Dec 10 (Reuters) - The administration of New York Mayor Michael Bloomberg is lining up for one last showdown in its $3.5 billion dispute over retroactive pay raises with the city's public school teachers.
With just three weeks remaining before his team cedes power to Mayor-elect Bill de Blasio, Bloomberg's administration will cite accounting rules at a closed-door state hearing on Wednesday as it tries to shut the door on any retroactive raises being paid out as bonuses in future years, according to people taking part in the hearings.
In the administration's view, the rules stipulate that any lump-sum payout must be booked in the year it is made, not spread out over years. The amount owed would be too big a hit for any one year and would break the city's balanced budget requirement, they say. The stance effectively closes down any attempt by the teachers for a settlement along those lines, at least with the Bloomberg administration.
At an earlier hearing, the teachers union, the United Federation of Teachers, which has been working without a contract since 2009, argued that under generally accepted accounting principles, or GAAP, rules for municipal budget keeping do not require an arduous one-time cost.
An accounting expert for the United Federation of Teachers also cited a 1991 deal when the city deferred part of a teachers' wage increase, paying $47 million out in 1995 and 1996 -- with interest of 9 percent -- and thus setting a precedent for the practice of deferred payments.
"It's a very big bill attached to this retroactive pay raise, and (the Bloomberg administration is) specifically raising this as a deal breaker," said Barry Epstein, an accounting expert at Cendrowski Corporate Advisors, who testified on behalf of the union. "Essentially what they are saying is, we'd be happy to pay this to you except we can't do it because we have a balanced budget law and this will bust the budget."
"My answer to that is they are misinterpreting their accounting requirements," Epstein said.
The mayor's office and the Department of Education declined to comment. But other people familiar with the proceeding supported Epstein's characterization on the city's position.
The UFT, citing the confidentiality of the negotiations, declined to say if it would seek retroactive raises in the form of one-time bonuses, though it has argued that they are permissible under accounting rules.
I saw this story as I was running out of the house to work yesterday and didn't get the opportunity to do more than post it.
My feeling is, one-time bonuses in lieu of retroactive raises is a terrible concession.
A one-time $4,000 bonus is a fine thing, of course, unless it is replacing $4,000 added to your salary step.
Adding $4,000 to a salary step means a worker makes an extra $40,000 over the course of ten years, $80,000 over the course of twenty (even more when pensionable.)
Two commenters at Perdido Street School blog felt the same way.
First, Michael Fiorillo:
A bonus, which is preferable to nothing, is nevertheless inadequate, since it is not pensionable and over the years means less income for teachers.
It does serious harm to the retirement plans of those teachers looking to bail out of this toxic system in the near future, since they will essentially be robbed of the pension increase they would have seen, had we received a new contract with the four and four percent raises, that other municipal unions received.
Let's also recall that Weingrew were complicit in Bloomberg's illegal third term and re-election in 2009, which directly led to this.
Then again, since the current model for teaching is 3-5 years and out, this all correlates perfectly. The UFT, being the dues collection agency it fundamentally is, obviously doesn't care, since they get their skim (along with their double pensions) no matter what.
While I have no illusions that most UFT members will do anything but happily accept it, a bonus that substitutes for a pensionable salary increase lets Mulgrew off the hook for his miserable record as UFT leader, and sets a bad precedent. It also lets De Blasio off easily, masking the declining relative wages teachers have experienced amid the scapegoating and attacks on working conditions they've suffered.
A bonus, substituting for the wage increases we should have received, is further proof of the bankruptcy of the Weingrew regime.
And an anonymous commenter:
This is all about cheating UFT members and teachers. A bonus will cheat teachers by not increasing their salaries and pensionable earnings. It is not only inadequate, it is unfair. The UFT has been an unscrupulous participant in these dragged out negotiations. Weingrew and crew are much to eager to throw teachers under the bus in order to curry favor with the kleptocracy: Bloombucks, Gates, Koch Brothers, Obama Phony President, Murdoch, Zuckerman.
I asked a couple of people at work their feelings about getting a one-time bonus as opposed to a raise and when framed that way, people were opposed to the one-time bonus.
Of course the geniuses at the UFT will frame that kind of concession as one-time bonus vs. nothing, hoping to convince members that this is the best we can do.
I say it is not.
We need raises for the lost years from the pattern bargaining, not a one-time bonus.
Anything less than the 8% without concessions every other union got during the last pattern is unacceptable to me.