$42 Million Divides L.A. Unified, Unions : Education: Teachers and others lay claim to money saved by a cut in health benefits. Supt. Thompson says the funds will be kept on reserve in case of a budget crisis.


In the latest round of sniping between the Los Angeles Unified School District and its unions, teachers and others who took a 10% pay cut are laying claim to an unexpected $42 million saved by reducing health benefits.

At a special Board of Education meeting Monday, Supt. Sid Thompson pledged to keep the money on reserve to be used--if necessary--to balance next year’s school budget. If the district does not need the money, however, Thompson said its use will be negotiated with the unions.

But the promise did not satisfy the unions representing teachers, aides, clerks and others among the district’s 70,000 employees, most of whom received a pay cut last year and gave up some of their health coverage.

United Teachers-Los Angeles President Helen Bernstein said Monday that the $42 million belongs to the unions and cannot be used to balance the budget. “That is our money and he will find himself in court faster than he can count to 3 if he uses it,” Bernstein said. “This infuriates me. I am not going to play games with him--this will go to court.”


As part of the labor contracts last year, six employee unions took over administration of the health plan. The $42 million in savings was realized because benefits were reduced and fewer people filed claims, according to district and union officials.

Additionally, the teachers’ contract stipulates that any new money must be applied to restoring teacher salaries. The labor contracts expire in June, and negotiations are expected to begin again next month.

Connie Moreno, an official with the California School Employees Assn., which represents office workers and clerks, said the $42-million saving should be kept in an account specifically earmarked for the benefits program. She said it could be used to offset higher costs next year.

“That money was squeezed out of employees,” Moreno said. “It came from cost savings generated by our six unions.”

While Thompson said Monday the district is expected to end the school year in the black, he said the budget is tenuously balanced. Changes in state funding in the next few months could require use of the $42 million to balance the budget or to help next year’s finances. About 90% of the district’s revenue comes from the state.

Thompson disputed that the cost saving belong to the unions. “These are district dollars,” Thompson said. “Yes, we have the authority to use it in case of a major budget issue.”

A financial report released Monday showed that the district will end the year with an $18.8-million surplus. In next year’s preliminary budget estimates, also discussed Monday, the district could have a $3.7-million reserve.

“I can’t say enough about how fluid this is,” Thompson told reporters in a budget briefing session. “This talks about what may be in June--not what will be. It means the system is just balanced . . . but it’s precarious.”


The budget estimates, however, do not reflect any funding for new programs already promised or announced, such as grouping schools into new clusters to streamline operations, increasing campus security and adding schools to the LEARN reform program. Thompson said he will bring to the board next month his requests for budget additions.

Board members said they, too, will bring forward suggestions for the budget in the coming weeks. But they were reluctant to speculate about whether there will be money to implement any new programs.

“We’ve got to make some tough decisions . . . (such as) how are we going to pay for the reform efforts that we are hanging our hats on,” said board member Jeff Horton. “It’s clear that there’s no extra money anywhere.”

District officials expect a $4-billion budget for 1994-95 that largely depends on how much money the state Legislature devotes to schools. Any shortfalls in the state budget could mean deep problems for Los Angeles, officials said.


A $1-billion shortfall in the state, for example, could mean a loss of $40 million to the district--the equivalent of a 2% salary restoration for teachers.

“What we present to you today could change very quickly--very drastically even--depending on any number of funding developments or actions at the state and federal level,” Thompson said. “This is the tightest of budgets.”