In a stunning move that could reshape the face of city schools, the Philadelphia School Reform Commission voted Monday to unilaterally cancel its teachers’ contract. The vote was unanimous.
The Philadelphia Federation of Teachers was given no advance word of the action — which happened at an early-morning SRC meeting called with minimal notice — and which figures to result in a legal challenge to the takeover law the SRC believes gives it the power to bypass negotiations and impose terms.
Jerry Jordan, PFT president, called the move "cowardly" and vowed to fight it strongly.
"I am taking nothing off the table," a clearly angry Jordan said at an afternoon news conference. Job actions could be possible, once he determines what members want to do. "We are not indentured servants."
The district says it will not cut the wages of 15,000 teachers, counselors, nurses, secretaries and other PFT members. But it plans to dismantle the long-standing Philadelphia Federation of Teachers Health and Welfare Fund, which is controlled by the union, and take over administering benefits.
Going forward, most PFT members will have to pay either 10 percent or 13 percent of the cost of their medical plan, depending on their salaries. They now pay nothing. Officials said that workers would pay between $21 and $70 a month, beginning Dec. 15.
The changes will save the cash-strapped district $54 million this school year, officials said, and as much as $70 million in subsequent years.
That money, SRC Chairman Bill Green said, will be invested directly into classrooms, with principals empowered to use the cash as they see fit — to hire a full-time counselor and nurse, perhaps, or to pay for more supplies or after-school programs.
Both Gov. Corbett and acting state Education Secretary Carolyn Dumaresq said the action means Philadelphia teachers will now join most teachers in the state in contributing to their health care.
“Today’s action by the SRC will effectively close the funding gap and provide the district with the ability to hire new teachers, counselors and nurses, and secure educational resources that will benefit the students of Philadelphia," Corbett said in a statement.
Since being named by Corbett to lead the SRC, Green has signaled that he would be willing to impose a contract on the teachers’ union if a negotiated settlement could not be reached. The two sides have been talking for 21 months and are not close to a deal.
“Every single stakeholder has stepped up to help the district close its structural deficit — the principals, our blue-collar workers. Families and children have too, through the loss of resources, increased class sizes, and lack of materials. It is time for the Philadelphia Federation of Teachers to share in the sacrifice,” Green said in an interview before the vote.
Superintendent William R. Hite Jr. said it was a difficult decision to support the SRC’s action, especially given all that teachers and others have done for children in the past several years of bare-bones budgets.
“But we still don’t have sufficient resources in order to educate our children,” Hite said before the vote. “This allows us to save millions of dollars that we can return to schools very quickly.”
Both Hite and Green said the teachers’ new benefit plan is still a so-called Cadillac program, comparable with what the district’s principals, blue-collar workers and nonunion workers have.
The benefits change would also have a significant impact on retirees. The existing PFT Health and Welfare Fund, which has about $40 million built up in it, has opted to subsidize retired workers’ prescription, dental and vision benefits. The district will not continue that practice, officials said.
The district will continue paying into the fund until Dec. 15, then let it run out, officials said. It will halt payments to the PFT legal services fund immediately.
While the district’s budget is now balanced, it carried an $81 million deficit until very recently. It was not clear until a few weeks before the scheduled start of classes whether there was enough money to open schools on time.
Officials said the action was necessary now because the district could still face an $8 million deficit this year and a projected $70 million next year, even with the cancellation of the teachers' contract.
Whether the state takeover law, known as Act 46, actually gives the SRC the power to cancel union contracts remains to be seen.
The SRC has imposed some work rules on the teachers’ union the past year, but has always bargained contracts since its creation in 2001.
“Unbelievable!” Ted Kirsch, president of the statewide AFT-PA and a former longtime president of the PFT, said Monday morning when he learned of the SRC’s action.
“They have mismanaged this system and now they’re following along with Corbett’s plan - it’s the teachers’ fault.”
“This is exactly what I thought was going to happen when Green was appointed to the SRC,” Kirsch said.
The district will immediately go to court to affirm the SRC’s action, filing a motion for declaratory judgment with the Pennsylvania Department of Education as co-plaintiff.
The PFT is expected to strike back swiftly through the courts and will likely try to get an injunction to halt the SRC’s actions. The PFT does not believe the district has the power to impose terms.
In fact, it’s clear that district officials aren’t sure themselves.
In 2012, the SRC lobbied lawmakers to attempt to get an amendment to the takeover law that would give it the absolute right to impose terms on its unions. The amendment died when the Philadelphia delegation caught wind of the SRC’s maneuvers.
Since January 2013, the distinct and the SRC have had over 100 bargaining sessions to achieve a contract. The old PFT contract expired last summer.
Sources close to the talks described them as “cordial,” with no screaming or fist pounding. But they have moved slowly, and eventually district officials became convinced that without using the nuclear option, they would never achieve the changes they say are necessary.
Jordan has publicly said the union has offered millions in concessions, but the district declined to take them up on the savings.
When Green or even Gov. Corbett, who has taken the union to task on multiple occasions, has suggested in the past that the PFT has not stepped up, Jordan has been clear: The teachers have sacrificed enough and he will not allow the district’s budget to be balanced on their backs.
Matthew Stanski, the district’s chief financial officer, said that the givebacks offered by the PFT would have netted the district just $2 million. The PFT has indicated that its totals amounted to much more.
Jordan strongly disputed the $2 million figure.
"Lies again," he said. He said the PFT has offered enough to wipe away the projected 2015 deficit.
Green said the benefit savings will help remake the district.
Between the benefits savings, the extension of the sales tax and the newly enacted $2 per pack cigarette tax, the district will have roughly $230 million in annual, predictable funds. For the first time in years, the SRC can plan for investments in education, not just figure out how to prevent disasters.
“The rest of this year, once we get over this, is making people believe we can transform the district,” Green said.
Two SRC members who are former members of disrict unions said they believed the PFT contract cancellation was the only action to take.
"Everybody is paying into their benefits," said Commissioner Sylvia Simms, a former district bus aide. "We need to stop playing games on the backs of our children."
Marjorie Neff, a former PFT member and Masterman principal. said she found the decision personally painful.
"But schools cannot go through another year the way they went through last year financially," Neff said. "They're at the breaking point."
State law prevents the PFT from striking. It is the only union in Pennsylvania without that option. (Teachers technically could strike, but the law gives the state education department the right to pull their teaching licenses if they do so.)
This is a developing story. Please check back for more details.
At a glance
The School Reform Commission voted Monday morning to cancel the Philadelphia Federation of Teachers contract, a move that is likely to result in legal challenges. The district believes it has the power under the state takeover law to do so, but is also going to affirm its action. The state Department of Education will be a co-plaintiff in the legal proceedings in Commonwealth Court.
The SRC will not cut teachers’ wages. Salaries will remain the same. But it is planning a major benefits overhaul for the 15,000 teachers, counselors, nurses, secretaries and other workers who belong to the PFT.
The district is phasing out the PFT’s Health and Welfare Fund, which now has a balance of about $40 million. It will continue contributing to the fund through December 15, then cut off contributions. By the end of the year, all district employees will be covered under a district-managed health plan.
The district will discontinue the PFT’s practice of subsidizing for retirees’ vision, dental and prescription benefits.
The district says the move will save $54 million this school year and up to $70 million in subsequent years, money that will go directly into schools. Principals will be permitted to use the money as they see fit.
-All employees represented by the PFT who opt for Philadelphia School District medical coverage will begin contributing to the cost of their health care benefits. Those who earn less than $25,000 a year will contribute 5 percent of their medical plan premiums; those who are paid between $25,000 and $50,000 per year will contribute 10 percent of the premiums; and those who earn over $55,000 will contribute 13 percent of the premiums. Officials said that would add up to a payroll deducation of between $20 and $71 per month.
-All district employees represented by the PFT will be offered a modified medical plan with an option to pay extra for their current plan.
-PFT members who enroll a spouse or domestic partner in a district medical plan when that person has a plan available to them will pay $70 per paycheck.
-PFT members will no longer receive “opt out” payments from the district if they decline coverage.