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Signaling the endgame in a fractious and nationally watched negotiation, officials of the District of Columbia schools and the local teachers鈥� union agreed to a that includes a voluntary individual performance-pay program to be financed largely by private foundations.

The arrangement is believed to be the first of its kind in the country, with four foundations committing nearly $65 million in total for the performance-based compensation. In all, the contract would cost an additional $140 million.

Under the proposal, which will likely go to the membership for ratification this month, teachers would earn more than 20 percent in retroactive pay and in new base raises through 2012.

Gone from the tentative pact is Chancellor Michelle A. Rhee鈥檚 earlier proposal to create a two-tiered 鈥渞ed鈥� and 鈥済reen鈥� pay system, which would have required some teachers to relinquish tenure for a year for the opportunity to win performance-based bonuses. The proposal drew nationwide attention, but was never put to a full union vote by George Parker, the president of the WTU.

Still, the tentative agreement contains vestiges of the plan, including the optional pay program, which could push the most effective teachers鈥� salaries well beyond the $100,000 mark. Teachers electing to join that program would not be required to relinquish their due process rights.

鈥淭his is a great contract, not only for kids but for teachers as well,鈥� Ms. Rhee said at a press conference to unveil the pact.

Randi Weingarten, the president of the WTU鈥檚 parent union, the American Federation of Teachers, called the contract 鈥渁 triumph for collective bargaining as a vehicle for improving teaching and learning.鈥�

鈥淲e may have had different views about how to get there, but both sides wanted change,鈥� she said. 鈥淭he status quo was not working for anyone.鈥�

Rocky Road

Over the past two years, stories in the national news media raised the contract negotiations to almost mythical proportions, variously depicting them as ground zero for school reform or as a showdown of sorts between Ms. Rhee and Ms. Weingarten, who began to provide formal bargaining assistance to the WTU in December 2008.

A number of political subtexts complicated the process. Ms. Rhee, for instance, had sparred with Vincent Gray, the chairman of the District of Columbia Council, over the school system鈥檚 procedures for closing schools, as well as the layoff last year of more than 260 teachers just months after the district had hired hundreds of new ones. Mr. Gray is generally viewed as an ally of the WTU and plans to challenge Mayor Adrian Fenty鈥攖o whom Ms. Rhee directly reports鈥攊n the mayoral race this year.

The relationship between the unions and Ms. Rhee soured as the chancellor moved ahead with an agenda to improve teacher effectiveness outside the contract by implementing little-known provisions of the District of Columbia code. She enforced a provision allowing principals to dismiss teachers who fail to bring up their performance after being placed on a 90-day improvement plan.

In the current school year, the school district rolled out an evaluation system, called IMPACT, based partly on student test-score growth. The AFT and the WTU criticized it for that reason and because the 鈥渕aster teachers鈥� who conduct two of the five total observations of each teacher are hired by the district rather than selected jointly with the union.

The tentative contract gives a nod to several such disagreements. For instance, the pact contains a specific set of rules for determining which teachers would be laid off during budget reductions, and an avenue for educators to provide input into the cuts鈥攁n apparent response to the union鈥檚 contention that such decisions were being made arbitrarily.

For teachers, the contract would stipulate new professional-development, induction, and school discipline initiatives; require school improvement plans to be jointly set by union and management; create a panel for improving the IMPACT evaluation system; and clarify that probationary teachers could not be dismissed for 鈥渁rbitrary or capricious鈥� reasons.

Ms. Rhee, for her part, stands to gain some additional flexibility over teacher assignment. In what would further dismantle the city鈥檚 already-weakened seniority system, the contract would require placements to carry the 鈥渕utual consent鈥� of both principal and teacher.

Teachers with effective performance ratings who were 鈥渆xcessed鈥濃�攔emoved from their schools because of program closures but still on the school system鈥檚 payroll鈥攚ould gain additional benefits, such as the option for a $25,000 cash buyout if they weren鈥檛 immediately able to secure new placements. Those proposals would apply only to teachers eschewing the new performance-pay program.

Outside Support

Both Ms. Rhee and Mr. Parker attributed much of their ability to work through the sticking points, particularly in the pay program, to the dean of the Howard University Law School, Kurt Schmoke, who was brought on as a mediator during a rocky patch in negotiations.

鈥淚 give him full credit鈥� for the breakthrough, Ms. Rhee said in an interview. 鈥淏y the time we brought him in, we thought, 鈥楾his thing is never going to happen.鈥� 鈥�

Among the contract鈥檚 most novel features, a new individual, voluntary performance-based-pay program would be supported by a total of $64.5 million in grants from the Laura and John Arnold Foundation, the Eli and Edythe Broad Foundation, the Robertson Foundation, and the Walton Family Foundation.

Observers had wondered whether Ms. Rhee, who had reportedly secured foundation support for her 2008 pay proposal, would be able to maintain that support without a harder line on tenure.

But Dan Katzir, the managing director for the Broad Foundation, said the latest version is 鈥渟till a pioneer contract in some ways,鈥� and can serve as a model for other districts.

鈥淭he core elements of [the early proposals] are still intact. Great teachers can now be rewarded for their excellence,鈥� he continued.

The maximum bonus amount and precise rules for awarding bonuses are still being discussed, but would include multiple measures of performance, including consideration of test scores. Ms. Rhee said that some teachers could earn potentially even more than $20,000 annually in bonus pay.

That figure was the upper limit in her 2008 proposal.

Peppered with questions about the viability of a proposal based heavily on external funding sources, Ms. Rhee said she would release a 鈥渟ustainability analysis鈥� showing that projected cost savings would allow the district to continue the pay program raises after the foundation funding runs out.

It is not yet clear whether, for qualifying teachers, the pay program would complement the district鈥檚 credentials-based salary schedule or replace it. In the past, pay programs have been vulnerable to cutbacks because of a lack of close integration with salary schedules.

鈥淏onuses come and go; they鈥檙e temporary,鈥� said Daniel A. Domenech, the executive director of the American Association of School Administrators, an Arlington, Va.-based advocacy group. 鈥淲hat happens if the [private] funds aren鈥檛 there anymore? Do you revert back to your old salary or does D.C. make up the difference? I鈥檓 surethe teachers are going to be asking themselves these questions.鈥�

The city鈥檚 chief financial officer must also assure the pact鈥檚 financial viability before it can go out for ratification. Once it reaches that stage, teachers will have at least 15 days to review the tentative contract and vote on it.

It is not yet clear that the proposal will be ratified by the WTU membership. A week after the contract was unveiled, Ms. Rhee revealed that the district had a $34 million surplus, incensing teachers who saw more than 260 colleagues get laid off last year for budgetary reasons. Ms. Rhee blamed faulty data for the discrepancy.

Mr. Parker, meanwhile, faces a challenger in upcoming elections from the union鈥檚 vice president, Nathan Saunders, who has urged teachers not to sign off on the pact.

And as both Ms. Rhee and the union leaders acknowledged, the real test will come during implementation if it is ratified.

鈥淲e probably won鈥檛 be having coffee over the backyard fence,鈥� Ms. Weingarten said, 鈥渂ut we are committed ... to sustaining a system that works for all our students.鈥�

Staff Writer Dakarai Aarons contributed to this story.