INSIDE UFT-CITY FACT FINDING FROM REUTERS

Reuters is finally giving us some news about contract negotiations between the UFT and city.  Apparently, the city is arguing that they legally cannot pay us the retroactive salary increases because it would bust the budget.  The city wants to avoid having to give UFT members the 4% + 4% raises that other city workers received in the last round of collective bargaining. Compounded over four years, it would be a substantial sum as we have reported.  Here is a portion of the Reuters article:

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.

The counter argument from the UFT:

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.

The city is arguing they can't afford to pay us all they owe us in one year so forget it while UFT is saying to spread the payments out as they did in 1991.

Who is right?

"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.

Thanks to Jeff Kaufman for sending this out.