The New York City Department of Education and the United Federation of Teachers agreed Friday on an evaluation and compensation system at 33 failing city schools that would for the first time link educator effectiveness to student performance.

The agreement was made under pressure of $65 million of withheld federal grants through months of disagreements between the two parties. This comes at a time when more schools across the country are assessing teachers in part based on student test scores.

"If we have an opportunity to look at this on a small scale, we might come to a better understanding of some of the issues inside of that legislation," UFT President Michael Mulgrew told The New York Times.

The deal will take effect next year and will score the teachers annually as ineffective, developing, effective or highly effective. The teachers are only currently assessed as "satisfactory" or "unsatisfactory." More than 95 percent of teachers in those failing schools are rated "satisfactory," The Wall Street Journal reports.

The city has yet to determine a new teacher evaluation system for the rest of New York's 1,600 schools, but "we're nowhere near having those conversations," Mulgrew told The Journal.

The New York Post reports that under the deal:

• City gets $65 million in federal grants to fix 33 low-performing schools
• Pays for higher teacher salaries, nonprofit consultants
• Union agrees to a more rigorous teacher-evaluation system
• Principals can be replaced with new leadership

Still, The Times reports that two controversial issues have yet to be resolved: how much, exactly, to weight student exam scores as a proportion of overall teacher effectiveness and whether the union will accept or reject the city's new standardized tests.