Alexandria teachers will receive an average pay increase of 7.7 percent next year, school officials said yesterday, because the City Council added $1.2 million to the school budget.

School Board Chairman Lou Cook said pay for Alexandria's teachers now will be competitive with other Washington area jurisdictions because the council approved the additional money for the fiscal year beginning July 1 during a midnight session on Monday.

The last-minute addition, Cook said, also means class size will not increase and students living more than a mile from school will remain eligible for bus service.

"I'm pleased," Cook said. "I would have been happier with $1.5 million, but I would have been miserable with nothing."

In total, the schools received $45.6 million for next year, the largest chunk of the $158.2 million city budget adopted late Monday.

Unexpected tax revenues also allowed the city to cut the real estate tax rate by 1 cent. Despite the cut to $1.38 per $100 assessed value, homeowners still will have to pay an average of $93 more next year because of rising assessments.

All three Republican council members, Margaret B. Inman, Carlyle C. Ring and Robert L. Calhoun, led an unsuccessful battle to reduce the tax rate by 2 cents. After that attempt failed on a 4-to-3 vote, the council compromised by unanimously approving the 1-cent cut and pledging to cut the tax rate further in the fall if a $1.8 million emergency fund is not needed to offset expected federal cutbacks.

Cook and other School Board members have lobbied the council relentlessly since City Manager Vola Lawson proposed a school budget that was $1.5 million short of what they calculated was needed.

Yesterday, school officials said that because they received $300,000 less than requested, they may have to kill plans for new positions, a performance incentive plan for teachers and a employe dental plan.

Pam Walkup, president of the Education Association of Alexandria, which represents most of the city's teachers, said she was still not satisfied with the 7.7 percent salary increase. "Arlington is still ahead of us and Fairfax has better benefits," she said. "In order to attract teachers, we are going to have to pay them more."

The increase means that on the average, a teacher will receive $2,100 more next year. Beginning teachers are now paid $18,200 and the average pay is $34,000.