Teacher Pensions Blog

New York City has come up with a screwy new way to compensate its teachers. Although it's been paying its teachers on time and giving them raises for the last five years, Mayor Bill de Blasio decided to also give the city's teachers retroactive salary increases for working in 2009, 2010, and 2011 (but not 2012 or 2013). This form of retraoctive pay is unusual in its own right, and Mayor de Blasio has made some unique choices in how to distribute it. Those choices have significant implications for different types of teachers:

- Former Teachers: This group fares the worst. For anyone who taught in 2009, 2010, or 2011 but who is neither currently employed as a teacher in New York City nor retired, they get nothing.  According to the United Federation of Teachers (UFT), the union representing city teachers, this group is somewhere between 4,000 and 8,200 former teachers. 

Recent Retirees: This group fares the best. The 10,808 New York City teachers who retired in 2010, 2011, or 2012 will receive an immediate lump sum payment of 100 percent of their back pay*. 

- Upcoming Retirees: Anyone who retires before June 30, 2014 will also receive a lump sum payment for 100 percent of their back pay. A wave of another 4,000 teachers will likely take this option. Anyone who retires after June 30, 2014 will receive their full back pay delivered in five separate payments from 2015 through 2020. 

- Mid-Career Teachers: Anyone who was teaching in 2009, 2010, and/or 2011, is still teaching, and remains in continuous employment (meaning they don't leave or take a year off for, say, childbirth), will receive a $1,000 payment immediately; 12.5 percent retroactive payments in 2015 and 2017; and 25 percent payments in 2018, 2019, and 2020. To receive their full retroactive payments (presumably for work they already did), teachers must remain in continuous employment until 2020. Using the pension plan's assumptions for retention, the average 15-year veteran in 2009 had about an 88 percent chance of making it until 2020. 

Early-Career Teachers: Using the pension plan's assumptions for retention, the average first-year teacher in 2009 had less than a 50-50 chance of making it to 2020. Many of them are already gone, but another 25 percent of the class of 2009 will leave between now and when they'll be eligible for full retroactive pay in 2020. 

- Recently Hired and Future Teachers: Teachers hired in 2012 or later (obviously) get no retroactive pay. They will receive the benefits of a higher salary schedule, but they'll also be working for a distict paying off $2.5 billion in past promises to teachers. No one knows what New York City's budget will look like in 2020, but that's $2.5 billion that can't be spent on future raises, additional teachers, or other instructional costs.   

*It's still unclear whether the retroactive pay will count toward the pension benefit calculation. If so, retirees would get an immediate and significant boost in their monthly benefit. We'll continue to monitor the story for further updates, but in the meantime read the UFT's description of the pay and benefits plan or their timeline chart explaining when everything will happen.