Reversing a budget-cutting decision he acknowledged to be unexpectedly divisive, Mayor Kurt L. Schmoke yesterday scrapped his controversial plan to close Baltimore's public schools for a week next month and said he would save money instead by forcing city workers to forfeit their pay from five holidays.

"I know some people will view this decision with some relief and say, 'Ah, the crisis has passed,' " Mr. Schmoke told a news conference. "But that's absolutely the wrong reaction."

When he announced his plan to close the city schools for a week in November, Mr. Schmoke urged city parents and education advocates to pressure Annapolis to restore cuts in state aid to the city.

But yesterday Mr. Schmoke acknowledged that his school-closing plan had boomeranged. He, and not Gov. William Donald Schaefer or the General Assembly, came under fire for undermining the value of education in the minds of children and making a mockery of his own promise to make Baltimore "the city that reads."

"I think it is fair to say the closing became the focus of attention when I thought the focus should be the inequity of funding," Mr. Schmoke said. "What I am trying to do is overcome a divisive issue that was diverting us from the major issue."

In junking the school-closing proposal, the mayor said he would save money elsewhere -- primarily by forcing the vast majority of the city's 27,000 employees to forfeit their pay for five paid holidays between now and June 30. The holidays are Martin Luther King's, Lincoln's and Washington's birthdays, Good Friday and Memorial Day.

The mayor said he would soften the financial blow -- which amounts to the loss of a week's pay -- by spreading it out over 10 pay periods. For a city worker making $26,000 a year -- about the average -- the loss of holiday pay would amount to about $500.

Parents, teachers and state school officials said they were pleased by the mayor's decision to keep the schools open, while criticism from city union chiefs -- whose members would suffer most -- was muted.

Jeffrey A. DeLisle, president of the Baltimore Fire Fighters Union, said the mayor's decision is another act of bad faith toward the unions and the contracts they had negotiated with the city.

"The city is taking the weaker way out," Mr. DeLisle said. "They are taking it from the public employees."

However, Cheryl Boykins-Glenn, president of the 6,000-member City Union of Baltimore, whose members have already been hard hit by layoffs, said she was relieved that the mayor's plan would spare jobs.

"The mayor has his back up against the wall," she said. "I'm very concerned with the legislators in Annapolis because they have known what the financial problems are and they have chosen not to do anything to help out for this fiscal year."

Officials of the Baltimore Teachers Union, which over the weekend ran an advertisement expressing their opposition over the school closing, were pleased with the new decision. And so were officials at the state board of education, who planned to file suit against the city next week if the mayor went ahead with plans to close schools.

"We have won half the battle as far as we are concerned," said Loretta Johnson, of the Baltimore Teachers Union. "We can't argue when the cuts have been spread across the board.

Indeed, the mayor's reversal may come too late to spare him political damage among parents. Yesterday, Paul Harkum, whose children attend Mount Washington Elementary School, said he cannot shake the feeling that education is no longer the administration's top priority.

"My kids are . . . very much aware that the mayor decided to close schools," he said. "The message it sends to them is that it is not that important to keep schools open."

At his news conference yesterday, the mayor promised to restore as many of the lost paid holidays as he can if the General Assembly restores the state aid to the city that Governor Schaefer wants to cut to help the state over its own budgetary troubles.

Yesterday's announcement amounted to a restructuring of the mayor's efforts to absorb those budget cuts -- which for Baltimore total more than $40 million. Initially, the mayor ordered layoffs and program cuts across the board. But as the crisis deepened, his most controversial measure was the announcement that he planned to close schools for five days beginning Feb. 17.

At the time, he said he hoped parents would realize he was not to blame for the closing of the schools and that objections should be directed at Annapolis. By and large, though, it proved to be a vain hope.

The state department of education said the mayor's plan was flatly illegal because the number of school days in Baltimore would have fallen below the 180 required of all public school children. State officials made it clear they would sue the city if the mayor went ahead with his plan.

And the huge groundswell of public pressure on Annapolis barely materialized. Although there was a demonstration in Annapolis when the General Assembly opened in Annapolis last Wednesday to urge fiscal relief for Baltimore, Mr. Schmoke has borne the brunt of the criticism.

In December, Susan T. Leviton, president of Advocates for Children and Youth, accused the mayor of using children as "political footballs" to extort money from Annapolis.

And this weekend, the Baltimore Teachers Union went public with a half-page ad in The Baltimore Sun, urging readers to call the mayor and insist that he not balance the budget on the backs of schoolchildren.

Thus the mayor announced yesterday he would "spread the pain" by requiring virtually all city employees -- and not just teachers -- to give up pay for five paid holidays as part of a new package to save $14.4 million in the current fiscal year, which ends June 30.

In addition to the savings from salaries, the city would also use a $2.5 million surplus carried over from last year's budget, an undetermined amount of rent to be paid by the Baltimore Orioles for Memorial Stadium and about $2.1 million saved by deferring the sale of city bonds and about $1 million the city expects to receive through the sale of city-owned property.

Without the savings, the mayor said, he would have had to fire another 400 workers.

The mayor was vague when asked at his press conference yesterday why he had not chosen to eliminate the holiday pay at the outset and spare the city the ordeal of wondering whether its public schools would be closed. When pressed on the issue later, he said, "I'm not going to debate you," and walked away.