UNION, Maine — A school district covering towns in Knox and Lincoln counties is at the center of a debate about basing teacher pay, in part, on the performance of students.

The details of the long-stalled contract talks between Regional School Unit 40 and the Medomak Valley Education Association were included in the fact-finding report released this past week by the Maine Labor Relations Board at the request of the Bangor Daily News. The panel has recommended that the district develop a new compensation system which factors in student performance.

“The dispute represents a unique opportunity for the district,” the panelists stated. “The panel could have declined to recommend any change to the compensation method and not entered into uncharted waters. After much deliberations we decided to take a position that might have an impact. Perhaps this is not the perfect answer. Compromise is never perfect for either party.”

The board and teachers have been unable to reach a contract agreement even though talks between the two sides began in January 2012. The last contract expired Aug. 31, 2012, and the faculty has been working under terms of that contract. The two sides had earlier tried mediation but that failed to break the logjam.

“The proposal is breaking new ground,” the RSU 40 board stated in the report issued by the three-member fact-finding panel, referring to connecting teacher compensation and student performance. The panel members were educator Gerald Clockedile, who represented the district, attorney Charles Priest, who represented the association, and Evan Weston, who was the chairman of the panel.

The board is calling for revamping the pay system in an effort to improve student performance.

“There is serious concern that many students who attend RSU 40 may not be properly prepared for their next academic endeavor or career after graduation from high school. The primary goal of the board’s proposal is to improve student learning, because 70 percent of the students in the school system are not proficient in reading and mathematics,” the report states about the board’s position.

Paul Forest, a teacher at Medomak Valley High School in RSU 40 and president of the local education association, said the teachers are in support of studying such a system for a pilot program but not to sign on for implementing a system for the long term.

The Maine Department of Education does not collect data on whether schools base pay on performance since those decisions are made at the individual district level, said Samantha Warren, the communications director for the department.

“Supporting teachers in their professional development and holding them accountable for student outcomes so that there is an effective educator in every classroom is perhaps the single most important action we can take to ensure student success,” Warren stated Thursday in an email.

Other professions are accountable for their results, she said, such as surgeons and lawyers.

Robert Walker, executive director of the Maine Education Association, said it was not fair to connect teacher pay to student performance.

“We don’t control how hard they work. We don’t control their economic status. The most important part of their education is the values they receive at home,” he said.

Walker said he is not aware of any school district in Maine in which a contract has been approved that bases teacher pay on student performance.

Warren said that several Maine school districts have received a federal grant in which teachers at 18 schools in five Maine districts are participating in a five-year program that ties intensive professional development, meaningful performance evaluations designed largely by teachers, incentives and stipends to reward educators for improved student performance, and performance-based pay systems — also designed largely by teachers.

The Legislature also approved a bill last year that calls for a system of evaluating teachers and principals and helping those with low scores improve. The Department of Education proposed rules earlier this year that test scores make up 25 percent or more of the evaluation, while education associations and Democrats generally favored a lower percentage.

In RSU 40, the board said it is eager to try something different because the traditional methods have not yielded the desired outcomes. The board said it is willing to let the teachers come up with a plan that will work, according to the report.

The central points of the board’s proposal are to pay teachers additional bonuses if they participate in a program in which student performances are measured and if there is a 10 percent increase in the number of students who show progress, bonuses if they volunteer to work toward advanced degrees, additional pay if they participate in community-centered projects related to education, and if they work with specific students on work assessment portfolios.

“The association clearly believes the board’s proposal is not an incentive program but a merit pay plan, a principle it rejects. The teachers believe the proposal will be punitive rather than constructive,” the fact-finding report states.

The association said it was willing to find ways to work with the board to help students improve while not punishing teachers by depriving them of an appropriate wage for their dedication and hard work, according to the fact-finders.

The Medomak Valley Education Association said their goal in the negotiations is to have their members’ pay be in line with that of local school districts. RSU 40 wages are substantially lower than those in the other districts in the region. The association is asking for a retroactive 3 percent raise for 2012-13, 3 percent for the current school year and 3 percent for 2014-15.

The current pay scale for the nearly 200 RSU 40 teachers has a $30,397 base with the top level being $58,739 for a teacher with a master’s degree with additional credits and at least 23 years of experience.

The teachers also object to the voluntary degree bonus program, saying there is no clear link between advanced degrees of teachers and the performance of students. The $500 bonus offered by the board for those who do get the advanced degrees also does not compensate the faculty for the expenses above tuition.

“Furthermore, many teachers work other jobs to earn enough money to support their families, which results in their not having the time to work, attend classes, study and teach,” the report states.

The three-member fact-finding panel in RSU 40 delved into the dispute. The recommendations are not binding on either party.

Panel members recommended that a retroactive pay increase be given to the teachers for 2012-13. The increase would be 2.66 percent for each step and teachers would also be given step increases.

Teachers would receive a 2.9 percent increase in the current school year with that percent including increases resulting from a faculty member moving up a step. During 2013-14, the teachers and administration would plan for the new compensation system.

And starting in September 2014, the new compensation system would begin, the panel is recommending.

The fact-finders are calling for each school principal in RSU 40 to form a committee consisting of themselves, two teachers they select and two teachers appointed by the association to develop a plan to measure student performance and what will be the result of meeting those goals.

The report was presented to both sides last month and became public 30 days after its release.

Interim RSU 40 Superintendent Michael Cormier said the board and teachers are continuing negotiations. Negotiating sessions are planned for Monday and again on Sept. 30.

Correction: Robert Walker’s position with the Maine Educational Association was listed incorrectly in the original version of the article. He is executive director of the association.