MEDFORD — Statewide cutbacks ordered by Gov. Ted Kulongoski Wednesday will delay labor negotiations between the Medford School District and its teachers union because officials won't know whether they can fund pay raises until the governor's office releases its 2009-11 budget in December.

MEDFORD — Statewide cutbacks ordered by Gov. Ted Kulongoski Wednesday will delay labor negotiations between the Medford School District and its teachers union because officials won't know whether they can fund pay raises until the governor's office releases its 2009-11 budget in December.

"Because of the economic forecast, the district has decided to wait until the budget comes out from the governor's office and based on that we will come up with a new contract offer," said Todd Bloomquist, Medford schools human resources director. "The school board was not comfortable putting offers out that we don't know we can afford because the state has asked us to start cutting."

When the state projected losses of $1 billion from the deepening recession, Kulongoski ordered all state agencies to trim 5 percent from state spending through June. The cuts affect schools whose operations are funded by monthly payments from the state school fund.

The Medford district and its teachers union have not been able to reach an employment contract agreement since negotiations began in April. Teachers have been working without a contract since July 1.

The district of 12,000 students, more than 600 teachers and 500 support staff is the eighth largest in the state.

The district on Thursday rejected an offer by the union Nov. 10 for a retroactive 4 percent pay raise for the 2008-09 school year and a 2.5 percent increase for the two subsequent years of a three-year contract.

"Everyone is fully aware of the financial status, not only in the state but nationally," said union spokeswoman Cheryl Lashley. "As disappointed as we are, we understand the district wanting to get more information from the state as to the funding situation."

At the same time, she noted that district administrators had received their 2.5 percent raises in the summer.

"We should get ours," she said.

District officials said they can afford to give the teachers a 2.5 percent raise retroactively for the 2008-09 school year. However, they want to hold off on determining salaries for the next two years because of the uncertain state of the economy.

The district and the union will meet again Dec. 17 to resume negotiations.

During past economic downturns, the district has cut school days as well as staff and teachers.

"The bottom line is Oregon needs to come up with a different way to fund our services," Lashley said. "The income is great when everybody is working, but the minute we have a loss of jobs, schools and public services are hurt."

Reach reporter Paris Achen at 541-776-4459 or pachen@mailtribune.com.