HARRISBURG (AP) - The chancellor of the state higher education system says it rejected a union proposal to have a third party outline mandatory contract terms because the system's negotiators remain dedicated to reaching a deal at the bargaining table.

"That's the way the process is supposed to play out," state system Chancellor Frank Brogan said during a webcast to students on Tuesday.The faculty union has called the denial disappointing.The Pennsylvania State System of Higher Education and the Association of Pennsylvania State College and University Faculties are divided on a number of key proposals, including faculty workloads, salary and health care.Brogan said the system has proposed raising faculty pay by 12 percent while seeking other contract changes, like installing a health plan already accepted by other unions. In a concession, Brogan said, the system "chose grudgingly" to withdraw a proposal to have students going for their master's degrees teach in labs.Faculty union president Ken Mash has said the raises wouldn't cover the costly health care changes or address other workload issues.Union members have been working under a one-year contract extension that expired on June 30. The union says its members at 14 state universities in Pennsylvania will strike on Oct. 19 if they don't reach a deal.The union represents about 5,500 faculty members and coaches at universities including Bloomsburg, East Stroudsburg, Kutztown and Shippensburg.Last month, union leaders also filed a charge of unfair practice with the Pennsylvania Labor Relations Board against the state system, claiming the system's negotiators haven't made a serious effort to reach common ground, reneged on agreements and used stall tactics.But Brogan said the system's proposal to have a fact finder review each side's documents and suggest a non-binding recommendation after 40 days would be a step toward mediation, not an attempt to draw out the process. The board rejected the fact finder proposal.The two sides say they'll return to the bargaining table, with dates proposed for next week.The system on Monday announced a tentative three-year deal reached with the union that represents about 700 student services workers.