The University of Hawai'i said its best and final contract offer to union employees includes a 5 percent salary reduction, a payroll lag of five days at the end of this fiscal year in June and a reduction in the state's contribution to health insurance from 60 percent of premium costs to less than 50 percent.

The UH Professional Assembly will ask its members in October whether to authorize the union to accept the offer.

The offer does not include any layoffs this fiscal year, according to the union, but leaves open the possibility of layoffs in fiscal year 2011. The university also would place all faculty on paid administrative leave on the day after Thanksgiving, the week of Christmas, the week of New Year's Day and spring break.

J.N. Musto, the union's executive director, said the union does not endorse the two-year contract offer but wants to give its members the opportunity to share their opinion. The union, which represents nearly 4,000 faculty members, will hold an authorization vote between Oct. 5 and 7. The vote will guide the union on how to proceed, not ratify the contract.

"Neither the UHPA board nor its collective bargaining committee endorses the offer," Musto said in a statement yesterday. "However, we are presenting the employer's proposal to the UHPA membership because we have reached the point where the employer is no longer willing to make any further compromises and we have a responsibility to allow our membership the opportunity to express their collective opinion."

John Morton, the UH vice president for community colleges and the university's chief negotiator, said the university is disappointed by the union's response.

"We are disappointed that UHPA leaders are recommending that its members reject the university's best and final offer," Morton said in a statement.

"We are experiencing a record increase in enrollment. At the same time, we face at least a $154 million shortfall in our budgets over the next two years. We believe that our offer is reasonable and look forward to a resolution of our bargaining efforts that best serves our students and the mission of our university."

TALKS PROGRESS

Russell Pang, a spokesman for the governor, said the university has taken the lead in negotiations with the faculty union but the governor's negotiating team has been kept in the loop.

On the employers side, the decision on a new contract requires a vote in which the governor has three votes, the UH Board of Regents has two votes, and the UH president has one vote.

The announcement of the UH contract offer and authorization vote is the second sign of movement in labor negotiations this week. On Monday, the Hawai'i State Teachers Association announced that it has reached a tentative agreement on a new contract with the state Department of Education and the state Board of Education and was awaiting Lingle to sign off on the deal. The governor has said she is close to making a decision.

The Lingle administration is in binding arbitration with the Hawai'i Government Employees Association and the United Public Workers' public safety unit.

ULTIMATUM ISSUED

Musto said the university issued the offer with an ultimatum that it would be unilaterally imposed if not accepted by the union. The union said that if the university does move to impose the offer without a tentative agreement, the union would likely take legal action or strike.

The existing six-year contract between the university and the union, which has been extended during contract negotiations, includes a no strike or lockout provision.

According to the union's description of the contract offer, the 5 percent salary reduction applies to faculty who are paid with state money. The pay cut would be prorated for faculty who are paid with only a portion of state funds.

Faculty pay would be restored to June 2009 levels at the close of the contract in June 2011.

The payroll lag provision of the contract offer could also dredge up a previous legal battle. The faculty union successfully challenged a similar payroll lag in court after Gov. Ben Cayetano imposed a delay in paychecks for state workers in 1998 to save money during a budget crisis.