In the last two months, the Bloomberg Administration announced two agreements with municipal unions. These agreements have been heralded as union-labor compromises to prevent the planned layoff of more than 5,000 employees. A close look at the agreements reveals that most of the jobs were not saved by labor concessions; rather, layoffs were averted by diverting other resources or creating new risks in the budget. The failure to negotiate more important concessions, like health insurance premium sharing, means that widespread layoffs will be threatened again soon.
The first agreement, announced on June 24, was with the United Federation of Teachers (UFT). It avoided 4,600 teacher layoffs that were budgeted to save about $315 million, but union concessions were a small part of the deal. Less than $60 million, funding approximately 850 positions, was saved from UFT concessions: delay of sabbaticals for one year and agreement to reduce restrictions for allowing teachers without classroom assignments to serve as substitutes. These teachers are placed in an Absent Teacher Reserve (ATR) and continue to receive full salary and benefits, paid from central administration, while they search for new positions. Tapping the ATR reduces the per-diem costs of hiring substitute teachers, but may be offset by added costs of providing for the salaries of new teachers in the ATR, which has swelled to record proportions as principals downsize staff.
Most of the funding, $255 million, to prevent teacher layoffs came from City resources. The largest sum, about $96 million, was from re-estimating attrition upwards – that is, about 1,400 more teachers than previously estimated are now expected to be leaving their positions voluntarily. The remaining savings come from dedicating additional city revenues and from savings in administrative operations, and are one-time sources of revenue. How these positions will be funded in the next budget remains to be seen, and the risk that teacher layoffs will be proposed for the third straight year is high.
The most recent agreement, with District Council 37 (DC37) over Department of Parks and Recreation workers, was reached on August 18. It reportedly saves $16 million and 465 of 665 positions slated for layoffs. What was the union “concession”? DC37 agreed to allow DPR to ask full-time employees to resign or retire voluntarily, with the understanding that they would be offered seasonal employment of up to six months in each of the next three years. They would remain members of the union during this period and would come off the payroll completely at the end of the three year period.
The savings estimated from the deal are barely half the $29 million in savings previously budgeted from eliminating 665 positions. With the economy potentially headed for a double-dip recession, it’s also questionable whether employees will volunteer to resign their positions. This places even the lowered savings estimate at risk, meaning that some layoffs will still be necessary.
Saving public employees from layoffs – and from perennial threats of layoffs – requires broader thinking and large-scale reforms that can produce recurring savings. For example, Citizens Budget Commission recommends eliminating the ATR altogether, previously estimated to save $100 million, more than both agreements described here combined. A more fundamental and important change would be to revise employee health insurance arrangements: requiring all employees to make premium co-payments of 10 percent for individual and 25 percent for family health coverage could save $625 million in fiscal year 2012.
You can read about other ideas here.