$90 Million Eases School Fiscal Fears : Budget: L.A. Unified turns up new potential revenues. The district could avert some layoffs and class-size increases.

The Los Angeles Unified School District has identified about $90 million in potential revenues for next year that could stave off class-size increases and layoffs, according to a financial update released Thursday.

Despite grim predictions two months ago of a $143-million budget deficit--which prompted layoff notices to more than 1,000 counselors, nurses, music teachers and administrators--the latest budget plan calls for only $13.5 million in reductions.

Supt. Sid Thompson said the remaining cuts can be achieved by leaving some vacancies unfilled and restructuring central administration. Officials say it has not been determined whether layoffs of secretaries and other workers in some other jobs can be avoided.

The new estimates also have earmarked $43 million to pay for the second year of the teachers contract, which calls for a 2% salary restoration.

The potential resources permit the district to draft its first budget in four years that does not cut into education programs or spur widespread layoffs, said Budget Director Henry Jones. Last year, the district was forced to cut $400 million from its $3.9-billion budget.

Two significant financial developments in the last month have prompted the rosier budget picture. First, Gov. Pete Wilson’s state budget revisions will not penalize elementary and high schools for statewide losses in property tax revenues and other shortfalls. As a result, the Los Angeles school district will receive $25.5 million that had been counted as a potential midyear deficit.

Also, state Controller Gray Davis has told the district that it is entitled to file claims next year for an additional $35 million in state desegregation money. Davis approved a similar amount in late April, allowing the district to pay for its teachers contract and avoid a strike.

Other additional revenues include $13 million in state lottery proceeds, an $8-million district surplus from this year and amounts from several other sources.

The district intends to make up the rest of its deficit mainly by deferring $31 million in payment to its workers’ compensation and liability insurance funds, according to the report.

Jones cautioned, however, that the bulk of the budget still depends on the state keeping per-pupil funding and desegregation funds at the same level next year.

“The emphasis should be that people will not lose their jobs, provided that the governor and the Legislature honor their commitment to fund education and we get the funds that we are entitled to,” Jones said.

The Board of Education must adopt a balanced budget by June 30.