The union representing about 4,300 members including cooks, custodians and nurses said the agreement was reached at about 2:30 a.m. Thursday.
The agreement includes cost-of-living raises of 1.5 percent on Dec. 1 and 2 percent a year later, as well as full step increases in each year that could come sooner if the Legislature appropriates enough money, the two sides said.
Local 503 of the Service Employees International Union had set a strike deadline and then moved it back to Monday. The university system said it wouldn't cancel classes and was prepared to have non-union staff members and temporary workers step in.
Statements from the two sides Thursday morning reflected differences within the system that consists of three large universities in Eugene, Portland and Corvallis, with a branch, and four smaller regional schools.
The university administration had argued that a systemwide contract had to take into account the finances of smaller schools, which derive smaller shares of their budgets from out-of-state students who pay higher tuition that enriches the bigger schools.
In a statement, Melody Rose, the interim chancellor, said the contract "must be a sustainable contract for all of our campuses."
A union statement called the agreement a victory and said, "We also believe that this is the best agreement that we could reach given financial realities of some OUS campuses."
The union said the agreement also meant an end to furloughs designed to trim budgets.
The deal is subject to a mail ratification vote by the union members.
The union had threatened a strike two years ago before agreeing to a contract. The last walkout was in 1995, for less than a week.
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