As districts around the state dole out pink slips and raises become pre-recession memories, the Walnut Creek School District is using its healthy money reserves to give employees a boost.

The school board recently agreed to contracts that give 2 percent raises to all employees and, in some cases, another half-percent raise each year until 2014. The raises could become permanent. The district also agreed to pay more health care costs.

"We feel like the three years our employees went without a raise, that it was not good for them or the district," said board President Katie Peña. "We want to make sure we retain the best qualified teachers and staff as possible."

Teachers and staff also received a 3 percent raise last year. What the contracts don't include are furloughs or layoffs, as none are planned.

So how is Walnut Creek able to do this while neighboring districts continue to wield the budget ax? Reserves.

While other districts reinstated cut positions and programs when some of the dire threatened budget scenarios didn't materialize, Walnut Creek chose to stick with its cuts. The board has cut $3 million since 2007 -- no drop in the bucket for a 3,300-student school district. The district's budget is nearly $25 million, with around $8 million in savings -- that's a 32 percent reserve fund. The raises will cost $475,000 per year, which will be paid out of reserves, said Kevin Collins, chief financial official for the district.

The district has also had 13 percent growth in enrollment since 2007, another reason it can offer the raises, Collins said.

The Walnut Creek district has about 160 teachers, with an average salary of $66,000, according to Rod Moore, president of the Walnut Creek Teachers Association.

Along with the raises, more will also be required of teachers, as the contract calls for an additional five minutes of class time per day for most grades. That adds up, Moore said, to two whole school days of instructional time per year.

"Think how valuable that is; the district recognized that this would come with a cost, but felt that the time was worth spending a little money," he said.

Classified workers such as janitors and secretaries are also getting raises and promises of reviews and job training.

It's not only reserves and conservative budgets, but cooperation and trust between employees and the district that allow for these types of contract benefits, said Dick Weyand, president of Chapter 202 of the California School Employees Association.

"We want our kids to receive the best education in the healthiest and safest environment," he said. "We are all working toward this common goal, and all parties are willing to compromise and sacrifice in order to achieve it."

And even with these raises, Moore notes, the Walnut Creek district's salaries and benefits have been near the bottom in the area.

"These raises have allowed us to close that gap with regard to salary," he said. "We are still one of the lowest with regard to benefits we receive."

While this all sounds good, if a tax increase initiative from Gov. Jerry Brown on November's ballot doesn't pass, California schools will once again take a major hit. Walnut Creek leaders have estimated the district would lose about $1.28 million if the initiative doesn't pass. But the district has planned for that worst-case scenario and would again use reserves to take the hit, Peña said.

"So this is a huge risk for us, but we are projecting over a three-year time period, and we will be able to cover our expenses," she said.

Contact Elisabeth Nardi at 925-952-2617. Follow her at Twitter.com/enardi10.