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The contract, for the 2001-02 and 2002-03 school years, calls for a three percent total compensation agreement in the first year and four and a half percent increase in the second year, both of which are below state averages for settlements.

The roughly 85 members of Education Minnesota-Paynesville, the local teachers' union, voted on the proposed contract on Monday and ratified it.

The agreement was also on the agenda of the school board on Tuesday night, and superintendent Howard Caldwell was going to recommend that the board approve it.

In the first year, the contract calls for a 2.15 percent increase in the basic salary schedule, which is the chart of salaries based on experience and education. The other 0.85 percent increase in the first year will come from step increases by teachers who gain experience.

With the contract settlement coming late, this should make it relatively easy to compute back pay, which will be applied back to July 1, 2001.

In the second year, the contract calls for a 2.70 percent increase in the salary schedule. Another roughly one percent is for step increases, and the rest - a little less than one percent - is split between extra insurance reimbursement and increases in the extracurricular salary schedule.

The total increase for the two-year contract is 7.5 percent, which is less than the state average. Normally, Paynesville teachers have waited until a state average has been determined by other districts in order to obtain a fair settlement, said Murry Rafferty, chief negotiator for the teachers, and Bill Brinkman, chairman of the teacher's negotiating committee.

"Typically, we haven't been the trendsetters. We've waited to see what others have done," Rafferty said.

This year that was made more difficult, they agreed, by a legislative change that eliminated the Jan. 15 deadline for reaching teaching agreements. In past years, districts faced a penalty if they had not setttled by that deadline, but the penalty was removed by the Legislature last session.

Only 75 districts had settled by Jan. 25, according to the Minnesota School Boards Association (MSBA). "We've always shot for an average settlement," said Brinkman. "In order to do that, you need a good, established average."

"It's hard to know what is average when only a few schools have settled," he added.

As of March 22, a little more than a third of the school districts in the state had reported settlements to the MSBA, but both sides in Paynesville decided it was time to reach an agreement.

So far, the state average is 9.5 percent increases over two years, and for schools about the same size as Paynesville, the settlements have averaged almost 10 percent, according to settlements sent to the MSBA. Settling for less than the state average was not surprising, considering the school's financial situation, said Brinkman. "We took two and a half percent less than the state average, and it's backloaded, so that helps," he explained.

"We're kind of doing our part by settling for less than the state average," added Rafferty.

Still, with the district facing statutory operating debt, every dollar counts and the district did settle for more than it would have liked, said Caldwell. "We understand it's less than what other school districts are receiving, and it's less than the state average," he said. "(But) I can't tell you that it will help our financial position."

In the district's statutory operating debt plan, filed with the state, Caldwell had estimated inflationary spending increases of three percent for the coming years.

The statutory debt plan does include a provision whereby the district would be force to make dollar-for-dollar cuts if total expenditures exceed that three percent estimate, but Caldwell was optimistic that other areas of the budget, doing better than budgeted, would offset the settlement.

Due to the fact that teaching positions have been eliminated in both rounds of budget cuts the past two years - yielding a net reduction of nearly 10 teachers - the total amount of district dollars spent for teaching will be less, despite the increases in the new contract, said Rafferty.

In the second year of the contract, if approved, some additional provisions would take affect. The first is a $350 increase in insurance contributions by the district towards teachers' insurance plans. In 2001-02, the district contributes $3,700 towards a family plan, and in 2002-03 it would be $4,050.

The district offers three plan options for teachers, and in recent years costs have increased tremendously. This year, they only increased by two percent, but the three previous years saw nearly 20 percent increases each year.

Another hefty rise in premiums is expected next year, which for the most comprehensive health insurance plans could eat most of the salary increase. Some family plans could cost $1,600 more next year.

"Basically, if insurance goes up like expected, it'd be a wash," said Brinkman.

The new contract would also include a couple provisions to encourage early retirements. The hope is that these incentives might make it affordable for a teacher nearing retirement to do so, thereby helping the district, which would have a lower salary to pay, and saving the job of a younger teacher.

One of these provisions - eliminating the age requirement for early retirement (which was 55) has a sunset provision at the end of the contract and would have to be renegotiated into a new contract if both sides wanted to keep it.

The new contract also includes an additional personal day in the second year. Teachers can take personal days, days off with pay, for any reason, unlike their other days off (sick days, bereavement leave, and family illness days) that have to have a specific reason. Teachers will now get two personal days a year, and can accumulate up to four days.

Improving the number of personal days has been a high priority for teachers for a number of years, said Rafferty, and was a concession to the staff that had minimal cost, just the expense of additional substitute teachers. "By taking nonmoney items, in lieu of salary increases, we think we're helping the district," he said.

Members of the negotiating committee for the district were Caldwell and board members Mark Dingmann, Maurice Dosdall, and Allen Schmidt.

Members of the teachers' negotiating committee were Brinkman, Rafferty, Jane Leitzman, Karen Mumm, and Tim Woehler.