The city's largest teachers union is headed to arbitration with the city's Department of Education after the agency informed educators that it cannot make the final installment to decade-old backpay.

"We're in for another fight," said Michael Mulgrew, president of the United Federation of Teachers, who posted video message to YouTube on Thursday. "We're not going to go to court and get dragged out for two years. We don't have to file the grievance process and go through each of those steps. We have the right to go directly through arbitration. I have already informed the arbitrator that that is what we are going to do. And we had already scheduled our arbitration."

Mulgrew posted the message shortly after receiving a letter from First Deputy Mayor Dean Fuleihan explaining that the city's poor financial outlook — a $ 9 billion hole caused by the pandemic — led officials to postpone the final payments that were part of a $900 million retroactive pay program. The timing of the payments also comes as the city aims to stave off layoffs to city employees, which includes teachers.

"It is the City’s desire to avoid the necessity for layoffs, and to make a retroactive payment at this time would therefore be fiscally irresponsible," wrote Fuleihan. "The City regrets having to take this necessary action, particularly in light of the assistance and cooperation of the union and its members in opening schools over the past several weeks. On behalf of the City’s students and their families, we are truly appreciative of all the UFT members’ dedication and sacrifice during these extremely challenging times."

The city effectively breaks a 2014 Memorandum of Agreement that established a retroactive payment system to active and retired teachers dating back to 2009 and 2010, when teachers did not have a contract under the Bloomberg administration. Teachers received between 12.5% and 25% of the amount owed to them between 2009 and 2015. The retroactive payments, which the city could not make in one huge lump sum, were doled out yearly beginning in October 2015. UFT members received payments every October between 2015 and 2019, except for 2016, when payments were paused. The last payment was expected on October 15th this year. Part of the memo assured the UFT it can go into arbitration if "there was any issue with these payments."

The relationship between the city and the UFT has been strained in recent months following an agreement to reopen schools for hybrid learning, which saw tens of thousands of teachers returning to the classroom during the pandemic. Mayor Bill de Blasio initially sought to reopen schools for September 10th, but delayed reopening after the UFT threatened a strike.

Bill Neihardt, a spokesperson for City Hall, offered this statement on the postponement of retroactive pay: “This action is necessary to avoid painful layoffs, but make no mistake, New York City recognizes our teachers go above and beyond for our students and schools every day.”

Update 12 p.m.: On the Brian Lehrer Show Friday morning, Mayor Bill de Blasio warned that layoffs will likely be on the table if the arbitrator sides with the UFT.

"I do fully understand the frustration and the pain that it causes, the problem is if I don't find some way to get relief for the people of this city and for this city budget, the next step is layoffs," said de Blasio. "Look, we announced in June the potential of as many 22,000 layoffs. That would devastate our city agencies, that would devastate a lot families, that would set back our city's recovery. So, this is a case of a very unfortunate choice I have to make. But literally, we have run out of options."