COEUR d'ALENE - Teachers in Coeur d'Alene will start the school year without a contract.

Negotiations between the school district's board of trustees and the Coeur d'Alene Education Association - the local chapter of the state teachers union - broke down a week ago. There was a glimmer of hope that a settlement might be reached at the 11th hour when both sides agreed to return to the bargaining table for one last meeting.

The session, held Monday at Woodland Middle School, attracted about 100 observers, mainly teachers.

It ended without resolution of the contract, and with an agreement to seek a settlement through mediation.

"We really wanted to settle tonight," said Kelly Ostrom, chief negotiator for the school board and the district's head of human resources. "We're really disappointed, but we have to stay within our budget."

The teachers union's last settlement offer called for salary increases based on years of experience and education attained. This would apply to teachers eligible for movement on the "steps and ladders" grid. The teachers estimate this will cost the district $350,000. The board's final offer includes this, but claims it will cost the district $700,000.

The teachers are calling for no change in the insurance benefits package or cost of premiums, and they are asking the board to absorb a $500,000 increase in health insurance costs.

The board's final offer calls for district employees to share the burden of the insurance cost uptick. They are proposing a change in health insurance benefits that will cost employees more through higher co-payments and co-insurance responsibility, and reduce the amount the district contributes to family premiums.

The teachers were asking for a 1 percent raise. They adjusted their final offer to seek a 0.9 percent increase to the salary base.

"All of this has been really tough because we would really love to do everything you're asking for," Superintendent Matt Handelman said during the session.

There is disagreement between both parties as to how much money is available to fund salaries and benefits.

The teachers union members pointed to several areas of the budget where they believe additional funds can be found. Handelman said there is no extra money available.

The teachers contend they have taken pay cuts in the form of insurance benefits changes since 2008 when the economy went into a tailspin.

Lake City High music teacher and the district's lead negotiator Tim Sandford said there are teachers who are struggling to make ends meet. He said there is a teacher who works delivering pizzas so he can pay his family's bills. Another is eligible for two forms of public assistance, and he has an advanced degree.

"These stories aren't uncommon. They're more common than you know," Sandford said.

He said the teachers union members will not ratify the board's proposal.

"Unfortunately, this is all coming down to about a $350,000 difference ... I don't see this as an issue of money. I see this as an issue of philosophy and priority," Sandford said. "There are going to be a lot of hard feelings over $350,000."

The first day of school is Sept. 2.