From N.Y. Times by Al Baker and Marc Santora:
The Bloomberg administration and New York City’s teachers’ union said Thursday that they had failed to reach a deal on a new system for evaluating 75,000 public school teachers, putting the city into immediate danger of losing out on up to $450 million in state and federal money and raising the possibility of cuts to staff and programs.

The deadline for state education officials to approve any teacher evaluation plan submitted by the city was midnight Thursday; missing it would cost the city approximately $250 million in education aid from Albany that it budgeted for in June and would make it ineligible for roughly $200 million in state and federal grants.

On Thursday afternoon, Mayor Michael R. Bloomberg and Michael Mulgrew, the president of the United Federation of Teachers, held separate news conferences to say the talks had disintegrated during a middle-of-the-night negotiating session in Manhattan. No further talks were expected before the deadline.

“The saddest part is that our students will pay the cost,” Mr. Bloomberg said. “I can’t tell you how much this pains me to see this happening.”

For the moment, the absence of a deal meant that the city would have to wait longer for a new evaluation system. Both the Bloomberg and Obama administrations have pushed for new evaluation methods as a better way to identify good teachers and to rid schools of bad ones. Across the country, unions have warily accepted new evaluation systems, often fighting to make sure they did not leave too much power in the hands of administrators or rely too heavily on test scores.

In New York, each side blamed the other for the breakdown and accused the other of hurling falsehoods. But what was clear was that the inability to reach an agreement, even with so much money as an incentive, was another sign of how frayed the relationship between the mayor and the city’s unions had become. The announcement came on the second day of a yellow-bus strike — the first in 34 years — that was called by the main bus drivers’ union, forcing more than 100,000 children, many of them with special needs, to find new ways to get to school.

In a statement, Mr. Mulgrew referred to the strike: “Thousands of parents have gotten a lesson this week, as the mayor’s ‘my way or the highway’ approach has left thousands of schoolchildren stranded at curbs across the city by the school bus strike. That same stubborn attitude on the mayor’s part now means that our schools will suffer a loss of millions of dollars in state aid.”

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