Thousands of New York City teachers' jobs will be spared, but the city will eliminate pay raises for all teachers and principals for the next two years, Mayor Bloomberg announced earlier today.

“Laying off thousands of teachers is simply not the answer. It would devastate the school system and erase much of the great progress we’ve made – and all the hard work we’ve put into turning our schools around. There is simply nothing more important to a child’s education than a first-rate teacher," Bloomberg said in his statement.

Responding to the news, United Federation of Teachers President Michael Mulgrew lauded the decision to avoid teacher layoffs but disputed Bloomberg's authority to block salary increases. New York City teachers have been working without a contract since their latest one expired on October 31, 2009.

In a statement released late morning, Mulgrew said that Bloomberg "does NOT have the power to unilaterally decide on the teachers’ contract, and we have reached NO agreement on his proposal to freeze teacher pay. If the mayor has concrete ideas on the next contract, he and his representatives should bring them to the bargaining table at the Public Employment Relations Board, where our contract is currently in mediation."<!--more-->

The mayor's decision to keep jobs but block pay raises was made based on proposed cuts in State education aid but without the certainty of hard numbers because of stalled budget talks in the State Legislature.

"Our schools simply can’t wait any longer. Principals are already far past the point in the calendar when they must plan for the upcoming school year, and they need to know what kind of resources they can count on," Bloomberg said.

You can read Mayor Bloomberg's full statement here and UFT President Michael Mulgrew's statement here.

More news coverage here, here and here.

UPDATE:  Principals will be getting their 2010-11 budgets today, which will take into account the two-year wage freeze for teachers and principals announced by Mayor Bloomberg.

In a lengthy email to principals, Chancellor Joel I. Klein discussed cost-cutting features embedded in the new school budgets, including a continuation of last year's teacher hiring restrictions.  Principals will not be able to recruit teachers from outside the system to fill vacant positions.

Klein confirmed that there are immediate exceptions to the hiring restriction in the areas of special education, bilingual special education and speech. He will discuss the 2010-11 budgets with principals in detail during an interactive Webcast scheduled for tomorrow.

Read the full text of Chancellor Klein's email to principals at Gothamschools.

UPDATE - June 9, 2010: The Department of Education relaxed its teacher hiring restrictions less than a week after releasing the 2010-11 school budgets.  The revised hiring guidelines posted on Monday, June 7 permit new schools in their first three years of operation "to hire externally for up to 40% of their teaching vacancies."  The exception only applies to teaching positions in middle and high school grades. No schools, including new ones, are permitted to hire teachers from outside the system to fill vacancies in common branch (elementary school) or early childhood grades. The guidelines also permit 6 - 12 schools that have at least two more grades to phase in to hire externally to fill 40% of its teaching vacancies "in their expansion grade(s) only."

The DOE is continuing its exceptions to hiring restrictions for teacher recruitment in select subject areas including, special education, bilingual special education, speech improvement and bilingual subject areas other than those involving  early childhood or common branch Spanish bilingual  instruction. 

All other teaching vacancies must be filled by candidates excessed or transferring from other schools within the system.