Philadelphia's oversight board yesterday agreed to give city officials extra time before they have to explain how a recent labor settlement will affect city finances.

Philadelphia fell out of compliance with its five-year fiscal recovery plan earlier this month when Mayor Edward G. Rendell settled a strike by agreeing to a contract for municipal employees more generous than the terms envisioned in the plan.

The plan was approved by the oversight board, the Pennsylvania Intergovernmental Cooperation Authority, as part of a $475 million bond sale for the city in June. Normally, the administration must report to PICA within 15 days if a labor agreement puts it out of compliance with the five-year plan. In its report, the administration must explain what steps will be taken to fix the problem.

But the authority agreed yesterday, at the request of City Finance Director Stephen Munin, that it would be counterproductive for the administration to revise its plan before results of continuing arbitration proceedings with police and firefighters unions are known. Those proceedings are expected to finish near the end of next month.

Bernard E. Anderson, the oversight board's chairman, said the authority's goal is to "encourage a comprehensive and logical approach to the management of city finances.

"It makes good sense to have the next revision to the plan reflect the reality of new contracts for both uniformed and nonuniformed city workers." Anderson said.

Rendell had hoped to save about $492 million over the next four years as a result of better contract terms, but the agreement with the city's nonuniformed workers approved earlier this month is expected to save only $374 million, he said.

In addition to telling how the plan will be revised to jibe with the new numbers, the city will also add projections for the 1997 fiscal year, PICA said.

The administration is still expected to file a report Nov. 16 on the plan's progress during the third quarter of 1992.

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