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With little chance of a salary increase this year, Frederick County teachers have agreed to the next best thing — better health benefits and a one-time cash refund.

The Frederick County Teachers Association has ratified its agreement for the coming school year, accepting the latest contract offer from the county Board of Education.

The new contract, which goes into effect immediately, gives Frederick County teachers no cost-of-living or step salary increases, but offers for the first time health and dental insurance for same-sex domestic partners. The contract also gives eligible teachers a one-time refund of up to $575 from a surplus in the school system's self-insurance health fund.

The 2,860 members of the union had until July 22 to vote on the contract, and although they were not thrilled, teachers accepted it with a clear majority, said Gary Brennan, union president.

"This certainly does not replace a step increase or a COLA," Brennan said.

The majority of teachers felt that under the current financial times the proposed contract was the best option, Brennan said, but he would not say how many voted against the offer. Some teachers opposed the contract because they felt they deserve a salary increase, he said.

For Frederick County teachers, fiscal 2011 will be the third straight year without a salary increase, even though they have been consistently asked to do more with less, he said. "We have teachers who are going into their third year who have never received a salary increase," he said.

The negotiated refund for teachers — which totals $3 million — should help alleviate that and put some extra cash in the hands of teachers, Brenan said.

Under the new agreement, teachers who paid for insurance will get a one-time cash refund of at least $200. Those who paid for both health and dental insurance —which is the majority of teachers in Frederick County — will get a refund for $575, Brennan said.

The union and the school board now anticipate to sign their finalized contract at the school board's Aug. 11 meeting, ending a negotiation process that started in March.

As of Tuesday, however, school officials were still negotiating with its two other unions — the Frederick Association of School Support Employees and the Frederick County Association of School Administrators, said schools spokeswoman Marita Loose.

It's a little late for the usual negotiation process, which normally ends by July 1. The negotiations are confidential, and Loose could not say what issues may be holding up the process. Generally, the school system has parity language in their contracts, and employees all three unions would also be affected by the school board's offer for refunds, she said. "But they may also have other issues they are considering," Loose said.

The contract negotiations between the school system and the teachers' union took place under increased public scrutiny and generated criticism, mostly because of that refund.

The money comes from a $14.1 million surplus in the system's $67.7 million health fund, which is funded by the school system's general fund and employee and retiree contributions.

The fund generated the surplus in the past three years, as employees have contributed more money toward the fund and pay higher co-pays when they see a doctor.

School officials had plans for $7.5 million of that surplus, including keeping $5.4 million as a reserve in the fund, returning $500,000 to the commissioners and using $1.6 million to balance the fund for fiscal 2011.

The school board had to decide what to do with the remaining $6.6 million, and eventually decided to offer $3 million of it to employees as a one-time refund on top of their salaries. The board has not yet announced what will happen with the remaining $3.6 million.

Some Frederick County commissioners, however, criticized that decision. Their biggest concern was that the school system may be using public taxpayer money to refund employees, which was partly why commissioners Blaine R. Young (R) and John "Lennie" Thompson Jr. (R) voted against the school system's fiscal 2011 budget.

The problem, Young said, is that school system officials were never able to pinpoint how much of their self-insurance fund came from employees, and suggested that more than 60 percent of the fund may have come from public taxpayer money.

Predicting even tougher budget times ahead, commissioners advised the school board not to use the money as a refund, but to keep it as a reserve for the future or to invest it in retiree health benefits.

That is why Young accepted the news of the final outcome of the contract negotiations with mixed feelings.

Young, who has children in the school system, said that as a father he appreciates the efforts of teachers. But he also noted that teachers should be pleased with their final contract. Educators in Frederick County have done much better than many of their colleagues in surrounding areas, who have dealt with salary reductions, layoffs and furloughs, he said.

"No one is ever satisfied about going consequent years without pay raises," he said.

But he also noted that in the current economic times, no one is expecting pay raises, whether they work in the public or private sector.

Young said he understands that young teachers have small salaries and are struggling to pay their rent and their bills. But his concern is with the employees who have salaries of more than $70,000.

"I do appreciate the teachers, and I know there are teachers in the system who are appreciative," he said. "...My biggest concern is with the bloated administration. At some point, that has to be addressed."

E-mail Margarita Raycheva at mraycheva@gazette.net.