A City Council panel adjourned Monday without approving the school system's budget because of a dispute over $2.8 million in funding.

Councilwoman Mary Pat Clarke said whether the city owes the schools the money is the latest wrinkle in a budget clash that moved closer to resolution Monday, when Mayor Stephanie Rawlings-Blake cut $4.2 million from various city services in her proposed $2.6 billion budget for the next fiscal year in order to fund after-school programs and community schools.

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The council had threatened a government shutdown unless that money was allocated to youth programs.

The school funding deficit is a separate issue that stems from a 15-year agreement under which the city agreed to pay the schools $2.8 million annually toward benefits, Councilwoman Mary Pat Clarke said. That agreement expires when the current fiscal year ends on June 30, she said.

The school system included the extra money in their proposed budget for the next fiscal year. Rawlings-Blake's administration did not.

"The question is: Who's right? What prevails?" said Clarke, a member of the Budget and Appropriations committee. "It's a conundrum."

The council committee adjourned without taking action on the schools' budget while the two sides work toward a resolution.

Clarke said school officials explained that the $2.8 million is budgeted for per pupil expenditures, charter school funding and other general fund expenses.

The school system acknowledged the discrepancy Monday. Officials said in a brief statement that "both sides are working together to resolve this issue. We are hopeful that there will be a resolution very soon."

School officials did not respond to a request to explain how the money would be spent.

Clarke said the council asked for the issue to be resolved before June 20.

Lester Davis, a spokesman for Council President Bernard C. "Jack" Young, said the council has limited ability to deal with the $2.8 million discrepancy. Under Baltimore's strong-mayor form of government, the council is restricted in the changes it can make to the schools' budget.

"We're waiting on direction from the mayor's office," he said.

Deputy Mayor Andrew Smullian said the mayor is awaiting a ruling from the state Department of Education to determine whether the city owes the schools the money.

A spokesman for the education department said agency officials are reviewing the funding questions and discussing the situation with city and school system officials.

Clarke said the source of the latest dispute is an agreement the city reached this year with the General Assembly.

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Gov. Larry Hogan and the legislature agreed to allot an additional $12.7 million in the state budget to help offset a $25 million drop in education aid from rising property values and declining enrollment.

The deal was based on the understanding that the city would contribute extra cash, too. Rawlings-Blake's budget includes an additional $10 million, per that agreement.

Smullian said the state education department is analyzing that agreement to figure out whether the city is obligated to spend another $2.8 million on schools, or if that deal expires this month.

Clarke said she believes the two sides can find resolution.

"One thing I have great faith in is the ability of our city budget to meet the needs when required," Clarke said.

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