NEW YORK - (AP) -- New York City and its largest teachers union struck a deal on a new contract Thursday, Mayor Bill de Blasio announced, ending a nearly five-year labor dispute and potentially setting a template for negotiations with the city's other unions.
Teachers will receive back pay equivalent of nearly 8 percent of their salaries and a series of additional small raises through 2018, according to the nine-year contract, a copy of which was obtained by The Associated Press in advance of the deal announcement.
The contract, which will expire after de Blasio runs for re-election, also will fund merit pay for teachers and provides the city $1 billion in health care savings over the length of the deal, an important point among city negotiators wary of the budgetary strain caused by rising health care costs across the municipal labor force. De Blasio noted that the agreement is being funded within the city's current budget framework and called it a victory for taxpayers.
"This agreement will be a gateway to great progress in our school system," he added at a news conference.
The deal is the first major labor agreement struck by de Blasio, a Democrat who took office in January, and it could affect negotiations with the other nearly 150 city labor unions, all of whom have been working with expired contracts. The United Federation of Teachers, one of the most powerful unions in the city, represents 100,000 teachers and other school employees who have been working on an expired contract since 2009. New York's public school system serves 1.1 million students, by far the largest in the country.
"We were creative, we were smart, we were respectful, and teachers now have a fair deal going forward," UFT President Michael Mulgrew said. The new deal will not become official until it is voted on by the union's members.
The UFT, which long pushed for retroactive raises, will receive 4 percent raises for 2009 and 2010, the same figure provided to other unions during that time by de Blasio's predecessor, Michael Bloomberg. The money will start being paid in 2015 and is spread over the next several years.
Teachers will also receive a one-time $1,000 ratification payment, according to the contract. The teachers will not receive back pay for 2011 and 2012.
Going forward, teachers will receive a series of incremental annual raises; 1 percent from 2013 to 2015, then 1.5 percent in 2016, 2.5 percent in 2017 and 3 percent in 2018. The deal expires in October 2018, nearly a year after de Blasio faces voters again.
Retroactive raises have long been at the center of the contract negotiations, which became a significant issue during the mayoral campaign last year.
Bloomberg, a Republican turned independent, long said the city could not afford retroactive raises for all unions, which could total up to $8 billion. Many of the unions ended negotiations in recent years preferring to wait for a new mayor who may have warmer relations with unions; as a result, all of their contracts had expired by the time Bloomberg left office.
De Blasio is a close ally of unions but has also expressed wariness about the city's ability to afford retroactive raises for all unions. Other municipal labor leaders are anxiously eyeing the UFT negotiations believing it could establish baselines for future negotiations.
City workers do not contribute to their health care costs, which will not change in the new deal. The $1 billion in health care savings achieved by the end of this contract will occur by other means, including centralized drug purchases and auditing health benefits to remove individuals not entitled to services.
In a memo about the UFT deal obtained by The Associated Press, the de Blasio administration suggests that the health care cost-control measures would save a total of $3.4 billion by 2018 if applied to all of the city's unions.
The teachers deal also address several hotly debated education issues. It will provide an additional $5,000 annual bonus for experienced teachers to stay in schools in underserved neighborhoods, and provides a new bonus structure -- which features payments ranging from $7,000 to $20,000 a year -- for highly rated teachers. The teacher evaluation system will also be overhauled, simplifying it from 22 criteria to eight.
The contract also will change the guidelines of the ongoing debate over the 1,000 teachers who are still being paid even though their jobs have been eliminated; if the new deal is approved, dismissal proceedings will begin against poor-performing teachers who are twice removed from classrooms by principals.
It also toughens the standards against teachers behaving inappropriately against students, now making inappropriate texting, particularly of a sexual nature, an offense that could warrant firing. The deal also will increase the number of parent-teacher conferences and, in 200 schools, allow principals to make sweeping changes, including lengthening both the school day and school year.
Associated Press writer Karen Matthews contributed to this report.