San Francisco Mayor Gavin Newsom last week gave in to calls to share more of the city’s rainy-day fund with the San Francisco Unified School District.

Newsom agreed to give $23 million, or 25%, of the $92 million rainy-day fund to the district to prevent teacher layoffs next year. The mayor previously said the city could legally pay just $11.5 million to the schools. The district is trying to close a $51 million shortfall in its budget. In fiscal 2008-2009, the city gave the district $19.2 million from the fund.

Newsom, who is campaigning to replace California Gov. Arnold Schwarzenegger in 2010, agreed to a bigger payment after school officials and members of the San Francisco Board of Supervisors criticized his earlier plan and the city Controller Ben Rosenfield said the city could legally do more to help its schools.

Voters created the rainy-day fund in 2003. San Francisco is allowed to spend up to 50% of the fund to balance its budget during lean years and is allowed to give the district up to a quarter of the fund. With both municipal entities facing deficits and planning withdrawals next year, officials disagreed over whether the city should calculate the school district’s share before or after accounting for the city’s withdrawal.

The school system sent out 362 layoff notices to teachers just before Newsom agreed to increase the rainy-day funding. Newsom said the city’s $23 million aid payment would help save 250 teachers’ jobs.

“By releasing our rainy-day funds, we will save all of our teachers’ jobs,” said Newsom. “We are lucky in San Francisco to have saved our extra revenue for when times get tough. Those tough times are here.”

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