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People walk the picket line in front of a Mississauga school in May amid a teachers’ strike.Mark Blinch/The Globe and Mail

Ontario's Liberal government paid $1-million directly to the province's high school teachers' union as part of a deal to defuse one of its most explosive labour disputes, a document obtained by The Globe and Mail reveals.

In addition, the government financed raises for teachers by diverting money from a fund for special programs that help struggling students graduate.

These details are included in the confidential 42-page document that spells out the terms of a three-year labour agreement the province and the Ontario Secondary School Teachers' Federation reached in August. The government and the union have kept the document secret, but The Globe and Mail obtained a copy.

The million-dollar payout is highly unusual: The government agreed to compensate the union for the cost of negotiations because problems with the province's new bargaining system caused talks to drag on for so long.

The agreement ended a year of tough negotiations during which the union unleashed strikes at school boards in the Toronto area and Northern Ontario, and the government legislated the teachers back to work. Wrestling with an $8.5-billion deficit, the province insists all labour deals be "net-zero," meaning something must be cut to offset the cost of raises.

The Liberals need to keep a strong relationship with OSSTF, in part because teachers are key members of the party's political base and in part because no labour dispute draws more attention than those involving schools. The timing allowed the party to clear the dispute off its plate ahead of the federal election, in which Premier Kathleen Wynne campaigned hard for Liberal Leader Justin Trudeau.

The deal consists of a memorandum of settlement, a letter of understanding, six letters of agreement and two appendices. And they show the government paid OSSTF millions of dollars and won few concessions.

Most significantly, the government agreed to give $1-million in taxpayer money to OSSTF to cover the cost of the negotiations.

"The Crown shall pay to OSSTF the sum of one million dollars ($1,000,000) to offset the cost of central collective bargaining no later than ninety (90) days after the ratification process," the memorandum of settlement says.

The deal does not make clear why taxpayers are on the hook for OSSTF's expenses. The union collects dues from its 60,000 members to pay for activities such as negotiations. Education Minister Liz Sandals's office refused to comment on the payment.

But union and government officials said the province agreed to pay the money after admitting the collective bargaining process it instituted last year, which was supposed to lead to faster and less acrimonious negotiations, made the talks longer and more complicated.

The new process, in which some contract matters are negotiated centrally between the government and the unions while others are left to individual school boards, resulted in more work and took more time than previous rounds, which made negotiating more expensive for the union, OSSTF president Paul Elliott told The Globe. Because the government legislation was responsible, he said, the government agreed to compensate OSSTF. A government source corroborated Mr. Elliott's account.

Brian Smeenk, a Toronto labour lawyer who was not involved in the negotiations, said such a payment from an employer to its union is unusual. In some cases, he said, an employer might agree to pay employees' wages while they serve on a bargaining committee. But simply writing the union a $1-million cheque is not common.

"I've never seen a subsidization clause that goes beyond paying for lost salaries. This unusual case … is not a compensation for actual costs incurred; it's what one might call a 'sweetener,'" he said.

Mr. Smeenk said it is generally not a good idea for an employer to pay a union's bargaining costs because each side in a negotiation should be responsible for its own interests.

"From the perspective of a prudent employer, you don't want to do that, because each party should pay its own costs, because each party is there to protect the interests of its own side," he said. "As the employer, you don't want to provide an economic incentive to the union to make your life difficult."

The document also reveals where the government found the money for a 1.5-per-cent raise and 1-per-cent lump sum payment to high school teachers. The province has repeatedly insisted the deal with OSSTF is a "net-zero," but refused to divulge how it paid for the pay bumps.

The money came from two sources: "The available funding for secondary programming enhancement and voluntary payout of discounted net present value of future retirement gratuities provides for increases to salaries, wages and direct compensation," the memorandum of settlement says.

Secondary programming enhancement was a pool of money set up in 2008 to hire extra staff for programs to help students at risk of dropping out. The programs offer such things as co-op work experience stints and courses that count towards college credits.

The government was supposed to add money to the fund for five years. But in 2012, the fifth year, as a cost-saving measure, the province decided not to contribute any more money. Mr. Elliott said that payment would have been about $20-million. That amount is now being used for the raise and lump sum payment.

The second source of funds is a rejigging in the contract of how banked sick days are paid out. Teachers will now have the option of cashing in banked sick days next year, instead of waiting for retirement, but will receive a lower rate. This is expected to save money, which will be put towards the raises.

Ms. Sandals's spokeswoman, Alessandra Fusco, insisted there were "no cuts to the classroom" to fund the raises. The government's rationale is that because the secondary programming enhancement money was diverted from the fund before it was spent in the classroom, it does not constitute a cut.

"We can confirm that modest wage increases were offset by savings through the collective agreements, with no cuts to the classroom," she wrote in an e-mail.

In another significant provision, the government is giving OSSTF at least $5-million to help set up a union-controlled fund to take over the administration of teacher benefits. The province's school boards will contribute at least $12-million.

At the moment, individual school boards handle benefit payments. The plan is to consolidate them all into a single fund. The fund's board of directors will consist of five union members and four representatives of school boards and the government.

Ms. Fusco said the OSSTF trust is one of six new programs that will consolidate health, life and dental benefits for teachers and other workers in the education sector. The new trusts will merge more than 1,000 benefit plans with 72 school boards into a handful of larger funds. She said government and school boards will recoup startup costs because they will save money down the road.

"Establishing benefit trusts will reduce the costs of providing and administering benefits due to an increase in benefits purchasing power, establishing larger risk pools and sharing administrative services among the trusts," she wrote in an e-mail.

Among the other provisions of the deal:

  • The government agreed not to change job security, contracting out, professional assignments and supervision, teacher workload, staff meetings and class size. Job security is a particularly important point for teachers in an era of declining enrolment.
  • The province will not be allowed to launch new “initiatives” such as testing programs or teaching techniques. These will be formulated by a group of government and union representatives tasked with creating a new “policy program memorandum.” This section also contains a provision for an extra PD day.
  • The province agreed to settle four union grievances and fully compensate the grievers. There were no details on the grievances.
  • School boards, the union and the government are meeting, with a facilitator, to discuss regulation 274, which obliges principals to hire teachers based on seniority. The rule helps the unions, but critics charge teachers are not hired on merit. The discussions are supposed to conclude before the end of the year.

The province has reached deals with all but one of its teacher unions; it is still negotiating with the Elementary Teachers' Federation of Ontario. The government says it wants ETFO to accept the same deal the OSSTF received. The province is also negotiating with five groups of school support staff workers, including some who are represented by OSSTF.

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