The Forest Lake School District and its teachers have signed a new contract that boosts pay and rewards educators who have advanced degrees in their field, union and district officials said.

The pact was ratified overwhelmingly on Nov. 5 by the Forest Lake Education Association, the union that represents the district's 500 educators, and then approved two days later by the school board.

The accord raises teachers' base salaries 3.5 percent this year, retroactive to July 1, and 3.87 percent in 2014-15. It also calls for yearly step and lane increases, union officials said.

Included in the contract is a program that will allow teachers who have received their doctorates to earn annual bonuses, an incentive that officials on both sides say will make the school district more competitive in attracting and retaining top teachers.

"It really was a very much a group effort to see what we can do to incentivize some of those education efforts for the teachers," said Allison Whittlef, a social studies teacher at Forest Lake Area Learning Center.

Whittlef, who is the teachers union's interim president, said the agreement succeeds in "honoring the teachers who're putting in the efforts to increase their education." Union members ratified the contract, with about 96 percent voting in favor, she said.

The payday comes as many school districts are regaining their footing after experiencing budget shortfalls and low enrollment. State lawmakers last spring approved a $485 million increase in school aid to help districts elevate teacher salaries and renovate crumbling schools.

Nearly two-thirds of the districts tracked by the teachers union's parent, Education Minnesota, have settled contracts so far this year. The average salary increase for educators across the state was 1.75 percent in the first year and 2.24 percent in the second year, said Chris Williams, a spokesman for the parent union. And these figures exclude step and lane increases, he said in an e-mail.

"Part of it is the state funding that changed. Part of it is the district taking a look at its own finances to see how they can work it out," Whittles said.

District officials are pleased with the settlement.

"It's not as though we're feeling robust, but after several years of pay freezes we have some funding available from the Legislature," said Larry Martini, the district's business manager. "Our general fund balance has increased slightly over that time. It's now at a level just over 10 percent. We consider that a pretty healthy fund balance and quite an achievement during hard times."

The agreement also revives a merit-pay program, called Quality Compensation or Q Comp, which could add $2,000 to teachers' salaries, the union said.

The district had a Q Com plan five years ago, but "basically, the implementation of the plan was rushed and they made changes and the teachers weren't happy and they ended up voting it out," said union president Tony Harris, a business teacher at Forest Lake Area High School who is on a medical leave.

"It was important to the school board to get that Q Comp thing back, because our community really wanted accountability. That's how it's being sold. I see Q Comp as staff development more than anything else. And you know that was one of the first cuts when money got tight."

Average annual teacher salaries have grown to about $45,000, Harris said, with new teachers earning about $34,000 their first year.

"That puts us more in line with schools in our conference. And that was a very important issue to both sides: to be more in line with other communities in our area," Harris said.

Libor Jany • 651-925-5033 Twitter:@StribJany