Board Delays Teacher Pact Approval : Education: Union threatens strike on Valentine’s Day. But head of trustees assures that although panel wants more time to study budget shortfall, the contract is ‘a done deal.’

Faced with worsening budget prospects, Los Angeles school board members Monday balked at ratifying a long-delayed contract with the teachers union, prompting the union’s president to threaten a strike when classes resume on Valentine’s Day.

“I will unequivocally recommend a strike” if the board fails to approve the agreed-upon contract, said Helen Bernstein, president of the 33,000-member United Teachers-Los Angeles.

But board President Warren Furutani said he expects that five of the seven board members will vote to ratify the contract later this month. “As far as us making changes in the contract, that is not going to happen,” said Furutani after the board meeting. “It’s absolutely . . . a done deal.”

Los Angeles Unified School District Supt. Bill Anton agreed, saying, “Our commitment to what we have agreed to is still solid. To all intents and purposes, it’s (the contract) a closed thing.”

The board agreed to delay contract approval at the recommendation of Robert Booker, district financial chief. Booker said he based his request on the recent discovery of a projected $150-million shortfall in this year’s budget.

Among other provisions, the teachers’ contract would require the district to spend about $12 million a year to repay teachers for a 3% pay cut they took this year to help the district balance its budget.

The board action came after auditors delivered a brief report on possible causes of the $150-million shortfall.

Booker said the district can cover about $120 million of the projected deficit by delaying payments to insurance funds and drawing on emergency reserves. The rest may come from freezing spending for supplies at the district’s 600 schools.

The auditors’ report, compiled after a four-day survey of district accounting and budget systems, failed to give detailed reasons for the deficit and suggested that the board itself must dig deeper to find out what went wrong.

After the meeting, William Altman, partner in Ernst & Young, the district’s outside auditor, said “it’s no secret but they’re mortgaging their future” by using money usually set aside for insurance and other claims to cover shortages.

At the same time, the district must begin paying back teachers for salaries that were cut to balance the current budget. It also must make up $15 million that was not placed in workers’ compensation accounts last year.

Officials are expected to cover this year’s new deficit by again deferring some allocations to the workers’ compensation fund, health and welfare and emergency reserves.

The current shortfall comes in a year when the district already has made more than $275 million in cuts, pushing class sizes to the largest in the nation.

Monday’s board meeting was the first public discussion of the $150-million deficit since it was announced last week, although board members, auditors and top district administrators have discussed it at least twice in closed sessions. They said they discussed the matter in private because it had possible legal, personnel or union contract ramifications.

The six-page Ernst & Young report recommended that the district do its own analysis of health insurance spending, use of substitute teachers and the number of employees actually on the payroll to learn why estimates of those health and salary costs were miscalculated.

The report said one of the problems was attributable to workers in the accounting department who failed to inform budget officials about changes in the law requiring increased withholding for social security.

The auditors also said that the district needs a more sophisticated computer system to track changes in the financial picture as the year goes on. They also said the board should be given more frequent updates on major spending than the twice-yearly updates now provided.

During the meeting, Booker said that he will make recommendations in two weeks on how to cover the shortfall and avoid a recurrence of the problem. He also said employees who made the errors will be held accountable, though he would not say whether they will be publicly identified.