Premier Dalton McGuinty warned Ontario teachers and school boards Thursday that he'll recall the legislature this month to impose new contracts if they can't bargain local agreements to freeze wages for two years.

"We have the right, even as a minority government, to recall the legislature before the scheduled sittings," McGuinty told reporters after touring St. John's Catholic school in Kitchener.

"We are running out of runway. School's about to begin."

The government wants to ensure the labour peace that Ontario schools enjoyed for nine years under the Liberals continues this fall, but some teachers have already scheduled strike votes for next month after failing to negotiate new contracts.

The province was unable to reach contracts with most of the big teachers' unions during five months of talks, and just this week said boards had until the end of the month to negotiate local deals.

"If we cannot secure those agreements...then we will take the necessary measures as a responsible provincial government to secure the agreements that we need to have in place," said McGuinty.

The premier refused to say if the threatened legislation would impose a contract on teachers, take over control of school boards or attempt to mandate a wage freeze.

The province did reach an agreement with the Ontario English Catholic Teachers Association, covering 43,000 teachers at 29 boards, that allows 35-40 per cent of teachers to get pay hikes by moving up the salary grid that rewards experience and qualification upgrades.

That deal also mandates three unpaid days off in the second year -- which the government says amounts to a 1.5-per-cent pay cut for two-thirds of teachers -- and stops teachers from banking up to 20 sick days a year and cashing them out on retirement.

The OECTA agreement provides a "road map" for local boards to reach contracts this month, but it won't be easy, admitted McGuinty.

"I know that what we're calling upon teachers and boards to do at this stage is to rise to a considerable challenge," he said. "But I feel if there is a will then there is a way that we can find a way forward."

The boards complained the threat of legislation was not going to help resolve complex issues, and pointed out the province was able to reach only one major contract after five months of negotiations.

"The government is now asking school boards to reach 400 collective agreements inside of four weeks," the Ontario Public School Boards' Association said in a release.

The other big teachers' unions have made it clear the OECTA deal is unacceptable, said boards' vice-president Lori Lukinuk.

"It is unrealistic to expect boards to find solutions within the OECTA 'road map' that will alter the position of teacher and support staff unions in the next few weeks," she said.

"We are concerned that, in the absence of deals mutually agreed between boards and employee, labour peace and stability in our school boards will be profoundly compromised, and lead to serious negative impacts on our classrooms and students."

A key concern for the province is the old contracts will automatically roll over Sept. 1 if they aren't replaced, giving teachers raises that McGuinty said the cash-strapped government can't afford while dealing with a $15-billion deficit.

"Rather than incur that additional cost, monies for which we do not have, what we've done is set out an example through the OECTA agreement, which provides for effectively a freeze on pay," he said.

"In fact if we were to take the OECTA agreement and apply it at large so it affected all of our teachers and support groups it would save us $2 billion over two years."

The Progressive Conservatives said McGuinty should have legislated a wage freeze months ago for teachers and more than a million other public sector employees, and complained the deal with Catholic teachers still allows raises for many.

"Don't be fooled: this deal with OECTA will give 40 per cent of teachers a raise," said Kitchener PC Michael Harris.

"It's not a wage freeze whatsoever."

The NDP said McGuinty knows the courts take a dim view of legislated wage contracts and would likely overturn any provincial bill, costing taxpayers even more in the long run.

"The premier knows this, but he seems more interested in playing politics than getting real results," said New Democrat Jagmeet Singh.

"We don't want to deal with another multi-million dollar mistake like the cancelled gas plant in Mississauga."

Ontario taxpayers are on the hook for at least $190 million for the Liberals' decision to cancel a generating plant under construction in Mississauga just days before last fall's election.