By activating its nuclear option and cancelling its teachers' contract, the Philadelphia School Reform Commission took an action Monday that could remake the city's schools and have national implications.
The unilateral step at a morning meeting has already set off a battle.
The Philadelphia Federation of Teachers received no advance word of the action - a unanimous vote taken at an SRC meeting called with minimal notice. The move will likely result in a legal challenge to the takeover law the SRC believes gives it the power to bypass negotiations and impose terms.
Anticipating a court fight, the SRC, joined by the Corbett administration, asked state judges to affirm its right to abrogate the contract.
An angry Jerry Jordan, PFT president, called the move "cowardly" and vowed to fight it.
"I am taking nothing off the table," Jordan said at an afternoon news conference. He said job actions could be possible once he determines what members want to do. "We are not indentured servants," the union leader said.
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.
The terms imposed Monday mean most PFT members will have to pay either 10 or 13 percent of the cost of their medical plan beginning Dec. 15, depending on their salaries. They now pay nothing if they opt for a basic plan. Officials said workers would pay between $21 and $200 per 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 in 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.
Green said district principals, blue-collar workers, and families have stepped up, and it was time for the teachers to do the same.
"We are compelled to pursue this action by the PFT's refusal to negotiate meaningfully for almost two years," he said, adding that "we remain committed to reaching a new agreement through collective bargaining with the PFT - a goal we hope this action expedites."
Mayor Nutter, in Harrisburg for a rally for a permanent school funding formula, said he supported the SRC's move.
"In the 21st century, it becomes increasingly untenable that folks aren't paying something for their health-care coverage and for a variety of other benefits," Nutter said. "At the moment, those are the only other additional dollars that are available to the school district."
Former Gov. Ed Rendell said he was "on the side of the teachers, but the union has to be realistic. Something had to be done. The education of our kids depends on significant savings coming from the contract."
While Green and others called the move necessary to direct money into classrooms that serve 130,000 children, some said it amounted to a war on teachers and their union.
"This is the most egregiously political action I've seen in a school district," American Federation of Teachers president Randi Weingarten said in a statement. "It's a total disregard for the well-being of Philadelphia's children in addition to being a callous denigration of educators and a blatant disrespect of the law and the contract."
State Sen. Vincent Hughes (D., Phila.) called the SRC's action "a war on the union." On the Senate floor, he excoriated the SRC for imposing terms on teachers who work "in hazardous conditions that this [Corbett] administration admits it created."
Gov. Corbett and acting state Education Secretary Carolyn Dumaresq applauded the SRC's action - and said it meant Philadelphia teachers would now join most teachers in the state in contributing to their health care.
The move "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.
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. "This allows us to save millions of dollars that we can return to schools very quickly."
He and Green said the teachers' new health plan was 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 affect retirees. The PFT Health and Welfare Fund, which has about $40 million on hand, has opted to subsidize retired workers' prescription, dental, and vision benefits. The district will not continue that practice, officials said.
While the district's budget is now balanced, it carried an $81 million deficit until very recently. Until a few weeks before fall classes, there were doubts about whether the district had enough money to open schools on time.
Officials said Monday's 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 cancellation of the teachers' contract.
Whether the state takeover law, known as Act 46, gives the SRC the power to cancel union contracts remains to be seen.
It is clear that district officials are unsure themselves.
In 2012, the SRC lobbied lawmakers to amend the takeover law to 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.
The SRC has imposed some work rules on the teachers' union in the past year, but had always bargained contracts since its creation in 2001.
Even so, the latest bargaining bogged down. Since January 2013, the district and the PFT have met more than 100 times to try to achieve a contract. The old one expired last summer.
Sources close to the talks described them as "cordial," with no screaming or fist-pounding. But they have moved slowly, and district officials became convinced that without using the so-called nuclear option, they would never achieve the changes they say are necessary.
Jordan has said publicly that the union has offered millions in concessions, only to have the district decline to take them up on the savings. But union and management differed over what those concessions were worth.
Matthew Stanski, the district's chief financial officer, said the givebacks offered by the PFT would have netted the district just $2 million.
"Lies again," Jordan said. He said the PFT had offered enough to wipe away the projected 2015 deficit. Deborah Willig, a PFT lawyer, said the union offered more than $22 million in health-care givebacks.
On Monday afternoon, the district, joined by Corbett's Education Department, took steps to affirm the SRC's action, filing a motion in Commonwealth Court for declaratory judgment.
The PFT will strike back swiftly in court, Jordan said. The union believes the district cannot impose terms, he said.
Green said the savings in the cost of health-care benefits would help remake the district.
Taking into account those savings, the extension of the sales tax, and the city's 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 unionized district employees said they believed the contract cancellation was the only action to take.
"Everybody is paying into their benefits," said Commissioner Sylvia Simms, a former bus aide. "We need to stop playing games on the backs of our children."
Commissioner Marjorie Neff, a former PFT member and Masterman School 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 now prevents the PFT from striking - teachers risk losing their state certification if they do so. It is the only teachers' union in Pennsylvania without the right to call a strike.
David Gregory, a law professor at St. John's University in New York, who directs the Center for Employment and Labor Law there, called the SRC's action "stark and startling," and said it took a page from Detroit's cancelling police officers' and firefighters' contracts.
Still, Gregory said, "There's no doubt we're in uncharted waters in Philadelphia."
He said the matter "has all the hallmarks to go to the state's highest court, or potentially, if it gets enough legal traction, to get vaulted into the federal courts and ultimately to the U.S. Supreme Court."
The School Reform Commission's actions Monday will change health care for PFT members several ways:
PFT members who get medical coverage from the district will have to help pay for its cost beginning Dec. 15. Now, most members pay nothing.
A member earning less than $25,000 a year will pay 5 percent of the cost of the individual plan premium.
Members earning $25,000-$50,000 per year will contribute 10 percent of the cost for an individual plan.
Members earning more than $55,000 will contribute 13 percent of the cost for individual coverage.
Officials said the changes would result in payroll deductions of $20 to $71 per month, depending on income.
For family coverage, the deduction will range from $77 to $200 per month.
PFT members who enroll a spouse or domestic partner in the district medical plan when that person has another plan available will pay $70 per month.
PFT members who decline coverage from the district will no longer receive "opt out" payments from the district.
SOURCE: School District of Philadelphia