Austin Public Schools isn’t about to forget old relations when it comes to state education aid.

State funding makes up 74 percent of the district’s revenue and state legislators are about to address a $6.2 billion deficit in the state budget this January. While the district is in better shape than most across the state, school officials are intently watching what the state Legislature will cut when it comes to education.

“To think there isn’t going to be some reductions in education funding I think would be a little bit naïve,” said Mark Stotts, the district’s finance and operations director. “With a deficit that big, they’re going to have to cut something out of education.”

No one knows what will happen when legislators look at the education budget, which makes up about 40 percent of the state’s overall spending. According to Stotts, local state legislators have told the district they don’t intend on cutting per pupil funding,which makes up a majority of district money, and there’s no talk of increasing education aid.

Categorical aid is a different matter, however. Stotts has heard targeted programs like integration funding may be restructured or cut, as some argue integration dollars go towards programs which aren’t measurably effective at increasing diversity. District officials believe that isn’t the case in Austin, where the district’s integration budget goes toward paying for success coaches and other integration staff who work with students of color and English as Second Language students. If the district’s integration budget, currently at $619,000 per year, disappears, the district will have to eliminate positions or pay salaries through its unreserved fund, which is used in emergency situations.

In addition, changes to other funding areas such as health and human services and transportation could affect the district, as well. More school counselors and psychologists were hired as a result of health and human service changes in recent years.

The district is in a decent financial position to weather such storms in the short term. Out of a $47 million budget, there is currently about $5.2 million in the district’s unreserved fund balance, according to Stotts. That’s higher than normal, as school board bylaws recommend the unreserved fund balance be at about 8 percent of the district’s budget, which would amount to a little under $4 million.

“We’re running higher than what the board policy states we should be at, but that’s okay because we know there’s going to be some pretty trying times coming down the road here,” Stotts said.

As of June 30, 2010, the district had $1.9 million in overall excess funds, according to the district’s annual audit report given at the December school board meeting. Because that number fluctuates given the district’s constant revenue and expenditures, it means the district grew its funds by about $600,000-$800,000, according to Stotts.

“You’ve got programs that are operating pretty well and are all in the black,” Kimberley Hillberg of Larson Allen, LLP told the school board during its December meeting.

The funding growth came from money the district received from the Education Jobs Fund, a one-time federal program signed into law in August with the intent of maintaining and creating education jobs for the 2010-11 school year.

If it weren’t for the one-time fund allocation, the district would have dealt with a deficit. The state reduced the amount of annual aid given to Austin and other school districts based on the amount of last year’s federal stimulus funding, which was a one-time grant meant to last two years.

Austin isn’t out of the woods yet when it comes to budget concerns. District officials cut two administrator positions earlier this year in order to balance the budget, before they knew about the Education Jobs Fund money. They’ll be closely watching the legislative session so they can make changes to next year’s budget accordingly. The problem with this, according to Stotts, is that state legislators may choose to wait until the end of session to address education reform, whereas the district must figure out and give notice on staffing levels in the spring and have next year’s budget ready by June 30, 2011.

“It makes it real tough,” Stotts said. “Here we are trying to figure out a budget for next year but yet we still don’t know what our funding is going to be. That makes it real challenging.”

By the time a financial plan is finalized, district officials will have heard from legislators what changes may come and plan accordingly. For now, it’s anyone’s guess what education funding will look like after 2011.

“We don’t know,” Stotts said. “It’s pure speculation at this point.”