California Gov. Arnold Schwarzenegger says he is willing to avoid a showdown with teachers over plans to suspend state spending rules.

Previously this week, Schwarzenegger said he would institute deep cuts in school spending by suspending Proposition 98, which was passed by voters in 1988 and mandates school funding be based, in part, on what was spent the previous fiscal year.

But on Friday, as the influential California Teachers Association geared up an effort to denounce the potential move, the governor backed off suspending Prop. 98, the San Francisco Chronicle reported.

"We are not stuck ... about the suspension" of Proposition 98, he said in a meeting Friday with the Chronicle's editorial board. "We've got to analyze all this. ... We have to figure out how to deal with it."

The newspaper cited an unnamed source saying the teachers' union is preparing a statewide television advertising campaign to bring pressure against Schwarzenegger if he attempts to ignore the Proposition 98 education spending rules.

The governor Tuesday rejected partial budget fixes proposed by the Legislature that would have saved $3 billion, causing a cash crunch that has forced the state to issue IOU's to vendors, the newspaper said.