If anyone is wondering why the previously-tolerant United Federation of Teachers (UFT) is suddenly desperate to sink charter schools, you need to remember what has been the most important decision about the New York City schools in the past decade, the one that has sealed the fate of the city’s schools for the next decade or two. Not the increase in charter schools. Not mayoral control. Not the Campaign for Fiscal Equity court decision. The most important decision is the shift from a teacher retirement age of 62 to a teacher retirement age of 55, with teachers then 55 or over at the time of its enactment not required to put in an extra dime, and those near retirement required to put in extra for just a few years. The result of that decision is a sweet deal for those cashing in and moving out, but will be devastating for New York City’s children – and for younger and future teachers (if the city can even afford to hire teachers to replace those who retire), particularly when the federal stimulus dollars expire. The city’s schools have been, in effect, re-Lindsayed, and will face a repeat of the 1970s as a result.
The UFT wants desperately to disassociate the pension deal with the coming consequences. So does the Bloomberg Administration, which agreed to the deal (why I don’t know). So do the Democrats and Republicans in the New York State legislature, who approved it unanimously. Charter schools, however, operating in the same city with less money but less of that money going to the retired, will be in a position to offer a better education and better pay and working conditions to those teachers actually on the job. As the walls close in on the 25/55 pension deal, that is a comparison the UFT desperately wants to stop.
Recall the data I presented last April, showing that instructional (ie. teacher) employee benefits (including pension contributions and retiree health care) cost the New York City public schools $3,083 per child in FY 2006, nearly triple the $1,086 per student national average. Even with a relatively generous cost of living adjustment for high-cost Downstate New York, NYC’s downsized figure of $2,347 per student was more than double the national average. From FY 2002 to FY 2006, the inflation-adjusted cost of instructional employee benefits per student increased more than 50% in New York City. Total instructional pay per student, which affects both the pay per teacher and average class size and in the past had been low in NYC, rose just 9.6%.
That was before the decline in the stock and bond markets would have vastly increased required pension contributions, even if the NYC teacher pension plan had not changed. And it was before the deal to allow teachers to retire up to seven year early. No money had been set aside to pay for that deal; it was described as “free.” And, more importantly, no money was set aside to pay for health benefits for ex-teachers for ten years before Medicare kicks in and shares the load, rather than three. That’s the real killer, given that this is an age when health care costs – and insurance premiums – tend to escalate.
Decisions to both enhance and underfund pension plans, and borrow on increasingly reckless terms, and not unique to New York City – one reason that bond raters are now downgrading the bonds of every municipality out there. But this deal — passed and signed after it was obvious the economy is in the tank – will be particularly disastrous.
Let’s assume the State of New York does not decide to once again protect the jobs of those paid by the overfunded schools in the rest of the state and target school funding cuts at New York City, as it did in the previous two recessions. Let’s also assume that (because everyone is in on the school deal and wants to cover it up) the city’s schools will receive less of a cut in funding over the next two years than any other public service, many of which will be gutted (parks, libraries and children’s services as always, transit for the first time since the 1970s). Let’s assume that in order to mitigate budget cuts overall, the taking away of the Bloomberg and Bruno checks this year will be followed by yet another 20% property tax increase next year, the “tax the millionaires” plan that raised state income taxes on those earning more than $200,000 this year will be followed by an even greater increase on those earning more than $100,000 next year, and that fees, fines and nuisance taxes will be increased as well. And let’s assume that despite this there will be sharp cuts in the budget of additional departments such as police and fire next year, particularly once the stimulus money runs out, the city and state elections are over, and investors realize that money the city and state borrow might not be paid back. And that thousands of public employees will be laid off as a result.
Even with all those assumptions, and even with the city’s schools favored over taxpayers and other services, those are going to be increasing class sizes and cutting services for years, while freezing pay and perhaps cutting the pay and benefits of any new hires, because more and more money will be going to the retired. That will, to say the least, raise a few questions. Imagine then that other city schools, the charter schoos, are raising teacher pay and maintaining services. Bad enough that students are clamoring to get into charter schools. How about when younger UFT members, given that the UFT also represents (in theory) those who work in charter schools, are also clamoring to get out of the schools encumbered by its contract and into schools where a higher share of the funding goes to those who are still working and doing their best, rather than those who stopped working at 55?
Expect a desperate attempt to slash charter school funding per child, relative to that of other schools, due to “fairness” because of their lower costs. And what are those lower costs? Those who cannot or will not do their best for the kids no longer work there, and those who do work there are perhaps expected to go on working and contributing a little longer as they live a little longer. That’s it. That’s the whole Charter School advantage, which would be present in every school UFT unionized or not — if a lower share of spending went to those not working and those not doing a good job could (without 10,000 hours of management time in documentation) be asked to perhaps choose another career. And there will be a desperate attempt to cut the relative amount of funding until that advantage goes away. The UFT, in effect, will be desperately working to make charter school teachers (forced to pay them for representation) worse off, so it won't be obvious that the other younger teachers they represent were made worse off by the UFT to benefit those who cashed in and moved out. And so the claim can be made the problem is that there isn’t enough money. They way that the Greater New York Health Association and Local 1199 asserts every year that if they get a 3 percent increase in Medicaid funding rather than the 10 percent they deserve, they’ll let our babies die and it will be the Governor’s fault.
Moreover, I wouldn’t expect the “best case” scenario in the assumptions above to come true. What if the Republicans retake the State Senate? According to the New York Times report on the downgrading of municipal bonds by Moody’s its “report suggested conflicts ahead between taxpayers struggling to keep their own households afloat and elected officials charged with balancing budgets, making their payrolls and protecting their credit ratings. ‘Taxpayers, worried about their own financial condition, are more resistant than ever to increasing property or other local taxes,’ the report observed.” Yes the Republicans are against taxes. But they are in favor of local governments in the portion of New York State outside New York City putting tens of thousands of additional workers, needed or not, on the payroll. The result has been, in every past recession, funding cuts only for New York City’s children, the poor, and the infrastructure (ie. the future).
And why assume that NYC teachers will be satisfied with retiring at 55? Perhaps they could have the city “save money” by having a pension “incentive” allowing teachers age 50 or over to retire immediately, with no additional contributions, and a full pension. After all, that’s the deal they cut with Giuliani in 1995. How about retirement at age 45? The pay and benefits of future teachers can always be cut to help pay for it.
Because early retirement soaks up so much money, and could only be funded without complete devastation for public services when New York City’s financial industry was succeeding in stealing $billions for the rest of the world every year, nothing else will matter in the end. Those who benefited, those who cut the deals, have a huge incentive to talk about anything else. Today Charter Schools with pre-programmed questions; tomorrow accusations that New York City’s out-of-classroom spending is high (it isn’t, and never was relative to other places, even in the 110 Livingston Street and community school board days, when it was higher than today). Who knows where the most selfish and greedy of our citizens will point the finger next? What if no one is willing to ask the question, and tell the truth? Comparisons that point to the truth must be eliminated, so people can’t figure it out for themselves.