By Bill Turque
Washington Post Staff Writer
Wednesday, April 14, 2010; B01
Teachers union leaders angrily accused D.C. Schools Chancellor Michelle A. Rhee of unethical behavior Tuesday by failing to disclose the discovery of a $34 million surplus in the school system budget in February, three months after laying off 266 teachers because of what she described as a budget shortfall.
News of the surplus comes at a critical time for Rhee and the teachers union, who just last week announced a tentative contract agreement that ended more than two years of often rancorous bargaining. The two sides were close to a deal late last summer when union anger over Rhee's plans for layoffs delayed its completion.
American Federation of Teachers President Randi Weingarten and Washington Teachers' Union President George Parker said Rhee's disclosure of the extra money -- at a Tuesday morning discussion with the D.C. Council about the contract -- renews questions about the legitimacy of the October layoffs, which sparked bitter protests and an unsuccessful union lawsuit. Teachers charged that Rhee contrived the budget crisis by hiring more than 900 teachers in the spring and summer of 2009, and then targeting older instructors for layoffs. A D.C. Superior Court judge rejected the union's claims.
Weingarten and Parker demanded Tuesday that Rhee reinstate the laid-off educators or face a renewed court challenge to the legality of the job reductions.
"This is a very serious situation," Weingarten said. "It's serious for the kids who lost their teachers and for the teachers who lost their jobs. The moment she knew there was no budget crisis, she had an ethical obligation to disclose that."
"The chancellor needs to make the teachers whole," Parker said.
But both union leaders said they would urge their members, who will begin to review the proposed contract in informational sessions this week, to regard the layoffs as a separate issue that will be resolved in court.
Rhee said she was under no obligation to disclose the existence of the funds in the midst of labor negotiations, nor would she reinstate the 266 teachers. She said the layoffs were based on fiscal forecasts she received from D.C. Chief Financial Office Natwar M. Gandhi. An additional $20 million in "spending pressures" were identified by Gandhi's deputy assigned to the school system at the time, Noah Wepman.
Rhee said she learned of the surplus in late February, when a senior aide evaluating the potential costs of the collective-bargaining agreement, reported that teacher salaries and benefits in the current fiscal year, expected to average about $81,000, were actually lower -- about $73,000. The lower-than-expected payroll generated a significant savings.
"We got this information very late in the game," Rhee said. "The most important thing is for people to look forward."
Tuesday's meeting started with what appeared to be heartening news for the council, which had raised numerous questions at a Monday budget hearing about how the proposed contract -- which promises teachers a 20 percent pay increase over five years -- would be financed in a tight fiscal environment.
Rhee said that raises in the first two years of the five-year agreement, which are retroactive base salary increases of 3 percent each for 2008 and 2009, would be paid for by $22 million in unspent federal funding. She said the third year of the pact, which calls for a 4 percent raise in the current fiscal year, would be financed by a $34 million surplus and $7 million from private foundations.
Council members, led by Chairman Vincent C. Gray, expressed astonishment at the sudden windfall. Gray, who is challenging Rhee's boss, Mayor Adrian M. Fenty, in the Democratic mayoral primary in September, said that if he were a laid-off teacher, he'd be livid. "I'd be about ready to put my hands around somebody's throat," he said.
He added: "People lost their jobs under a budget deficit that didn't exist. That's what I heard today."
"It's just too convenient," said council member David A. Catania (I-At Large), who likened the school system's budgeting process to a "three-card monte game."
"This just gets curiouser and curiouser," council member Jim Graham (D-Ward 1) said.
Council member Michael A. Brown (I-At Large) asked Rhee whether she would be willing to consider reinstating the laid-off teachers in light of the new budget situation. Rhee said no.
"Because we are in a completely different situation now," she said.
Members also were upset with Gandhi, who made no mention of the surplus at Monday's hearing, which lasted more than five hours.
Gandhi did not respond to a request for comment Tuesday. Through his spokesman, David Umansky, he said: "All of the facts, figures and information concerning the finances of the teachers contract will be released when the CFO's analysis of the contract is made public."