COEUR d'ALENE - Teachers in Coeur d'Alene will have a new contract in place when students return to the classrooms on Sept. 3.

It must still be ratified by both sides, but an agreement was reached Wednesday between collective bargaining teams representing the Coeur d'Alene Education Association and the Coeur d'Alene School District's Board of Trustees.

"I think we're being responsible to the citizens and fair to our employees," said board chair Tom Hearn, after negotiations ended. "I hope we can do better for them next year, but I feel this is a fair settlement."

Key salary and health care benefit changes were hammered out and tentatively agreed to during negotiating sessions held earlier this summer.

Negotiations had begun earlier in the year, but were suspended following a May election that changed the leadership and philosophical direction of the board. Contract talks did not resume again until after July 1, when three new trustees were sworn in.

To fill a projected $1.5 million budget shortfall, the teachers conceded to bumping their co-insurance cost up from 10 percent to 20 percent. The teachers also agreed to a hike in the health insurance deductible from $200 to $400 for an individual, and from $400 to $800 for a family.

Both sides agreed to a decrease in the district's share in the cost of family health coverage. The district previously paid 71 percent of the health insurance premium and will now pay 68 percent.

If additional money is left over after the 2012-13 budget is audited this fall, $84,000 will go toward increasing the district's portion of family health coverage premium back up to 69 percent.

Heading into the final round of negotiations on Wednesday, the fate of those potential carryover budget dollars was the last major issue to be settled.

The two sides agreed that provided state funding based on attendance does not drop below a certain amount, and provided the leftover funds exceed $4.85 million: $222,493 will be directed toward the district's contingent reserve fund; $284,493 will be distributed among benefited employees to help offset the increased cost of the health coverage; $146,000 will be spent on buses; and any remaining money will be distributed equally among employees.

A salary increase of one-half of 1 percent was also agreed to.

Teachers union leaders petitioned for the extra funds to be used in ways that would help reward the school district's staff for making concessions during difficult economic times, and for not receiving raises for the last five years.

"I'm ecstatic that we're finished, and that we're able to start building teachers back up on the salary side," said Superintendent Matt Handelman. "I'm happy we've reached an agreement before school starts. Now we can all focus on the kids who are coming back."

The CEA, the local branch of the state teachers union, backed away from a proposal they pitched earlier this week calling for the district to hire a part-time certified teacher to cover classes for incoming union president Derek Kohles, a teacher at Lake City High School.

Board members said earlier this week that the trustees would oppose such a move.

For the first time this year, employees covered by another insurance plan will be allowed to waive out of the district's health insurance plan, if they choose to.

The negotiating teams agreed that employees who waive out of the district's health, dental or vision plans for an entire year will receive compensation from the cost savings realized by the employee opt-outs. For those employees who waive coverage, the district will deposit $400 into the employee's flexible savings account for the next year. Employees not returning to the district will receive a one-time payment of $319.20.

"In the spirit of collaboration, we've come a long way since last May," said outgoing CEA President Kristi Milan. "It's going to make our employees really happy."