Public school teachers would continue to take a 5 percent pay cut under a proposed contract but would move to a new salary schedule and evaluation system in July 2013 and would be eligible for annual pay raises based on their performance.

The Hawaii State Teachers Association, which reached a tentative agreement with the state on Friday, released a synopsis of the six-year contract to its 12,700 members on Wednesday.

Teachers, like other public workers, would face 5 percent in labor savings through June 2013 to help balance the state’s budget. They would move to a new salary schedule in July 2013 that recognizes their years of service with the state Department of Education. The department would also convert to a new teacher evaluation system, and teachers would be eligible for annual pay raises based on performance.

Performance-based evaluations for teachers that include student learning growth are one of the state’s promises in a $75 million federal Race to the Top grant. Hawaii has been warned that it could lose the grant money because it has not made sufficient progress, in part because of the labor dispute with the teachers union.

"The HSTA board of directors and I believe this is a good contract," Wil Okabe, the president of the teachers union, said in a letter to members. "The components and concepts are innovative and positive for our membership. Most importantly, through this tentative agreement, the state of Hawaii recognizes and honors teachers for their commitment to the profession."

Gov. Neil Abercrombie imposed the state’s "last, best and final" contract offer on teachers in July, which included 5 percent in labor savings, after the union’s board declined to present it to members for a vote. The teachers union fought the two-year contract before the Hawaii Labor Relations Board.

Okabe said in his letter Wednesday that the opportunity arose late last year to resume informal talks with the state, which led to the tentative agreement announced Friday.

The new contract would run through June 2017. The contract would include a reopener on possible wage increases. Teachers would have to cover half of the cost of their health insurance premiums just as other public workers agreed to in contracts signed last year.

Upon ratification, according to the union, teachers would get four extra days off through June 2013.

Next school year, according to the union, new teachers would serve six semesters of probation and would be eligible for a $2,500 bonus after earning tenure. In the 2014-2015 school year, the state would pay teacher license renewal fees for the Hawaii Teacher Standards Board.

The teachers union said it would hold an informational meeting on Oahu, which would be streamed live on the web for teachers on the neighbor islands, so teachers could discuss the proposed contract terms before a ratification vote Jan. 19.

The Abercrombie administration has yet to disclose the financial effects of the teachers’ contract on the state budget and six-year financial plan.

The administration has projected significant deficits in the fiscal years when teachers apparently will be eligible for pay raises under the new contract terms.

Kalbert Young, the state’s budget director, has said that tax and revenue adjustments would likely have to be made during this session of the state Legislature to contain the projected deficits.

The teachers’ contract may also have repercussions for other public employee unions.

The Hawaii Government Employees Association, the state’s largest public-sector union, has a "favored nation" clause in its two-year contract that allows the union to match gains achieved by other unions. The HGEA, which signed a new deal last April when the state was still trying to close a $1.2 billion deficit, is in discussions with the Abercrombie administration about whether the two-year United Public Workers’ contract reached in November has better terms.

The teachers contract — in both duration and in the pay raises at the back end — would be significantly different than what HGEA and UPW negotiated.

"We’re absolutely paying close attention," said Randy Perreira, the executive director of HGEA.