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 to nearly 8 percent of their salaries and a series of additional small raises through 2018 under the nine-year contract.
The contract will offer bonus pay for well-reviewed teachers and aim to save the city $1 billion in health care costs over the length of it, an important point among city negotiators wary of the budgetary strain caused by rising health care costs across the municipal labor force.
De Blasio insisted 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 said at a news conference.
The deal, which revamps the teacher evaluation system and could lead to longer school days at some schools, is the first major labor agreement struck by de Blasio, a Democrat who took office in January, and could affect negotiations with the other nearly 150 city labor unions, all of which 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," said UFT President Michael Mulgrew.
The new deal will not become official until it is voted on by the union's members and the Municipal Labor Committee, an umbrella group of unions.
The UFT, which long pushed for retroactive raises, will receive 4 percent raises for 2009 and 2010, the figure provided to other unions during that time by de Blasio's predecessor, Michael Bloomberg. The money will be paid over the next several years.
Teachers also will receive one-time $1,000 ratification payments. There is at least one year in which teachers will not receive back pay.
Going forward, teachers will receive a series of incremental annual raises, totaling 10 percent by the end of the deal. They will receive 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, had 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 might have warmer relations with them, and all of their contracts had expired by the time Bloomberg left office.
De Blasio is a close ally of unions and all but fawned over Mulgrew at the press conference, painting a clear image that times have changes since Bloomberg's term. But he has 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 they could establish baselines for future negotiations.
"Anytime you're getting retroactive payments, it's pretty important," MLC chairman Harry Nespoli said.
But other unions, including the rank-and-file police union, said contracts with years that don't contain back pay are unacceptable.
City workers do not contribute to their health care costs, which will not change in the new deal. The administration and the UFT have set a goal of reducing heath care costs by $1 billion, but few specifics have been offered to achieve that.
The de Blasio administration suggested that the health care cost-control measures would save a total of $3.4 billion by 2018 if applied to all the city's unions. Carol Kellerman, head of the non-partisan Citizens Budget Commission, said she was concerned about the health care savings being realized but the contract "appears to be relatively reasonable."
The teachers' deal also addresses 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 provide a new bonus structure, featuring payments ranging from $7,000 to $20,000 a year, for highly rated teachers. The teacher evaluation system will be simplified from 22 criteria to eight, which should cut down on time-consuming paperwork and lead to more accurate ratings, Schools Chancellor Carmen Farina said.
The system, which incorporates student test scores, principal observations and other data, will help in determining the bonuses.
The contract also will change the guidelines of the ongoing debate over the 1,000 teachers still being paid even though their jobs have been eliminated. It the deal is approved, dismissal proceedings will begin against poor-performing teachers who are twice removed from classrooms by principals.
The deal 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. It also will increase the number of parent-teacher conferences and allow principals in 200 schools to make sweeping changes, including lengthening school days and school years.
Associated Press writer Karen Matthews contributed to this report.