 2014. Due to the state of the Internet, I can’t get great details on the background of the agreement. From what I can infer, teachers had gotten lower pay increases than other city workers in the years right after the financial crisis and sought a make-up. The incoming mayor and the unions agreed on a complicated package for teachers hired before 2012. You can read a summary here; these were the two groups subject to the pay deferral scheme:

– Upcoming Retirees: Anyone who retires before June 30, 2014 will also receive a lump sum payment for 100 percent of their back pay. A wave of another 4,000 teachers will likely take this option. Anyone who retires after June 30, 2014 will receive their full back pay delivered in five separate payments from 2015 through 2020.

– Mid-Career Teachers: Anyone who was teaching in 2009, 2010, and/or 2011, is still teaching, and remains in continuous employment (meaning they don’t leave or take a year off for, say, childbirth), will receive a $1,000 payment immediately; 12.5 percent retroactive payments in 2015 and 2017; and 25 percent payments in 2018, 2019, and 2020. To receive their full retroactive payments (presumably for work they already did), teachers must remain in continuous employment until 2020. Using the pension plan’s assumptions for retention, the average 15-year veteran in 2009 had about an 88 percent chance of making it until 2020.

– Early-Career Teachers: Using the pension plan’s assumptions for retention, the average first-year teacher in 2009 had less than a 50-50 chance of making it to 2020. Many of them are already gone, but another 25 percent of the class of 2009 will leave between now and when they’ll be eligible for full retroactive pay in 2020

So you can see the motivation for deferring the pay wasn’t the usual hope that New York City’s finances would be better later (and that the value of money in the future is less than money now) but also that the number of recipients would be reduced by the “remaining in continuous employment” requirement.

The Wall Street Journal broke the story of New York City announcing it would not make its $900 million payment due this month:

New York City can’t afford to pay a lump sum due its teachers because of the new coronavirus, city officials said Thursday, reflecting a fiscal crisis that has already led to budget cuts and service reductions.

The city teachers union, which puts the amount due this month at $900 million, called Thursday for immediate arbitration.

First Deputy Mayor Dean Fuleihan sent the union a letter saying the budget impact of the pandemic was “debilitating and not yet fully known,” and the city couldn’t afford to pay a lump sum due to active and retired teachers scheduled for this month under a 2014 agreement….

To cut costs, the mayor has mandated weeklong furloughs for about 9,000 government workers. He also has warned that he will have to lay off 22,000 employees if state lawmakers don’t give the city the authority to borrow billions of dollars….

A letter from the union’s general counsel, Beth Norton, seeking arbitration said the anticipated final payment, due Oct. 1, would cost the city some $900 million. She said the UFT understood the city’s fiscal challenges but members “have already worked for and been waiting for these payments for a decade.”

Union officials said the amount due to an individual teacher varies from a few hundred dollars to thousands, depending on salary level and time in service…

“This action is necessary to avoid painful layoffs, but make no mistake, New York City recognizes our teachers go above and beyond for our students and schools every day,” said mayoral spokesman Bill Neidhardt….

Patrick Sprinkle, a UFT [United Federation of Teachers] chapter leader who teaches at NYC Lab School for Collaborative Studies, said the delay was unfortunate, but “If we can avert layoffs and save middle-class jobs, I will gladly make another sacrifice in these unprecedented times.”

Tellingly, the summary of the 2014 pay deal that we cited above alluded to the notion that the deferrals might not be honored in full:

Teachers hired in 2012 or later (obviously) get no retroactive pay. They will receive the benefits of a higher salary schedule, but they’ll also be working for a distict paying off $2.5 billion in past promises to teachers. No one knows what New York City’s budget will look like in 2020, but that’s $2.5 billion that can’t be spent on future raises, additional teachers, or other instructional costs.

In isolation this contract breach may not seem like a big deal. But this is one of the more visible ways New York City is having to impose pay reductions on workers via wage cuts, shorter schedules, or both, and lowering service levels to city residents.

This move comes less than a month after more than 150 executives sent a letter to Mayor de Blasio effectively complaining about the deterioration of cleanliness and safety in the city. The key section:

Despite New York’s success in containing the coronavirus, unprecedented numbers of New Yorkers are unemployed, facing homelessness, or otherwise at risk. There is widespread anxiety over public safety, cleanliness and other quality of life issues that are contributing to deteriorating conditions in commercial districts and neighborhoods across the five boroughs.

We need to send a strong, consistent message that our employees, customers, clients and visitors will be coming back to a safe and healthy work environment. People will be slow to return unless their concerns about security and the livability of our communities are addressed quickly and with respect and fairness for our city’s diverse populations.

We urge you to take immediate action to restore essential services as a necessary precursor for solving the city’s longer term, complex, economic challenges.

Yes, and I’d like a pony too. What about “gaping budget hole and therefore no money” don’t you understand? De Blasio is trying to get permission to increase borrowing but that hasn’t happened.

More generally, I’m not sure what the point of a letter like that is unless it is to set the stage for another fiscal-crisis-style takeover of New York City finances, which in the 1970s took place first with the Municipal Assistance Corporation and later with the more draconian Emergency Financial Control Board.

De Blasio is not a very good mayor but it is going to take New York City some time to climb out of its mess, and that can’t happen in a meaningful way until Covid is perceived to be a contained health threat. The city’s former status as a magnet depended on entertainment, the arts, and business travel. Huffing and puffing at the mayor about graffiti and garbage won’t solve the underlying bad fundamentals.

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  1. drumlin woodchuckles

    This is the kind of social infrastructure decay which the Republicans are hoping and planning to engineer for all the politically-Democratic-leaning cities by withholding aid to make up for the Covid-imposed losses.

    This is the kind of social infrastructure decay which Pelosi and the other Catfood Democrat officeholders were satisfied to enable when they refused to hold the first Covid-losses-relief bill hostage to including losses-relief for states , cities, and other regionalocal units of government.

    1. Larry

      Indeed. And Nancy kept saying, don’t worry, we’ll get state and local relief in the next bill. And it never happened. Once the wealthy were bailed out and further enriched, their work was done and they could return to play acting about discord between Republicans and Democrats.

      1. drumlin woodchuckles

        Nancy was a key part of the Congressional Conspiracy to make sure that no such relief was ever allowed.

        Going forward, can Congress be tortured and terrorized into changing its mind about that?

  2. Bob Hertz

    A large portion of the general public thinks that teachers have had it very easy during the pandemic. They got full paychecks, but seemed to have a very easy time of doing zoom lectures and not handling unruly students.

    Contrast this to most other ‘essential workers,’ who got no pay at all unless they showed up and were exposed to health risks.

    This may not be accurate, but it is a real feeling across the country. The average worker who has a skimpy 401(k) is not too concerned about teachers missing a very small part of their defined benefit plan.

    1. CallMeteach

      Anyone who thinks that “doing Zoom lectures” doesn’t understand the first thing about teaching in general and what it’s like now more particularly. We aren’t lecturing (at least most of us aren’t), we’re using all of the available tools to make class as interactive and normal as possible. In order to translate from the classroom to virtual, we spend hours each night working. The vast majority of essential workers leave their work behind and go home, or they stay and get overtime. That’s not true for educators. What’s worse, people seem to think it’s okay to renege on paying for work already done. Some commenters talk about the crapification of education. Well, what do you expect when you treat teachers like this? Who is going to want to be a teacher? Why should they work as hard was they do? You get what you pay for.

      1. MK

        Exactly! Teachers in most states, particularly NY, CA, IL are set for life with their non-taxable pension and health care benefits. No doubt it’s tough for the 9 months a year in the classroom, but those on the front lines of COVID can’t ZOOM to work everyday.

        1. Bob Hertz

          According to the original article quoted here, the teachers are seeking money because they got a smaller increase back in 2014.

          In government circles, a smaller increase is a horrible injustice.

          For years during the prominence of Newt Gingrich, one heard complaints that Gingrich was ‘savagely cutting Medicare.’

          It turned out that he was only proposing smaller increases.

          (by the way, I was probably thinking of college professors when I complained about what an easy life they had during the pandemic. My error.)

          1. Yves Smith Post author

            No, they agreed in 2014 to accept “a smaller increase” when the city agreed they ought to have a full increase but said it couldn’t pay them then.

            And for a CEO or corporate executive not to get his deferred pay isn’t just a horrible injustice, it’s unheard of.

            Why do you hate government workers so much?

            1. Bob Hertz

              Some of my feelings are probably pure jealousy. I just retired at age 72 with no pension. I was fired three times over the years. Very few paid vacations also.

              Not the end of the world, and I have much to be thankful for. But I do resent paying taxes for the benefits of public employees, who are far richer than me on a lifetime basis.

              I am aware that millions of public employees have modest salaries and pensions. My annoyance is at those whose salaries and even pensions are in six figures, which is a growing category (see Pension Tsunami website)

              I am a constant advocate for universal social insurance. I would rather that my taxes go toward Medicare, Medicaid, and Spcial Security before public employee perks.

          2. Michael Fiorillo

            I am a retired NYC public school teacher..

            The money in question regards retroactive raises, negotiated early in De Blasio’s first term, for the years we worked without a contract under the previous mayor, Bloomberg. He had conducted years of attacks on the union and the public schools, and was insisting on a contract that no self-respecting trade union, even a paper tiger like the UFT, could accept.

            There was no interest attached to the retro payments, so we have in essence given the city an interest-free loan for over ten years, which it is now trying to weasel out of.

            1. Ana Anitoaie

              Public should be aware of “interest-free loan for over ten years”
              Happy retirement Mr Fiorillo!

      2. drumlin woodchuckles

        Since the 401k is an elaborate swindle designed to become a 201k by the time the retiree needs it,
        there is nothing lucky or advantageous about “having” one.

        1. flora

          Yes, but remember, the people who got in early on chain letters, er, ponzi schemes, er the 401K scheme did very very well for a time and ended up acting as unwitting touts for the plans to later suckers enrollees… until the bottom fell out for everyone.

          I have a bit, a tiny bit, in a 401k. When fraud is on the rise one might as well have a bit in the pot. But only a little bit. ;)

          I know a couple who planned to retire in 2009 based on the 401k account value in 2006, but are still working.

  3. TMoney

    Classic collective wage theft. Note to all: Get the bucks up front, future promises are worth sh*t.
    The UFT should slap a mechanics lien on City Hall and start garnishing bank accounts.

    1. Big River Bandido

      The UFT “leader” quoted in the article completely folded — betrayed and undercut his rank and file, acting the way AFT always does.

      It’s for these reasons that come Jan. 1 I’m ceasing my dues deductions to my AFT local.

      1. Michael Fiorillo

        I spent my entire teaching career in active, public opposition to the collaborationist leadership of the UFT/AFT, and am not surprised at the union’s weakness, but unless you intend to affiliate with another union or start your own independent one, then you’re just helping the Boss by dropping out.

        Even a bad union is better than no union at all.

    1. BXteacher

      And yet in August, this mayor, who already stole close to a billion dollars already, paid over nine million dollars to a hoverboard maker to make PPE while appointing him to an influential board position. Oh, did I mention he was a DeBlasio donor for years?

  4. Ginny

    Teachers have worked hard throughout this pandemic with little training for remote teaching/resources and have returned to work this September with even less due to limited budgeting! Teachers have waited to be paid retroactively for completed work since 2009. This retro pay is NOT a gift or reward. It is earned money that we have waited for patiently for 11 years. I have 3 children to put through college- this money will be used for tuition and we all deserve it. Let’s not mention that NYC teachers were ordered to work through Holy Thursday, Good Friday and Passover in the spring with no regard to our holy days of obligation OR pay. Being a teacher is an honor- but it is not a volunteer position. We are salaried employees. PAY UP NYC.

    1. Jen

      You could not be more right! No other profession waits 10+ years to be paid nor works for free as we did over spring break. And no one realizes how hard remote learning is and how we were thrown into it and had to figure it out ourselves. I know I was putting in more hours on the computer at home than I was while physically in the classroom. Shame on the city for doing this with no warning! Btw..other unions got their retro over the summer and it wasn’t owed to them for 10 years!

  5. Rick

    Many thanks to mayor billy and Michael Mulgrew for their betrayal. I remember when the city desperately needed money that it was the teachers that bailed the city out. So thanks billy and mikey …for nothing.

  6. Jeanie D

    What about the fact that many employees increased their TDA as per an email for the September 15 deadline now we are not getting Our retro

  7. Jeremy Grimm

    Teachers are not well-paid or well-treated but I think the main point of this post is that NYC — like many other cities throughout the U.S. regardless of their party affiliation, democratic or republican — is in serious financial trouble. Costs have gone up, revenues have gone down, and budgets must be balanced. The Federal Government is playing with fire. The longer the states and cities are left to crumble the less will be left to recover. I can grasp neither what twisted reasoning could rationalize nor what profit might come nor to whom it might accrue as a result of this abject failure of the Federal Government. I am slowly coming to believe the U.S. Power Elite is bitterly and dangerously Insane.

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