The four public worker unions, state administration and representatives of the four counties held a formal contract negotiation session yesterday.

The parties face a June 30 deadline to reach a settlement before Gov. Linda Lingle imposes furloughs amounting to a 14 percent wage cut on state workers.

Yesterday's four-hour meeting at the United Public Worker's School Street headquarters was the first involving federal mediator Ken Kawamoto, who met with the parties individually.

“;There is no settlement. We exchanged proposals. This is negotiations,”; Roger Takabayashi, Hawaii State Teachers Association president, said.

A union source said the unions hoped to steer discussion away from furloughs and toward pay cuts to make up for the state's budget shortfall, but there was no agreement to take furloughs off the table.

Lingle is calling for furloughs of 36 days a year for two years and has already put in motion procedures to start taking the expected 14 percent reductions out of state paychecks starting next month.

The Lingle administration had no comment on the talks but plans to announce details of her furlough plan today.