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At the same time city schools are poised to suffer mid-year budget cuts, the Department of Education is awarding $12 million in pay raises over the next two years to non-union department employees, Chancellor Joel Klein announced this afternoon.

Central office employees have gone two years without raises and are getting less than the city set aside for them. Under the original plan, they would have received two four percent pay raises over two years, at a cost of $30 million total. DOE officials said today the $18 million savings would be used to soften budget cuts’ blow to schools.

In a memo this afternoon, Klein told employees they deserve raises, but following significant budget cuts to schools and the layoffs of hundreds of other central employees and school-based staff, he could not justify granting the full four percent raise.

“[A]t a time when the Department and our schools will have no choice but to make further large reductions, I cannot in good conscience fully fund raises, especially for people who are already earning substantial salaries,” Klein wrote. “We are in this together, and our schools in particular must be spared to the extent realistically possible.”

The $18 million saved by cutting the raises will cover only a fraction of the amount the DOE needs to cut from its budget. For the 2010 fiscal year, the department needs to reduce its budget by just over $113 million, and for 2011, the target cut is nearly $317 million.

Employees who earn over $70,000 are having their raises capped at roughly $2,800, while those earning less will receive a two percent raise to their salaries. The increases are being awarded to employees who do not have raises otherwise written into their contracts, and affect employees from among the lowest pay grades to the highest.

Doug Turetsky, chief of staff of the New York City Independent Budget Office, said that other managers working in city government received four percent raises earlier this year. “DOE managers didn’t, and now they’re making good on part of that,” he said.

When the four percent raises were originally announced by the mayor in July, the DOE was not included because it is not legally recognized as a city agency. The raises were later approved for the department, months after raises for other city managers went into effect.

DOE managers last received slightly more than a four percent raise in 2007; that followed a two percent raise the year before. The current raises include $4 million in retroactive payments and $4 million in salary increases for the next two years.

The raises come at a time when the city is negotiating a new contract with the city teachers union. At issue in those negotiations are pay raises for teachers, though UFT president Michael Mulgrew said that raises for non-unionized DOE managers are a separate issue.

“The Chancellor has the right to make his own judgments about what his managers deserve,” Mulgrew said in a statement.

David Bloomfield, professor of education at Brooklyn College, said that while the capped raises sound reasonable, it was hypocritical of the chancellor to give managers a raise paid irrespective of their performance, while demanding merit pay plans for teachers.

“Isn’t this another example of, ‘do as we say, not as we do?’” he said.