The budget forecast for Austin Public Schools appears bleak if an operating referendum is not renewed next fall, the district director of finance and operations reported Monday.

“The operating referendum we passed back in 2003 is now fully tapped,” Lori Volz told the Austin School Board during their regular meeting, explaining how the district is now “breaking even.”

Volz expressed her concern for the future of a district recognized for its fiscal soundness. Austin is in a minority in Minnesota; many schools are in statutory operating debt following failed referendums. The district could face statutory operating debt in four years, she said, if a referendum is not renewed for the district.

The current operating referendum — one of three — generates $3.5 million per year for Austin Public Schools, at $53 per marginal cost pupil unit. The district is asking voters to renew this referendum one year early, in November 2009. If that vote fails, they will go to voters again in November 2010.

Even if the referendum is renewed, Volz said, it may not be enough to cover inflation, which is climbing at $1.5 million per year. The district could begin to run a deficit as early as 2010-11.

According to Volz, on top of skyrocketing costs for fuel, insurance and benefits, the state is not funding schools nearly enough for them to operate, which is why so many are seeking referendums.

“The state of Minnesota is not adequately funding schools,” she said. “That is very unfortunate.”

The best case scenario would be a 1 percent increasing in funding, but Volz is not optimistic. The next biennium of funding will be determined by the legislature in June 2009.

On the positive side, Volz explained, the district has been experiencing a slight increase in enrollment and is more fortunate than most districts budget-wise.

Also in her report, Volz outlined a space analysis, which has been largely addressed because of steadily increasing kindergarten enrollment.

“Our elementaries are filling up,” Volz said.

The district’s plans include working with its financial adviser, accepting bids for projects in winter 2010, and construction beginning that summer if the referendum passes in 2009. If that vote fails in 2009, but then passes in 2010, construction would begin in 2011.

The analysis calls for two additional classrooms in each elementary school, as well as other additions, including at Ellis Middle School.

Those space demands re-enforce Volz’s doomsday scenario that a renewed referendum is vital to the district, adding that they want to avoid “massive cuts.”

“We would want to renew that if at all possible,” she reiterated.

“It’s not going to fail,” board chairman Don Fox assured Volz. “Austin has a lot of pride in its schools.”