In a decision sure to resound across the city’s rocky labor landscape, the state Public Employees Relations Board, after nearly nine months of arbitration, awarded the police officers union yesterday a 10.25% wage increase, retroactive over the two-year period from August 2002 through July 2004.

The award dealt a blow to the Bloomberg administration, breaking the precedent set by the April 2004 contract with District Council 37, which represents 121,000 municipal workers, that called for a one-time $1,000 payment and raises of 3% and 2% in the second and third years of the contract.

The mayor has used that deal as a benchmark in negotiations with the PBA and other municipal unions.

City Hall has emphasized the award’s cost-savings and productivity gains, which will start this year and include a significant reduction in the salary schedule for new officers, the elimination of yearly personal leave days for all employees, and a more flexible scheduling policy that will save the city money in overtime pay.

The city and the PBA still must hammer out a new contract going forward, or re-enter arbitration for the period beginning in August 2004.

The chairman of the employee relations board, Eric Schmertz, wrote in his 35-page opinion that arbitration decisions often have a “global effect” on other municipal union deliberations, and yesterday the award was read closely by leaders of the teachers and fire unions, two large and politically influential groups that have been without a contract and in stalled negotiations with the Bloomberg administration for more than two years.

The head of the United Federation of Teachers, Randi Weingarten, called the decision “very good news” and said the PBA award would serve as a “better benchmark” for salary increases than the DC-37 contract.

Asked if the teachers union would settle for a similar deal with a 10% raise over two years, Ms. Weingarten indicated at a press conference at UFT headquarters that the union is still seeking 6% increases in three consecutive years, amounting to a raise of 19%.

Ms. Weingarten said she was encouraged by the arbitrators’ use of the salaries of police officers in surrounding areas to determine the award. She has argued that suburban teachers’ substantially higher salaries have drawn teachers out of the city and are one reason a big raise is warranted.

Ms. Weingarten insisted, however, that givebacks that lowered the starting salary schedule would work against the union’s drive to recruit and hire teachers and control what they characterize as a high and growing attrition rate.

“We will not consider a reduction in starting salaries,” she said.

A spokesman for the mayor, Jordan Barowitz, said in a telephone interview the award’s productivity givebacks will set a precedent for other contract negotiations.

“We believe by working together, we can achieve similar wage increases for teachers and firefighters for productivity,” the spokesman said.

“There are many ways to provide productivity that does not involve lowering starting salaries,” Mr. Barowitz said.

Mr. Barowitz said that the PBA raises will cost the city $27 million per percentage point – equivalent to more than $275 million.

A political consultant, Scott Levenson, suggested that the police award could tighten the screws on the teachers union’s leaders.

“For the UFT this decision presents bit of a problem,” he told The New York Sun. “It sets raises that will not necessarily be acceptable to its membership. At the same time, it will be difficult politically for the UFT to argue that they deserve more than police, or fire for that matter. If Randi Weingarten delivers the same contract, I don’t know whether teachers, especially the young ones, will consider it the same type of victory.”

The award could have more direct significance for the city’s negotiations with the Uniformed Firefighters Association, which in the past has enjoyed some degree of parity with police contracts. A spokesman, Thomas Butler, said the union’s executive board will decide the best course of action based on the new information available.

A former president of the union, James Boyle, said in a telephone interview that the recently re-elected president, Stephen Cassidy, would pick up the pace of negotiations.

“I am sure that Steve will be in there right away trying to negotiate a deal. The numbers are already laid out for him – 5 and 5,” Mr. Boyle said. “They will get 5 and 5. But how does the value of what the police gave up translate to fire? That is the question.”

The PBA has 22,000 members, the firefighters union has 9,000, and the teachers union has 140,000.