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New agreement preserves age 55 retirement, restores post-Labor Day school start
by Michael Hirsch | June 29, 2009 New York Teacher issue
How the UFT-city agreement affects current members
- UFT-represented employees required to report to work on the Thursday before Labor Day will report instead on the Tuesday after Labor Day. That day will be used first and foremost for classroom preparation.
- All pension benefits remain intact.
- The 55/25 and 55/27 early retirement benefits are preserved, and there will be no changes in contributions for in-service members.
- All UFT members will receive the 7 percent guaranteed annualized rate of return for the fixed investment option in the voluntary Tax-Deferred Annuity programs for Board of Education Retirement System (BERS) and Teachers’ Retirement System (TRS) members. The additional 1.25 percent rate above the state-guaranteed 7 percent will no longer be available, a modification that reflects the downturn in investment income after the stock market collapse last year.
How the UFT-city agreement affects future hires
- New UFT-represented employees will report to work the Tuesday after Labor Day. That day will be used first and foremost for classroom preparation.
- They will enjoy the 55/27 retirement benefit, which remains intact. The change is that they will make additional contributions for these benefits. New employees will make a 4.85 percent pension contribution for 27 years and 1.85 percent thereafter, up from the current 4.85 percent contribution for 10 years and then 1.85 percent through 27 years.
- They will become vested in the pension plan after 10 years of service, rather than the current five.
- They will be eligible for retiree health insurance coverage after 15 years instead of 10 years.
- They will receive the 7 percent guaranteed annualized rate of return for the fixed investment option in the voluntary Tax-Deferred Annuity programs for BERS and TRS members.
Negotiations between the UFT and the city over pensions resulted in a big win — since approved by the June 24 Delegate Assembly — that restores the traditional post-Labor Day school start for members.
The agreement preserves the union’s hard-won age 55 retirement benefit in the face of enormous political pressure to roll that back. It also leaves intact the pension and health benefits of all members.
The union agreed to support legislation to modify pension measures affecting only new hires. New vesting requirements for pensions and retiree health care will take effect and the 3 percent contribution which was eliminated after 10 years in 2000 when the stock market was flush will be restored from the 10th to the 27th year on the job. New hires will continue to be able to retire with an unreduced pension at age 55 with 27 years of service.
In addition, all options in the voluntary Tax-Deferred Annuity programs for Board of Education Retirement System (BERS) and Teachers’ Retirement System (TRS) members are maintained, but those who opt for the fixed investment option will have a guaranteed rate of 7 percent — down from 8.25 percent.
The agreement came in the face of declining revenues, increased employer contributions to the pension systems to make up investment shortfalls, an agreement between the two largest state unions to increase the retirement age to 62 and a propaganda barrage from local media outlets demanding that public officials rein in what the Daily News called “costly and excessive retirement benefits” for public employees.
“The question we asked ourselves is do we want to control our destiny in this or do we want the situation we had in the 1970s when a new pension tier was imposed on us?” UFT President Randi Weingarten asked the delegates.
The pension modifications will provide the city with much-needed cost saving during this severe economic downturn. Mayor Bloomberg estimated that the changes will save the city about $100 million a year over 20 years.
In the wake of the stock market’s collapse last fall, the state’s pension fund had shrunk to $109.9 billion at the end of March from $153.9 billion a year earlier. The city pension fund has suffered similar percentage losses.
“In every respect, this agreement is a win for everyone,” said Weingarten. “We are all very concerned about the heavy losses our pension system has incurred during this economic crisis and the looming cuts for schools. Not only does this deal help shore up the city budget with new savings, which will hopefully be used for schools, it also maintains the age 55 retirement benefit (and all other retiree and health benefits) that we fought many years to achieve and returns us to the tradition of teachers and students starting school after Labor Day, something that our members, particularly those with families, very much wanted.”
The UFT rejected efforts to raise the retirement age of New York City public school educators — an effort that has grown in intensity since two large state public employee unions earlier in June agreed to support state legislation that will raise the minimum retirement age for future hires from 55 to 62, even for those with 30 years of service. Future state workers will see a pension reduction of 38 percent if they retire at age 55.
The state unions agreed to those pension changes under the threat of large-scale layoffs, furloughs and deferred wage increases.
Instead of laying off 8,700 state employees, Gov. David Paterson agreed to reduce 7,000 positions through targeted buyouts, attrition and the elimination of funded positions that were currently vacant.
While not second-guessing the state employee unions on the agreement’s suitability for their members, the UFT and other city union leaders rejected the state agreement as a model for city employees.
At the April Delegate Assembly, when the delegates held a discussion on contract priorities, getting back the two days before Labor Day repeatedly came up as a key demand.
The UFT and the city negotiated those two additional workdays as part of the 2003-2007 collective-bargaining agreement that boosted wages by 15 percent.
The UFT and the city identified ways to pay for approximately half of the worth of the days and agreed to find another .58 percentage point in the next collective-bargaining agreement.
At the June 24 Delegate Assembly, where the agreement passed overwhelmingly, delegates crystallized the pros and cons of the agreement by contrasting the value of two days recouped to slightly higher pension contributions for new hires.
Speaking for the resolution, Dolores Lozupone, chapter leader of PS 185 in Brooklyn, gave the agreement a big thumbs up.
“Thank you, thank you, and a million times thank you,” she told Weingarten.
Lozupone said her staff couldn’t believe that they would not have to return to school until after Labor Day.
“When I went into school on Tuesday morning, my staff said to me, ‘Is this some kind of joke you’re playing on us?’” she said. “I was thrilled to say, ‘It is no joke; it is real.’”
Speaking against the proposal, Jonathan Halabi, chapter leader of the HS of American Studies at Lehman College in the Bronx, agreed that “it was important to get the two days back, and a lot of people would have given up something to win them back.” But he said that current hires weren’t giving up anything in return. “Our solidarity with the teachers not here yet has to be greater,” he said.
Weingarten acknowledged that having teachers and students start on the same day would be challenging. At the UFT’s urging, the DOE corrected that arrangement the following day in a new side agreement between the union and the city that set the start of school for students for the second day after Labor Day, allowing teachers a day to prepare.
Pensions for new UFT members will become vested after 10 years of service, rather than the current five. New UFT-represented employees will be eligible for retiree health insurance coverage after 15 years instead of 10 years, rewarding those who choose teaching as a career.
Under the agreement, the city and the UFT agreed to meet by September 2009 to assess the impact of school budget cuts and “to identify potential additional funding for schools.”