Mayor Rudolph W. Giuliani and the municipal labor unions announced last night that they had reached an agreement on a package of severance offers that the Mayor hopes will cut 7,600 jobs from New York City's payroll without having to resort to layoffs.
The agreement was Mr. Giuliani's first success in his effort to reduce the size of the city's work force of 216,000 as he seeks to close a $2.3 billion gap in the next fiscal year's budget.
Under the program, the severance packages would be offered for three weeks beginning tomorrow to a pool of about 80,000 workers, excluding teachers, police officers, firefighters and other uniformed employees. The offers range from $3,500 or two weeks pay for newly hired workers, to $15,000 for workers with 30 or more years of service, as well as nine months of health care benefits for all who accept the package.
Appearing beside the leaders of the city's largest unions, the Mayor said the agreement recalled the cooperation of the 1970's, when the city and the unions, seeking to avert the city's impending bankruptcy, forged an alliance to lay off thousands of workers.
"The end result is that New York City has a program and an agreement here that really is an innovation," Mr. Giuliani said. The severance package, modeled on similar efforts in private industry, "is new and a much better way of achieving fiscal stability than even in the 1970's," he said.
The severance offer was the first test of the new Mayor's ability to bargain with the municipal unions, most of which supported his predecessor, David N. Dinkins, in last November's election. Wielding the threat of immediate layoffs, the Mayor got largely what he wanted from the unions on the severance package.
He appeared, however, to back away from another demand he made of the unions: that workers begin paying for some of their health benefits, a proposal that would save the city $200 million a year.
Stanley Hill, the executive director of the city's largest union, District Council 37 of the American Federation of State, County and Municipal Employees, said that the agreement "was not easy" but that it was necessary to reach an agreement on severance "to avoid that tough word called layoffs."
"We know that the times are tough," Mr. Hill said as he stood beside the Mayor at District Council 37's headquarters on Barclay Street in lower Manhattan. "We understand that the times are tough."
The agreement still needs the approval of the state's Municipal Assistance Corporation, which controls a $200 million surplus that the Mayor hopes to use to pay for the severance packages. Mr. Giuliani expressed confidence that with a deal in hand, he would win the corporation's support.
In a statement last night, the corporation's chairman, Eugene J. Keilin, said that the board would make a decision after reviewing the details of the packages. "We are pleased that the city and the unions have reached agreement," he said.
In fact, the Mayor hopes to entice 9,500 workers off the city's payroll. Under the severance program, however, the Mayor assumes that the city will have to replace 1,900 of the workers who take the offer, for a net reduction in jobs of 7,600. The Mayor has said he will limit replacements to one in five in order to win the support of the Municipal Assistance Corporation to use its $200 million surplus.
The agreement, described by the Mayor's aides as the first severance package offered by a city, left a number of issues unresolved. Most notable among them was how successful the city would be in persuading workers to leave their jobs and the impact the reductions would have on the city's myriad services.
Raymond D. Horton, the head of the Citizen's Budget Commission, cautioned that the real question now would be whether enough workers would accept the severance offer.
"You'll have to have 7,600 different employees sit down and run this through their economic calculus and decide whether this is in their best interest," he said.
Long Session
The agreement came after a negotiating session that began Tuesday morning and continued overnight, breaking for only a few hours around dawn. And it was reached, aides to the Mayor said, a day before Mr. Giuliani was prepared to order 10,000 layoffs immediately if the severance offer could not be put together.
The unions also agreed for the first time to a major demand that would allow the city to redeploy workers from agency to agency for a period of 15 months. Mr. Giuliani said that would minimize the impact on services since commissioners would have "maximum flexibility" in refilling newly vacant positions by shifting employees already on the payroll from other departments.
Appearing ebullient, the Mayor's chief of staff, Randy Mastro, described the agreement on redeployment as "a historic thing."
The severance program is a major part of the Mayor's preliminary plan to balance a $31.2 billion budget for the fiscal year that begins on July 1. By cutting 7,600 jobs, it would save $250 million over the next 15 months and more each year thereafter.
Under the Mayor's plan, the severance program would eliminate roughly half of the 15,000 jobs Mr. Giuliani has said he wants to cut. The administration has said the rest of the proposed jobs cuts would come from attrition, as well as a proposal to slash 2,500 administrative jobs at the Board of Education, something the Schools Chancellor, Ramon C. Cortines, still has not agreed to do.
Sitting down with the unions for the first time a month ago, the Mayor initially offered to pay $5,000 to $10,000 to each worker, as well as health benefits for up to a year and the value of unused sick leave and vacation. The unions countered with an offer that gave more to workers with more experience, starting at $3,500 for workers with less than 10 years of experience and rising to $25,000 or a year's pay for workers with a least 26 years on the job.
A Compromise
The packages announced yesterday amounted to a compromise, providing a scale of cash payments and health benefits for nine months. All workers would still collect unused sick leave or vacation days and be eligible for unemployment insurance.
The Mayor's Commissioner of Labor, Randy Levine, who lead the Mayor's negotiating team, called the deal "a real, negotiated collective-bargaining settlement."
From the start, however, the unions appeared to have little room to negotiate. They could either accept severance and some cash for workers who had to leave or they could challenge the Mayor's threat to move to layoffs.
Arthur Cheliotes, the head of Local 1180 of the Communication Workers of America, described his sensation during the negotiation as "feeling like I was Dr. Kevorkian."
"The pain is there," said Mr. Cheliotes, whose union represents administrative employees. "How do we deal with it? This is what we had to do under the circumstances."
The unions did appear to win some room to negotiate on the Mayor's demand that employees pay 10 percent of their health premiums for individuals or 20 percent for families.
That concession did not come up at the news conference announcing the agreement until the Mayor was asked specifically if it remained a demand, along with another proposal to save another $200 million by temporarily reducing the city's contributions to workers' pension funds.
Mr. Giuliani said that he would continue to negotiate those proposals, which are also important to his budget. He suggested that the unions had offered alternatives that could produce the same savings.
"And we're more than willing to talk about them," the Mayor said.
