(Reuters) - New York City's public schools over two years will lose $724 million in state aid and as many as 2,500 teachers through attrition, because of a labor union conflict over a teacher evaluation system, Mayor Michael Bloomberg said on Monday.
The schools lost $250 million of that total earlier this month after the city and United Federation of Teachers failed to agree on a way to evaluate teacher performance.
City schools would lose that same baseline funding amount in the state's coming fiscal year, which begins April 1, plus another $224 million under the state budget proposed by New York Governor Andrew Cuomo last week, Bloomberg said at a joint legislative hearing.
State legislators passed a law in 2010 that tied state aid to teacher evaluations. About 99 percent of the state's school districts have implemented some kind of evaluation plan, Cuomo has said.
Lawmakers on Monday began to review Cuomo's proposed budget. Bloomberg is scheduled to present his own budget for the city on Tuesday.
Separately, the city's $22 billion public school system, which is controlled by the mayor, lost $200 million in federal education funding when it missed the deadline.
As a result of the missing funds, the city will lose 700 teachers through attrition this year and could lose another 1,800 in fiscal 2014, Bloomberg said during the televised hearing.
The state used to pay for about half of New York City's school budget but now pays 39 percent, even as the system has expanded with more students, Bloomberg said.
City schools could lose $1 billion altogether in baseline state funding without action on the teacher evaluations, said New York City Comptroller John Liu, who testified after Bloomberg.
Liu, a Democrat, is a possible contender for mayor this year as Bloomberg's third term expires.
He blamed Bloomberg for losing the money, saying the impasse was fueled by "quite a dose of ideology" from the mayor, whose testimony "very much clarified exactly where the responsibility lies."
Bloomberg, however, said that the union tried to introduce new provisions to an agreement at the last minute that would have made the evaluation system a "fraud" because it would have expired in two years - the same amount of time required to conduct the evaluations, making the process pointless.
The state's education department "accepted plans they knew were total frauds," Bloomberg told lawmakers. "It's a fraud on the public."
"I made a decision that we would be better off" without the funds if it meant the city could avoid such a flawed system, he said.
UFT President Michael Mulgrew has said the union is not the obstacle, and that it is willing to negotiate a new teacher evaluation system by Cuomo's next deadline on September 1.
The school system, the largest in the United States, serves about 1.1 million students in more than 1,700 schools, according to the city's Department of Education.
(Reporting by Hilary Russ; Editing by Steve Orlofsky and Nick Zieminski)