May 1, 2014 / 9:26 PM / 4 years ago

UPDATE 2-New York reaches "landmark" agreement with teachers

(Adds details of agreement, background)

By Edward Krudy

NEW YORK, May 1 (Reuters) - New York City struck a tentative $4 billion nine-year agreement with its teachers that could pave the way for settling a years-old dispute with the city’s workforce by the end of the fiscal year on June 30.

The agreement on Thursday is a major coup for Mayor Bill de Blasio, who took office on Jan. 1. The dispute, which had left all 300,000 city workers without a contract as far back as 2009, was seen as one of his greatest fiscal challenges, with estimates for settling all retroactive demands ranging from $7 billion to $8 billion.

A deal with city workers in time for the next fiscal year starting July 1 would remove a major question mark over the mayor’s first budget and provide some clarity to investors who hold more than $100 billion in total outstanding city debt.

“Working together with our dedicated teachers - instead of being locked in rancorous debate - we have found common ground today,” said de Blasio, flanked by his negotiating team at a press conference at City Hall.

The mayor said the cost of the contract would be covered within the framework of the existing 2014-2015 budget plan.

Under the city’s strategy of “pattern bargaining,” the first union to agree to a contract serves as a model for other contracts. This means the teachers’ agreement could dictate settlements with more than 150 other municipal bargaining units.

The mayor’s office declined to say what a settlement on similar lines with the city’s other unions would mean for the budget, noting it would provide updates as deals were struck.

The “landmark” teachers’ contract would be retroactive to 2009, de Blasio said. It contains a one-time $1,000 ratification payment and additional salary hikes of 10 percent from 2013 through 2018.

Teachers have been working without a contract since 2009. The agreement, which must be approved by union members, calls for raises of about 4 percent for 2009 and 2010, which would be paid out in increments from 2015 through 2020, the mayor’s office said.

The deal on retroactive pay was a victory for the teachers, who had long ridiculed claims by former mayor Michael Bloomberg that the city could not afford any back pay, insisting they were owed the two 4 percent raises that other unions got.

The teachers also had to make concessions. The agreement outlines $1 billion of healthcare savings over the next four years, something the mayor has said he wanted to achieve as part of any deal on retroactive pay.

If extended across the whole workforce, those healthcare savings would reach $3.4 billion, the mayor’s office said.

The contract also includes disciplinary measures such expanding the definition of sexual misconduct to include “inappropriate texting.”

The dispute with public sector workers is a legacy of former Mayer Bloomberg, who imposed pay freezes in the years after the financial crisis. Unions refused to renew contracts in the hope of a better deal after Bloomberg left office at the end of 2013. (Additional reporting by Hilary Russ; Editing by Chizu Nomiyama, Bernard Orr and Richard Chang)

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