Community Consolidated School District 15 school board asked Superintendent Scott Thompson to compile a list of potential budget cuts to reduce a mounting deficit.

The school board made the request after a presentation by assistant superintendent for business Michael Adamczyk showed a projected $3.7 million deficit for this fiscal year and a deficit of $5.4 million for next fiscal year.

"We need to look at budget reductions that will help cut into some of the red ink," board member Sue Quinn said.

School board President Gerald Chapman suggested Thompson come up with a list of potential cuts and the impact the cuts would have. Thompson said the priority with any cuts would be to minimize the impact on students and class sizes.

The district is half way through the 2010-2011 fiscal year. Thompson said the district would work to contain costs through the rest of the fiscal year. The budget cuts would primarily be considered for the 2011-2012 fiscal year.

Even though District 15 is projected to run a deficit, it currently has ample reserves. If the district finished $3.7 million in the red this fiscal year and $5.4 million in the red next fiscal year, it still would finish 2011-2012 with $46 million of reserves.

Despite this, board members are concerned that the deficit will grow over time, erode reserves and place the district in a precarious financial position by 2015-2016. Adamczyk's projections have the deficit reaching $12 million by 2015-2016.

Board member Tim Millar said the budget problems are caused by salary and benefit increases that are exceeding the rate of inflation. Much of the district's revenue comes from local property tax revenue which is tied to the rate of inflation through the tax cap.

"This is a salary and benefits issue," Millar said. "This is because we increased salary and benefits above CPI [consumers price index]. Realistically that's why we are here."

The Education Fund pays for much of the district's operational costs, including teacher salaries. Most of the projected deficit is associated with that fund. For example, of the $5.4 million deficit projected for 2011-2012, $4.4 million is the Education Fund.

Ultimately the budget issue could come down to the next teachers union contract which will be the next time that salary and benefit increases are negotiated. The final year of the current contract is 2011-2012.