A fact-finder's report released yesterday says the financially troubled Pittsburgh Public Schools still can afford raises for teachers.

		Fact-finder's recommendations Length of agreement -- Two years, retroactive to July 1, 2005. Salary -- Members of the bargaining unit would receive raises of 1.35 percent July 1 and Jan. 1. Some would receive more money because of movement on salary scale. • $1,000 payments this school year to teachers at top of scale. Other teachers would receive salary adjustments only if they moved a step on the scale. Health care -- No change in employees' percentage-share for health-care costs; no benefits for domestic partners. Academic initiatives -- No recommendations for staffing procedures or pay scale for teachers at proposed accelerated learning academies; no recommendations on incentives to lure teachers to low-performing schools. Said more detail needed from district. Retirement incentives -- No recommendation on the union's proposal for a retirement plan, intended to prevent some furloughs associated with the school district reorganization. The fact-finder said he wasn't able to predict whether the proposal would benefit both parties. Other issues -- Fact-finder rejected union's proposal for smaller class sizes and the district's proposal to add three professional development days to the teachers' school year without extra pay.

But school district officials disagree, saying the proposed raises would accelerate the bleeding in a district already projecting a $45 million deficit for 2007.

The school board rejected the report Tuesday, and the union approved it Wednesday. If one party still rejects it after a 10-day reconsideration period, negotiations may resume, or a lockout or strike become possible.

The 26-page report shows deep division between the district and the Pittsburgh Federation of Teachers on issues ranging from salary to working conditions to retiree health care.

The differences come at a critical time. Superintendent Mark Roosevelt is trying to turn around financial and academic problems -- and stave off a possible state takeover of the district -- and both parties have acknowledged it's in their best interests to work together.

"We don't have the option of being adversaries with each other," the report quotes Mr. Roosevelt as saying.

The district proposed an 18-month contract in which employees this school year would receive a salary adjustment only by moving up a step on the salary scale. Next school year, once the district goes through a round of school closings and has a better grasp of its financial situation, the union would have the opportunity to bargain for raises in 2006-07.

The union proposed a four-year deal with annual raises of 4 percent for teachers at the top of the scale and 3 percent increases for other teachers at other steps. In addition, teachers would receive money for moving on the scale.

Fact-finder Matthew M. Franckiewicz recommended a two-year contract, retroactive to July 1, the day after the last agreement expired.

He recommended $1,000 payments this school year for teachers at the top of the scale. Other teachers would receive more money only by moving up a step on the scale.

Mr. Franckiewicz recommended salary increases of 1.35 percent July 1 and Jan. 1 for all bargaining unit members. That's on top of what teachers would get for moving on the scale.

Mr. Roosevelt said the combination of salary increases, step movements and $1,000 payments would total $14.4 million over two years. That's about an 8 percent increase in bargaining unit pay, he said, and much more than the district can afford.

If adopted by both sides, the fact-finder's report would become the basis of a contract for about 2,700 teachers and a few hundred social workers, nurses and other professional employees in the bargaining unit.

The district yesterday issued a statement calling city teachers the fourth-highest paid in Allegheny County, behind counterparts in the Gateway, North Allegheny and Upper St. Clair districts. It said the average salary of $63,148 is more than twice the city's median household income.

Mr. Roosevelt is pressing the state for $20 million in aid, and he said he feared it would be difficult to get if most went for teachers' pay.

The district's statement says the fact-finder omitted mention of the $45 million deficit projected for next year and did not tally the costs of salary increases, $1,000 payments and step movements, obscuring the potential impact on the district.

The union contends the district has more money available than officials have said, and Mr. Franckiewicz drew a similar conclusion. He said, however, that he did not believe the district was purposely exaggerating its financial situation to gain the advantage in negotiations.

In a statement yesterday, union President John Tarka said the report didn't give members all they wanted but "would provide for stability while the school district goes through an era of transition and addresses student achievement and financial challenges."

Mr. Franckiewicz recommended that employees' percentage-share for health care costs remain unchanged, but he rejected the union's proposal that benefits be extended to domestic partners.

He rejected the union's proposal to decrease class size. The proposal was at odds with Mr. Roosevelt's plan to close 20 schools, which would increase class sizes in some remaining buildings.

Mr. Franckiewicz also rejected the district's proposal to add three professional development days to the teachers' work year without giving them extra pay. Mr. Roosevelt has said increased faculty development is an important component of his plan to raise student achievement.

Mr. Franckiewicz said he wasn't able to make recommendations on two key issues -- staffing and pay for teachers at the planned accelerated learning academies and incentive pay to lure teachers to low-performing schools -- because the district didn't provide enough detail about the proposals.

The academies and pay-for-position incentives are components of Mr. Roosevelt's plan to improve academic performance.