The University of Hawai'i administration said it has reached an impasse in contract talks with the faculty union and is threatening to implement a 6.667 percent salary reduction effective Jan. 1.

In a letter to the university community yesterday, UH President M.R.C. Greenwood said she was "deeply disappointed" over a deadlock in contract talks with the University of Hawai'i Professional Assembly. She said the negotiations have stretched over 15 months and the two sides remain far apart.

The university's biennium budget was slashed by $154 million, and the administration is looking for ways to cut costs. To meet the shortfall, the university has reduced its non-union faculty size, consolidated programs and look-ed for ways to save on energy.

The university also proposed a 5 percent pay cut over the first two years of a new four-year contract with the union. After two years, the faculty's salary would return to current levels for the remaining two years of the deal, the university proposed.

The pay cuts would save an estimated $12 million. The university also offered a "reopener" clause that would allow for salary increases after two years should the state's economy rebound.

But the 3,000-member union rejected the offer. UHPA agreed to the temporary 5 percent cut in the first two years, but proposed pay be restored in the third year and that members get a 7.5 percent pay hike in each of the final two years of the contract, according to the university.

Greenwood said the university does not have the money to meet the demands of UHPA.

"We cannot cover our deficit sufficiently without our faculty also accepting temporary pay reductions through this extremely difficult biennium," Greenwood wrote. "It is deeply disappointing that we remain at an impasse in our negotiations for a new contract."

UHPA Executive Director J.N. Musto said last night that the union had not seen Greenwood's letter, and he declined comment.

But last month, Musto told The Advertiser that it would be "overly simplistic" to look at salary cuts as part of the answer to the university's budget woes. He said salaries for professors and researchers cost the university $306 million, but the UH faculty generates more than $430 million in research and training grants.

Musto said then that pay cuts would jeopardize UH's ability to recruit new and young faculty, who would bring more grants to the university. He added that cutting faculty pay would exacerbate the state's economic problems.

Greenwood said the 5 percent pay reduction should have been implemented in July in order to produce the 12 percent salary savings. But since no contract agreement has been reached, the salary cuts would now have to be 6.667 percent and be effective on Jan. 1, she said.

"Due to the delay in implementing an agreement, the temporary 5 percent salary reduction over two years would be taken as a 6.667 percent salary reduction over 18 months beginning on Jan. 1, 2010," she wrote.