CHAMPAIGN – The Champaign school district needs to cut $2 million from its budget for each of the next two years, says its chief financial officer, Gene Logas.

Logas talked to school board members at a Monday night study session about his predictions for the district's finances for the next two years and his suggestions for making cuts to balance the budgets.

Logas recommended the board consider $2 million in cuts next year, as well as issuing working cash bonds and further spending down its fund balance.

Logas predicted the school district will end this fiscal year with a deficit of nearly $4 million.

In 2010-11, the district will save money on attorney fees, and on skipping one year in its textbook-adoption schedule. But it will spend $3 million more on salaries and benefits, and $250,000 on staff training for its magnet schools, among other expenses. The district is applying for grant money for the magnet-school training.

It will also see about $2.5 million less in property-tax increases, and $800,000 less in state funding, Logas said.

He is recommending making $2 million in cuts, which could include teachers, support staff and administrators; academic and extra-curricular programs; and purchase of supplies, equipment and services. The district should look at how cuts would affect student achievement, its strategic plan, its consent decree settlement agreement, community support, and relationships with its unions, Logas said.

The board will discuss its strategic plan and budget issues at upcoming retreats in the next two months, and it plans to hold a special board meeting in mid-December to report on those discussions. It will also talk with principals, teachers and support staff about cuts, and then hold community meetings next spring about how the district plans to respond to the budget deficits.

Logas is also recommending the district issue $2 million in working cash bonds and further reduce its fund balance by $1.5 million.

The district's fund balance was $23 million at the end of fiscal year 2008. That will be reduced to almost $16.4 million at the end of the current fiscal year, Logas said, as some of the money in the fund balance has been used to cover budget deficits in the last fiscal year and this fiscal year.

Logas expects further decreases in state funding and the additional property tax money available to the district in 2011-12. He recommends another $2 million in cuts, $3 million on working cash bonds, and a $568,000 reduction in the fund balance.

He also recommends selling school district property near Barkstall Elementary School, the Family Information Center on Clark Street and the literacy center on Randolph Street.

Logas said he didn't recommend more cuts because "there are so many unknowns. What if we do better than the deficit projected in 2009-10?" If the financial picture ends up being better than predicted, better not to have made so many cuts, he said.

He also noted the district will make its last payment in 2011 on the $6.3 million in working cash bonds issued several years ago.

Board member Stig Lanesskog asked why the board shouldn't spend more of the fund balance. Logas said the district is chipping away at it, but he didn't want to have the fund balance get to $10 million because the options then for balancing the budget would be only working cash or more cuts.

The recommended ratio of fund balance to overall budget is 10 percent to 15 percent, he said, and the district's budget is a little more than $100 million.

Board member Greg Novak said he was concerned with issuing more working cash bonds when the district will likely need to have a building bond referendum in the next five years for some building improvements.

Lanesskog suggested exploring more collaborations with other school districts, especially in areas with less impact on students.

"We don't have to do everything ourselves," he said. "We don't have to own everything ourselves. We need to explore those options."