Schools Face Additional $10.5-Million Deficit : Education: Recalculations of incoming state revenue and other adjustments account for the shortfall, which could lead to deeper spending reductions.

Less than two weeks after the Los Angeles Board of Education imposed drastic pay cuts to balance its budget, officials are facing another shortfall of $10.5 million for this year--a deficit that could lead to deeper spending reductions for the financially beleaguered district, sources said Wednesday.

In a memo to board members Wednesday, district financial officers said state and county education officials identified the deficit during an ongoing review of the state budget adopted in September.

Recalculations of incoming state revenue, charges to the district and other funding adjustments will result in the district taking in $10.5 million less than anticipated, according to the memo.

Additionally, restrictions may be imposed on $5 million in state funds the district had been counting on to balance its budget. The state may require the district to spend the money on special programs, such as dropout prevention and gifted education.

Board member Mark Slavkin said Wednesday he was concerned because the state and county continue to change the budget information they relay to the district. “It’s terribly frustrating. The rules seem to be changing in the middle of the game,” he said. “What’s to stop the state from sending us a memo next week saying they changed their mind again?”

Henry Jones, the district’s budget director, said officials may have to reopen a painful budget-cutting process that caused unprecedented tensions, chiefly over the proposals of employee pay cuts.

“At some point it would require additional budget adjustments,” Jones said of the deficit. “The superintendent will eventually bring recommendations to the board as to how to deal with this problem.”

But Jones said he doubted the board would consider increasing pay reductions that will slash employee salaries as much as 11.5% for this year.

“Since the board has taken actions to reduce the pay cuts for employees, that would probably not be an option employed by the board to solve this problem,” Jones said.

The deficit is the latest in a series of shortfalls that have forced the district to cut more than $1 billion from its budget in the last four years. Jones warned that uncertainties over the state’s economy and difficult fiscal conditions within the district could lead to a potential $90-million shortfall for the next fiscal year.

This year, the district grappled with a $400-million spending gap in its nearly $4-billion budget, which forced reductions in services and programs and the elimination of jobs.

The most controversial of the reductions was a proposal to cut employee pay this year. United Teachers-Los Angeles, the district’s largest union, launched an aggressive protest campaign and several other employee groups forged an unprecedented alliance to ensure that their jobs were not sacrificed to preserve those of instructors.

The board voted Oct. 2 to impose pay reductions, scheduled to take effect in November. Teachers and most administrators would suffer a 9% pay cut for this year. With another 3% cut for all of the district’s 58,000 full-time workers last year, teachers’ salaries will drop 12% below what they earned in 1990-91.

Employees earning less than $20,000 a year would receive no pay cut but would take some furloughed days, while workers earning $20,000 to $28,000 would receive a 6.5% reduction. The 40 administrators earning more than $90,000 a year would receive a cut of 11.5% for this year. Employees would take the pay cuts through unpaid furlough days.

It was unclear what effect, if any, the discovery of the deficit could have on contract negotiations with UTLA. Union leaders have advised members to strike rather than accept the deep cut. UTLA’s approximately 28,000 members will vote next week on whether to accept the district’s offer or grant their leadership the authority to call a strike if negotiations deadlock.

According to the district memo, the deficit includes $1.3 million in state monies no longer available for special education programs and $1.8 million the district must pay the county to collect property taxes.

The district’s options for eliminating the shortfall are limited, Jones said, because board members are unable and unwilling to resort to layoffs of teachers and other workers.

“As we move through the fiscal year, the board’s options diminish,” Jones said. “Certificated employees are protected from further (layoffs) this fiscal year, and the board has indicated they are not of a mind-set to lay off any additional classified employees. So the last option is to look at programs and reduce them.”

Slavkin said the board may be able to utilize its reserve for economic uncertainties or consider cutting programs to deal with the shortfall, but that it was highly unlikely the board would consider deeper pay cuts to make up the deficit.

“We may need to look at hard cuts in specific programs in order to offset these reductions,” Slavkin said. But employee salaries “would be the last thing any one of us would touch and I think the likelihood of that is slim if not zero.”