Revenue Drop May Derail Deal With Teachers

Because property tax revenues have fallen short of expectations, the Los Angeles Unified School District may need to cut an additional $20 million from this year’s budget, calling into question the district’s ability to keep the commitment it made to reduce teachers’ salary cuts.

Options to close the unexpected budget gap are few for the cash-strapped school system, which has cut $400 million from its budget this year and tentatively committed its $30-million reserve fund to finance the settlement approved by teachers last week.

That agreement--drafted by Assembly Speaker Willie Brown--calls for the district to reduce the size of teacher pay cuts from 12% to 10%, which would cost $36 million this school year. All district employees were given pay cuts this year, but only the teachers union refused to accept it and threatened to strike.

The money to restore part of teachers’ pay was to come from the district’s state-mandated reserve fund for economic uncertainties. Brown pledged to try to secure state approval for the district to set aside textbook and other restricted funds to replace that reserve.

But the news that the district might not receive the full amount promised by the state for this school year means that the district might have to make deeper program cuts or renege on its deal with the teachers union and use the reserve fund to cover the shortfall.

“I don’t think we have a deal anymore,” said school board member Barbara Boudreaux. “We cannot put our children into any deeper trouble, and if we have a $20-million deficit, the only way to make that money up is to hurt them even more than we’ve already hurt them with this contract.”

Teachers union members approved the settlement package by a 68.8% margin. The school board approved it Feb. 20 by a 6-0 vote, with board member Roberta Weintraub abstaining. Contract language has yet to be formally ratified by the school board or the union. Brown declined to comment Thursday.

“I think we have to derail that promise that we have in place now in order to have our educational program survive,” said Boudreaux, who plans to introduce a motion at the March 15 board meeting to rescind the deal. “We’ve already cut too much to afford this promise.”

Teachers union President Helen Bernstein said Thursday she was taken aback by the news that district officials now believe that they may not be able to afford the pact.

“This whole thing smacks of people who don’t want to see this proposal go through. The only other option is for us to be on the streets,” she said, saying the threat of a strike will be resurrected if the deal falls through.

“Ever since the teachers reluctantly agreed to this deal, every single day there has been somebody else trying to take it apart. There’s a sickness in this system.”

District finance chief Henry Jones said the district has not been notified of the exact amount of the shortfall, but must come up with ways to make up the difference by March 15, when its next financial report is due.

County and state officials said the deficit in property tax income has grown by nearly 1 percentage point--from 5.7% to 6.4%--which would translate to a $20-million loss in revenue for the 640,000-student district.

School districts develop their annual budgets on what they expect to receive from the state, based on state projections of property and other tax revenues and other sources of income. When those sources provide less money than anticipated, school districts receive less money.

Last September--when school district budgets were finalized--state officials calculated that the property tax roll would grow 9%, said Fred Silva, a chief fiscal adviser to state Sen. David A. Roberti (D-Van Nuys). “Instead, it grew by only 5%, and as a consequence, school districts are getting less revenue from property taxes,” Silva said.

Those kinds of midyear fluctuations in school funding are common, he said. “That’s why the state requires school districts to maintain a reserve” that can be tapped to cover shortfalls.

County officials are in the process of calculating the amount of Los Angeles’ shortfall, but it is certain that “they are getting less money than they thought they were going to get,” said Deborah Simmons of the Los Angeles County Department of Education.

The drop in state funding “is not a major surprise to any school district,” Simmons said. “That’s been the general trend. Deficits change throughout the year, and we were expecting the deficit to go up.

“Most districts understand this is how the system works, and they typically use their reserves for these types of problems.”

Jones said the district has few options to cope with the midyear shortfall. “Certainly since this deficit is a 1992-93 problem, other resources in the district’s current budget will have to be identified to offset this reduction in income.

“We’ve had deficits on a number of occasions and there’s always the possibility the state will provide legislation to fund the shortfall,” Jones said.

But given the state’s worsening financial condition, that will be difficult, Sacramento officials said.

Silva said the state typically copes with shortchanging districts in one of several ways: by dipping into its reserve to make up the difference, approving a so-called “deficiency appropriation” for the difference, or including it in next year’s budget bill.

Times staff writers Ralph Frammolino and Stephanie Chavez contributed to this story.