Negotiations to finalize a contract for Medford School District's classified employees made headway Thursday, with the employees' union agreeing to some parts of the district's contract proposal but not with its health insurance offer.

Negotiations to finalize a contract for Medford School District's classified employees made headway Thursday, with the employees' union agreeing to some parts of the district's contract proposal but not with its health insurance offer.

Representatives from the Oregon School Employees Association, the classified employees' union, and the school district have been negotiating a contract since April. Superintendent Phil Long said he hopes to finalize a contract by the first day of school on Sept. 4.

The district's proposal includes a 7 percent salary increase for classified employees during the 2012-13 school year but asks them to take on 16 percent of their health insurance premiums. Classified employees would also continue paying 6 percent to the Public Employees Retirement System.

The salary increase would cost the district more than $950,000, Long said. About 470 classified employees work for the district, ranging from custodians to teaching assistants.

Classified workers typically receive the lowest pay among district employees.

The district proposed paying $450 per month toward health insurance premiums of single classified employees, while employees with children would get $850 a month, employees with a spouse $990 and families $1,450.

The union countered, asking the district to cover 97 percent of monthly health insurance costs for all classified employees.

"We believe it's possible for the district to do this," said Cindy Draught, a representative for the OSEA.

Under the district's new proposal, Draught said, classified workers would pay 16 percent of health insurance costs, about the same as administrators, whose current salaries range from about $80,000 to $136,000.

"The contribution needs to be proportional," she said. "Our people are still trying to recover from last year's cuts."

About 28 percent of classified employees work full-time for 10 months, earning about $28,400 a year, not including benefits. About 18 percent of classified workers are full-time employees who work year-round, earning about $34,500 a year, not including benefits.

Classified employees who work more than four hours a day are eligible for health benefits from the district. Draught said about half of classified employees would qualify.

Karen Herwig, the district's human resources director, said the district doesn't know how much the union's health insurance proposal would cost. She said the district will come up with a counter proposal by next week.

Should the district agree to the union's health insurance proposal, the district may have to rethink the size of the salary increase proposed for classified workers, Long said.

"We're hopeful we can resolve this next week," he said. "We want to be focused on the kids and have no anxiety within employees."

The district will present another contract proposal to the union Aug. 30.

Reach University of Oregon reporting intern Josephine Woolington at 541-776-4368 or jwoolington@mailtribune.com.