Mayor Bloomberg and the UFT have agreed to allow teachers to retire with full pension and health benefits at age 55, pending approval by the state legislature (which has already passed the deal unanimously before, with Pataki’s veto). You find out about that, and not in detail, at the end of articles today in the Times, Post and Sun. The part of the deal that led those articles, and led the city’s press release that was used to quickly and easily create those articles, is that there will be “merit pay,” something that may allow Bloomberg to make a political point. The teachers would receive bonuses if they worked in low-performing schools and those schools improved. But that may be a pilot program, which can be terminated after Bloomberg leaves, and is funded only with private donations, whose future is at best uncertain. The real order of significance can be found in on the UFT website and in the Daily News story, where this part of the agreement is given its proper insignificance. Or more significance than it deserves.
Meanwhile, the additional cost of paying additional teachers for doing nothing will divert money out of the classroom for decades to come, just like the to similar pension enhancements in the mid-1990s and 2000. Mayor Bloomberg has used the higher pension and retiree health care spending to show he has invested in “education,” even as funding in the schools themselves has lagged (before his administration, retiree spending was not tabulated as “education” spending). This is one of the most horrific, unjust, inequitable decisions I can imagine, one that (like the near identical mid-1990s decisions) could have negative consequences for me and my children directly. It's almost enough to make me puke.
It is no surprise that such a deal is being cut now – at the peak of another bull stock market. With teachers required to (maybe) make additional contributions, and using current asset values the “base” (or in reality past asset values, before losses are admitted to), and with an excessive return assumption from the current asset values, the Mayor claims that the pension enhancement would be “free.” That is the very same claim Carl McCall and Rudy Giuliani made when he pushed through similar deals in pursuit union support for higher office in 2000. Their backers won, and we have suffered for it ever since. But neither McCall nor Giuliani have never been called out this, or if they have they have refused to answer. They and theirs won, and the children, the future, the rest of us lost. The schools are still not what they were 40 years ago, and most of Bloomberg’s property tax increase was never taken back.
The details of the current deal are sketchy. According to the News “the changes will be paid for by increased contributions to the pension plan by teachers who choose to participate – and those who will start their teaching careers next year…there would be a six-month window within which teachers who agree to increase their pension contributions by 1.85 percent of their salaries, will be able to retire at age 55 with full pension benefits as long as they have 25 years of service.” Does that mean that those age 55 could retire immediately, without paying in much of anything at all? Is there a payback for all those years they didn’t have to pay in? It certainly doesn’t sounds like it. Expect a mass exodus within the six month window, perhaps right in the middle of a school year, a huge increase in retiree health care costs, and the desperate need to hire anyone, even the unqualified, to replace them, just as after Giuliani’s similar deal in 1995. Perhaps they won’t even be replaced initially, with class sizes soaring, due to a budget crisis next year (or the year after). There were 35 kids in the local public elementary school the year my oldest would have enrolled, one reason we paid for Catholic school through 8th Grade and many of our friends left.
More from the News: “Teachers now pay 3% of their salaries for their first 10 years and then nothing until they retire. New teachers would pay the 4.85% for 10 years and 1.85% until they retire. But they can't retire until they've taught 27 years.” Wait a minute. I know from working for the city that city workers hired since 1995 (other than cops and firefighters) have had to pay 5.85% of their pay into the pension system for ten years, followed by 2.85%. Were the teachers exempted from that?
From the Times: “Mr. Bloomberg said the changes would be ‘cost neutral’ to the city for the first five years and would save ‘in the tens of millions of dollars’ in following years. City officials say that is partly because highly paid retirees will be replaced by younger, less costly teachers.” What is the assumed rate of return under which this deal is “cost neutral,” Mr. Bloomberg? And would those green teachers dumped on today’s kids disappear later, when they would earn more? If not, wouldn’t it cost money in the long run? What a fraud. And we know Bloomberg’s solution, based on the police, fire and DC37 contracts. When retiree health care and pension costs soar, pay new hires less, and accept less qualified and less motivated workers (or fewer of them). But by then he’ll be long gone.
The UFT tells a different story from the city’s website. “Under this agreement, current New York City public school educators who have 25 years or more of service will be able to retire at age 55 without a reduction in benefits.” They have six months to make up their mind. If they don’t leave now, they have to work to 62. Does the Bloomberg press release indicate how many teachers are likely to walk out the door, and who will be available to replace them? What is the plan for this? Did anyone ask the question? Can some one tell me how many teachers are over age 54 in every school in the city, what percent of the staff, and at what point in the school year they can stop working? Is there anything in the deal to prevent teachers from leaving in the middle of a school year? Does the six month window essentially “force” them to? Or does it not matter, because they could in reality stop working any time whether they are on the payroll or not, once they have one foot out the door?
The UFT describes this agreement as pension “equity,” since current teachers get to be paid for nothing just as early in their lives as past teachers. (Better, since current teachers are likely to live longer after leaving). But is it equity for new hires who will have to pay in far more than those who can leave immediately? Is it equity for those of us who will be working to age 75 and paying taxes to fund their life of leisure and getting nothing in return, with our earnings taxed at higher and higher rates but their pensions exempt from state and local income taxes? Are UFT members willing to pay additional taxes, or higher prices, so all of us can stop working at age 55? Is it equity for the children?
According to the UFT “The negotiated program is cost-neutral to the city on terms that are comparable to what other unions have negotiated over the past 15 years.” What a spit in the face way to put it. In other words it is just as much a fraud as the past deals, no more no less. And will have the same effect. Even if the teachers were paying for the entire deal, which is almost certainly a lie, the deal would represent a massive transfer to older generations, who could leave after contributing little, from younger generations, who would pay in more throughout their careers. That is assuming that older teachers are not required to “buy back” the years. Can someone answer that question?
By the way, there is nothing preventing any teacher from retiring younger by putting 1.85% of their pay in a 401K, if 1.85% will cover it. So why go through all this trouble? Because it won’t. And it certainly won’t if older teachers get to leave early without putting in the 1.85% retroactively. It is pure theft, unless they want to make the claim they made an extra effort all these years in exchange for a deal they knew was coming.
And what did the UFT give up in exchange, according to their website? “A voluntary school-wide bonus program will be established on a pilot basis.” Voluntary, meaning once they get their pension enhancement it can be turned down – a 55% teacher vote is required. Temporary, meaning once Bloomberg is gone it ends. “This money will not reduce the amount of money available for collective bargaining in any given year.” That’s because it only includes private funding. And when the cost of the pensions and mass departure of teachers set’s the city’s schools back another decade (or perhaps makes them equivalent of Detroit’s permanently), the private funders will likely surrender and take back their money. But meanwhile, Bloomberg has his symbolic victory. I guess that’s the “art of the possible.”
But why even talk about this aspect of the deal? What does it matter if it voluntary or not, temporary or not. It is comparatively insignificant. A symbol, meant for those who are not directly affected, and who do not care about those directly affected, to put on their scorecard. Perhaps the UFT can claim that eliminating individual merit pay (the grants are based on schoolwide performance) and the Post and Sun can claim that by establishing merit pay at all, a precedent will be set that will allow education to improve outside New York City in places where children matter. But so what?
I actually blame Bloomberg more for this deal than I blame Giuliani for his. Giuliani was a lawyer, the Police Mayor, who didn’t know what he was doing on issues like this (and boy did it show). Bloomberg knows exactly what he is doing, especially since he was around to see the results of past deals personally. And he knows how to write the press release so the media will not report what he is doing. Why, why, why! Why did Bloomberg do it? A UFT endorsement for President? A symbolic victory to campaign with in the hopes that the damage will not be apparent until after 2008? Does Bloomberg really believe every single teacher over 55 is dead wood, and is willing to pay to get rid of them, since they aren’t working anyway? Have they in fact stopped working as a ploy to get early retirement? Has Spitzer informed him that the deal is going through, and $billions will diverted out of the classroom no matter what, because unlike Pataki he won’t veto it, and the legislature is sure to pass in unanimously, so the City might as well take what it can get in exchange?
Is 20/50 for the TWU, followed by reduced service and deferred maintenance on the trains and the cancellation of the Second Avenue Subway next?
The bastards are doing it again, the same thing over and over again, and then they will move on and leave us with the consequences. Those consequences will then be described as “inevitable” and, what’s Bloomberg’s phrase, “uncontrollable.” No one’s fault, really. We’ll just have to accept that we have to pay more and get less, and suck it up. I’ve got a child who chose a public rather than Catholic high school. Someone must have been outraged that in exchange for a boatload of taxes over all the years, my family might not get nothing. I’ve got another child who will be making that decision this year. Should public high school even by an option for her, given what is likely to occur? For her friends? For anyone?
Is anyone going to tell me "it's different this time" and this will turn out to be a "win for children?" What happened after the 1995 deal? What was said when it was cut? What happened after the 2000 deal? What was said when it was cut? What happened after the rich Lindsay pensions were enacted in the 1960s? What did Lindsay's press releases say?
Republican/Democrat, liberal/conservative, who cares? What we have is an ongoing generational war. When will they go too far, far enough that people wake up?