PROVIDENCE, R.I. (WPRI) — City Council leaders are offering the Providence Public School District $2.5 million in an attempt to prevent cuts to student athletics and some bus passes for students. Council President Rachel Miller said in a news conference on Tuesday afternoon that the money was comprised of $750,000 from a new PILOT deal with Lifespan, $250,000 from a parking agreement with the Rhode Island School of Design, and $1.5 million in reallocated American Rescue Plan Act dollars. Miller said the money was contingent on the district agreeing to a third-party audit of its finances and to spend the money on reversing cuts to sports and bus passes.  Tuesday's announcement from councilors comes after a weekslong back and forth between the city and the state-run school district. Earlier this month, Mayor Brett Smiley called a news conference announcing that Superintendent Javier Montañez gave him 24 hours to respond to his request for the city to provide the district nearly $11 million in city funding beyond what’s already been provided in the current budget year, which began on July 1. Montañez disputed that his call to Smiley was an "ultimatum." "In fact, I was calling in the interest of transparency and open communication ahead of the Providence School Board Finance Committee meeting, where I planned to speak publicly about the impact of the city’s underinvestment," Montañez wrote in an Oct. 11 letter to Smiley. MORE: Smiley slams Providence school leaders over 24-hour ‘ultimatum’ for $10 million The city is already contributing $135.5 million to public schools in the current school year. However, the school district believes the city owes them "a minimum total allocation" of $164.8 million under the Crowley Act. In a PowerPoint presentation, the district accused the city of investing in areas other than schools, "despite funding obligations to the school department." The superintendent said earlier this month that the state-run district would start taking "mitigation steps" if the city didn't hand over the $10.9 million. The district's proposed cuts included eliminating all athletic programming, furloughs for central office staff and administrators, layoffs of non-union staff, withdrawing contributions to the capital revolving fund and making "deeper school-based position cuts or freezes." But the 24 hours came and went. On Oct. 16, the city filed a complaint in R.I. Superior Court in an attempt to block a request that R.I. Education Commissioner Angélica Infante-Green had made to state Treasurer James Diossa to withhold $8.5 million in car tax reimbursement payments from the state to the city. The city and state went to court again on Tuesday morning. No decision was made, and the hearing is set to resume on Nov. 6. RELATED: RI officials frustrated over tardy pension payments for Providence teachers Mayor Brett Smiley spokesperson Josh Estrella said the Smiley administration was supportive of the additional $2.5 million "to ensure that critical functions for our students, like sports and transportation, are met." "We now also need to resolve the recent withholding order as it will affect the city’s ability to provide any additional support," Estrella added. The mayor previously offered the district an additional $1 million from unbudgeted funds from recent deals with Lifespan and the Rhode Island School of Design in exchange for a $3 million match from the state. Smiley also requested a third-party audit of the school department’s finances. Council leadership and district staff met on Oct. 21 and 22 to discuss the new $2.5 million offer. On Oct. 23, Superintendent Javier Montañez wrote a letter to council leadership stating the district would comply to the independent audit on two conditions: the city details in writing how the audit would differ from the yearly audit the city already commissions relative to district finances, and that the city also agrees to an audit. As for the $2.5 million offer, Montañez said it was "insufficient," and renewed te district's request for $10.9 million. "We are gravely concerned about how far apart we are to adequately solve the crisis before us," Montañez wrote. "Most importantly, this offer is completely insufficient to meet the growing needs of PPSD," he added. Montañez argued there are other pots of funding that the city could use to fully fund the schools. "The city has the money to make the district—and thus the student experience—whole but chooses not to do so," Montañez wrote. "As a result, we will move forward with implementing the difficult decisions we have communicated to the city for months." On Oct. 25th, Council President Rachel Miller responded with another letter, saying she was "deeply disappointed" that the district felt the offer was characterized as "insufficient." "Our students and families urgently need us to put aside the mentality that pits PPSD and the city as two sides fighting," Miller wrote. "Instead, we should go all in together for solutions that can help ameliorate the current financial issues and solve the long-term issues that find us in this and similar positions year after year." Miller said the district has yet to formally respond back to that letter. As a result of the district's lack of response to Miller's most recent letter, the City Council's Committee on Finance postponed its final vote on the ARPA reallocation ordinances to Nov. 7. District spokesperson Jay Wegimont told Target 12 on Tuesday night that the district was limited in what they could say due to ongoing litigation. "While we appreciate the city’s ongoing efforts to identify funds that may be allocated to PPSD to meet its maintenance of effort obligation, $2.5 million is insufficient to meet the district’s needs and comes nowhere close to satisfying the city’s statutory obligation," Wegimont said. Alexandra Leslie ([email protected]) is a Target 12 investigative reporter covering Providence and more for 12 News. Connect with her on Twitter and on Facebook. Close Thanks for signing up! Watch for us in your inbox. Subscribe Now Daily Roundup SIGN UP NOW