Pension Deal & Merit Pay Plan Breakdown: The Good, The Bad and the Utterly Insulting

by James Eterno, Chapter Leader Jamaica High School

(The opinions expressed here are solely those of the author and do not represent pension advice. We recommend that for pension advice members should call a qualified pension consultant. )

There has been a great deal of discussion on the blogs and in schools about the pension deal and the merit pay plan. Before we begin please note that currently Tier IV members need to have 30 years of service and be at least 55 to retire without penalty or they have to be 62 years old and meet other criteria.

It is also important to note that the proposed 55/25 will provide a pension without a penalty. If someone retires at 55 with 25 years of service, the final pension you receive will be 10% less than if you retired with 30 years. Obviously, the more years you work, the greater the pension.

Listed below is the actual 2005 Contractual language for pension legislation along with much of a letter from city Labor Commissioner James Hanley to Randi Weingarten. Hopefully, after reading this piece UFT members will have some factual information for when the parade of Unity representatives come to the schools to try to sell yet another questionable deal, even though we won't even get to vote on this one because we already approved most of this in the 2005 Contract.

Article 4C from the 2005 Contract called Pension Legislation:

1. A Labor-Management Pension Committee will be established to investigate legislation allowing all current and future members of the TRS Tier II, III and IV to retire without a reduction of benefits due to early retirement upon age 55 with at least 25 years of service, as well as other relevant pension issues.

2. The Committee will analyze the actual costs and additional contribution rates required to provide this benefit (including any additional health insurance benefit costs) without any cost to the City.

3. Upon mutual acceptance of the Committee's recommendations, including plan design and costs, the parties agree to jointly support the legislation necessary to implement the benefit changes.

The Four main provisions of the pension agreement that were written in a letter from city labor commissioner to UFT President Randi Weingarten last week that goes now to Albany for approval.

(1) An "opt-in period" of six months in which any incumbent employee who wishes to participate in this optional program must affirmatively submit a written election to participate.

(2) Additional Member Contributions (AMC) - in addition to all currently required statutory contributions, an Additional Member Contribution (AMC) of 1.85% shall be paid by those employees electing to participate in this optional program as well as by all newly-hired employees participating in the TRS and newly-hired UFT-represented above listed members participating in BERS retirement systems. These additional member contributions shall become effective on the first business day after the enactment of the enabling legislation.

(3) Current incumbent employees including those on leave who elect to participate in this optional program and who pay the requisite AMC shall be eligible to retire at age 55 with 25 years of credited service with immediate payability of pension benefits without any reduction. Assuming the legislation is effectuated in 2007-08 school year, those who elect this pension will be eligible to retire 6/30/08 or later.

(4) Employees hired after enactment of this enabling legislation shall be eligible to retire at age 55 with 27 years of service and receive immediate payability of pension benefits without any reduction. This will not be construed to change the eligibility for retiree health insurance benefits (i.e., ten years of credited service and pension payability) as determined by the City and the Municipal Labor Committee and in accordance with the Administrative Code.

So Who Wins and Loses?

The Pension Agreement

The Winners

1. Generally, UFT members who started in the system (or another system but got city TRS pension credit for it) between the ages of 26 and 36 should consider opting in on 55/25 even though they will have to pay 1.85% of their salary for the rest of their career into their pension. They will be able to retire when they complete at least 25 years of service as long as they are at least 55 years old without the substantial percentage reduction in pension income that exists now. (If someone opts in and changes their mind and decides to stay the full 30 years or until age 62, I doubt they will get a refund of those additional contributions so if you opt in, you will probably need to retire as soon as you can to stay a winner.)

2. Anyone who started in the retirement system younger than age 26 but took substantial time off on un-credited, unpaid leave (child care, restoration of health without pay) which means they won't have the required 30 years of service that is needed to retire at age 55 without opting in to 55/25 . Anyone in this category also should consider opting in if they want to retire at age 55 with at least 25 years of service without a reduction. Remember, however, you will have to pay 1.85% of salary into the retirement system for the rest of your career if you opt in.

3. People who cover classes gain as coverages will be counted as income when figuring out the Final Average Salary that pension payments are based upon.

4. The City of New York- The NY Times reported last Thursday that Bloomberg expects the city will gain tens of millions of dollars over the long term from this agreement. For more on how the city gains, read on.

The No Gainers

1. Anyone who started before age 26 (and will work straight through until retirement) cannot retire a day earlier because of this agreement as far as we can tell. They will still need to work at least 30 years to collect a full pension upon retirement.

2. Anyone who started at age 37 or later cannot retire a day earlier because of this agreement as far as we can tell because they won't have the years of service that are necessary to take advantage of the new program. At age 62, their retirement won't be subject to a reduction in benefits.

3. Tier I members

Note that all of the no gainers could gain from coverages being pensionable.

The Big Losers

Teachers not yet hired-

Right now UFT members have to pay 3% of their salary into the pension for the first ten years of service and then nothing for the rest of their career. Under the new system they will have to pay 4.85% for the first ten years and 1.85% thereafter but they will not be permitted to retire at 55 with 25 years of service as was agreed to in Article 4C1 of the Contract. Instead, the new agreement says they have to complete 27 years and be at least 55. In addition, a teacher hired right out of college at age 22 will have to work 33 years to be able to retire and unlike those teaching now, they will have to make pension contributions for their entire career, not just the first ten years of service. That is why we are calling this provision a de-facto Tier V and this is how the city wins.

We would like everyone who reads this blog who would like to question a Unity representative to ask why Randi gave up so many of our rights in the 2005 Contract but she couldn't get what the city agreed to in the Contract: "legislation allowing all current and future members of the TRS Tier II, III and IV to retire without a reduction of benefits due to early retirement upon age 55 with at least 25 years of service?" Emphasis on future members added by us. 55/27 for yet to be hired teachers is not 55/25 and pension contributions for new teachers for their entire careers is a step backwards.

Merit Pay

The little ugly merit pay provision was snuck into the last Contract in an Article 8L which you won't find much about in those glossy "fact sheets" and special NY Teacher editions selling the punitive giveback laden Contract that among other indignities forced us back to hall patrols and gave us work in August. The school-wide bonuses for improved student performance are there also. Article 8L says:

Labor/Management Committee On Long Term Reforms

With regard to the long term recommendations the 2005 Fact Finders made subject to adequate CFE funding, the parties shall establish a Labor Management Committee to discuss the following issues: a)bonuses, including housing bonuses, for shortage license areas; b) a pilot project for school-wide based performance bonuses for sustained growth in student achievement c) salary differentials at the MA-5 through MA-7 levels; and d) a program for the reduction of class sizes in all grades and divisions. If the parties agree on the terms of any or all of these issues, they may be implemented by the Board using whatever funds may be identified.

You see ladies and gentlemen we voted for merit pay when we voted for the 2005 Contract.

Is anyone holding their breath waiting for the class size reduction program in Article 8L to be implemented?

The Winners

Nobody

The Grand Losers

New York City educators, parents, students and anyone nationally who attempts to follow NYC and implement such a dumb merit pay plan. We will see millions of dollars that could go to worthy projects such as lowering class sizes, adding more guidance counselors, social workers or paras, or starting up more after school programs that instead will be raised for a completely useless merit pay plan whose underlying assumption is that if the city dangles a possible $3,000 in front of a school staff, then teachers will work harder than they are working now and veteran teachers will run to transfer to difficult schools for that potential 3 grand. This merit pay plan is a combination boondoggle-slap in our faces.

DA SAYS YEA TO MERIT PAY

We often say that teaching and learning conditions cannot possibly get any worse in the New York City Public Schools and we are constantly proven wrong by the Chancellor and the UFT leadership. UFT President Randi Weingarten went in with Mayor Michael Bloomberg and Chancellor Joel Klein and made the lives of educators she is supposed to represent even more unbearable by agreeing to school-wide merit pay. The deal was announced at the first UFT Delegate Assembly meeting on Wednesday and approved by the delegates. While Randi has been urging us to write faxes to Washington opposing individual merit pay, she was negotiating a deal with Bloomberg that will give us school-wide merit pay for student achievement gains in up to 200 low performing schools this school year and 400 next year. This is supposed to be a pilot project with 55% of UFT staff in each pilot school having to vote to opt in the program and the Principal has to agree to be a part of it as well.

Also, if a school agrees to be in the merit pay program, then it could be a positive factor in determining whether the "Participant School" is to be phased out or given a year's moratorium on a possible phase-out. The DOE in consultation with the UFT will set the criteria for awarding funds to schools. The amount will be $3,000 per member in a school. How that money will be divided will be decided by a committee made up of the principal, an assistant principal and two UFT members who are elected. This group must reach a consensus on how to distribute the bonuses or the school will receive nothing.

Clause twelve of the Memorandum of Agreement states: "Among the topics each Participant School compensation committee may decide to consider, after receiving guidance from the DOE and UFT, are whether to make equal individual awards to all eligible UFT staff, equal awards to all those in the same title (teachers paras, secretaries, counselors, etc...), or whether to make differential awards." As we read this, there is nothing that would stop a compensation committee from awarding various members nothing or they could give teachers more than counselors, or any combination that the committee wants. If a simple majority of the UFT Chapter votes to accept what the committee comes up with, then that's the award. Therefore if a school has fifty UFT members and the school's compensation committee decides to give 26 of them $6,000 and everyone else gets nothing and the twenty six agree to this, then everyone else would get nothing. That of course is an extreme example but we know it is not out of the realm of the possible. In addition, a vindictive principal could block consensus to spite a staff and give them nothing. There is an appeal process but all administration would have to do is prove they were not acting in an arbitrary and capricious way.

Merit pay could prove to be very divisive. For example what if there is a teacher who has tougher grading standards, there will be major pressure on that teacher and all teachers to pass everyone. The potential for cheating on tests and marking or playing with attendance numbers will be enormous.
What is most insulting about the merit pay program is the assumption by Randi and the city that the only reason any of us will be motivated to do our best in the classroom is so we can get an extra $3,000.

A DE-FACTO TIER V PENSION FOR UNBORN

The other big news from the DA was that the promised 55 years of age and 25 years working in the system retirement program should become a reality now that the city and the UFT have agreed to its final cost. The only step left is to get the Legislature and Governor to sign off which should not be a major hurdle since the city and UFT are now working together. When we looked very closely at the details of the letter that City Labor Commissioner James Hanley sent to Randi, it became obvious that this isn't a pension improvement for most UFT members but rather it is a new retirement tier, a De-facto Tier V for teachers yet to be hired.

For those currently in the system, there will be an "opt-in period" of six months to decide whether to participate. Weingarten told the DA that 36,000 members out of 100,000 active members would potentially be eligible. A member would have to make Additional Member Contributions of 1.85% for the rest of their career to be eligible to retire at age 55 with 25 years of service without the penalty that exists under current law.

For members not yet hired the situation is not at all positive. Anyone hired after this legislation is enacted would have to pay 4.85% of salary toward the pension for their first ten years of service and then new hires would have to pay 1.85% of their salary as contributions to the pension for the rest of their career. However, the new employees would not be eligible to retire with 25 years of service but instead they would have to be 55 and have finished 27 years of service.

Someone who starts teaching right out of college at age 22 is totally abused by the new system as they would have to pay pension contributions (4.85% for ten years and then 1.85% for the rest of their career) for 33 years before being eligible to retire without penalty. Right now the same college graduate who started in the system this year only has to make a 3% pension contribution for their first ten years of service. This is why we are calling this system a de-facto Tier V. It is another disincentive to teach in New York City for a young college graduate. ICE would also like to point out that once again we were right when we said the following on this blog last November when the Contract was proposed: "Let's remember that we have still not gotten the 25-55 year retirement that was supposed to have been won in our last contract. Will the 7% raise turn out to be much less?" For a teacher hired after the new law is passed, much of that 7% is gone for their entire career. Young teachers would be better off in yet another way working in a system in New York State outside of New York City or starting in the city, gaining experience and then going to a suburban district.

Both the De-facto Tier V and the merit pay scheme were overwhelmingly approved by the delegates but there was an enthusiastic opposition. Hopefully, word will get out in the schools about how future teachers will be hurt by the UFT pension scheme and we now have merit pay which we have opposed for years.

MORE BAD NEWS ON MERIT PAY & EXCESSED TEACHERS

In other Delegate Assembly news the delegates rejected a proposal by Peter Lamphere from Teachers for a Just Contract that called for the UFT to lead an AFT fight that would culminate in a rally in Washington opposing of all things, merit pay. The delegates also rejected two ICE amendments to a resolution asking for a moratorium on hiring new educators until all Absent Teacher Reserves (UFT members in excess) are placed. ICE believes that the resolution has little or no chance of being accepted by the Chancellor because there are no union actions that would support it. Randi at the September 25 Chapter leaders meeting said that it would be difficult to get the Chancellor to agree to the moratorium on hiring until ATR's are placed. We believe it will be impossible if the Union does not back the resolution with a full scale mobilization of UFT resources.

Jeff Kaufman motivated the amendments by telling Randi that she was in effect telling the ATR's "to go to hell," because she will not put the full weight and force of the Union behind the resolution to help them. ICE also believes that one of the biggest causes of the ATR problem is the closing of schools where again the Union needed to mobilize its members to get a moratorium on closing schools until we can have studies done assessing the effectiveness of closing schools on the educational process. Randi said we lost that battle in a court case years ago. The UFT won't even consider a real fight to keep its chapters together. When it comes to working for its members, this union once again proved it knows only one word:

Retreat!

When will the people who work in the schools say, "Enough already?"

UFT BARKS ON RUBBER ROOMS…BUT NO BITE

In a recent New York Sun article UFT newly hired "Rubber Room" guru Betsy Combier is reported to have joined forces with two New York Teacher journalists and dubbed themselves the "SWAT Team of the Reassignment Center." As previously stated on this blog the three person team is Randi's answer to the increasing pressure to do something about the burgeoning rubber room. But, alas, more of the same.

The real issue in this fiasco is the lack of union leadership in dealing with the DOE's increased use of the rubber rooms as a place to dump, what it considers, troublemakers, questioning staff and others it does not like. The fact that the UFT has totally failed in representing these accused members zealously is lost in the shuffle.

When a principal gets the o.k. (which is freely given in this age of principal autocracy) a member is ordered to report to a rubber room. Many times these members have little or no inkling as to what they have done to deserve the removal from their school and students. The union's reaction to such removal is basically nothing.

There is no investigation. There is no consultation with a labor attorney. There is no explanation of rights. In most cases the Union doesn't even know a person has been removed.

As the case against the member gets old the DOE has fully investigated the allegations and has spent months (and even years) preparing for a hearing to terminate the member. The Union's response…until charges are served there is no investigation. After charges are served the matter is referred to a NYSUT attorney where the "investigation" begins…by the same NYSUT attorney. There are no paralegals, investigators or anyone with knowledge about employment law, the DOE or anything else that will be involved in the case.

NYSUT attorneys do not issue subpoenas (too much work to go to court) or FOIL requests or interview witnesses other than those supplied by the member and at this point the issues are stale and memories have faded.

But we now have the SWAT team who will come to the rescue. And they threaten a lawsuit. A lawsuit for what? How do you sue for better representation?