The Fort Zumwalt School District faces a projected $3 million deficit by the end of this school year.

The actual deficit might end up closer to $1 million or $2 million if the district spends less than the $182 million budgeted for operating expenses this year, said Jeff Orr, the district's chief financial officer. Typically, the district spends less than budgeted, he said.

The 2011-12 budget adopted in June included a projected $500,000 deficit, but officials revised their projection in December after new information indicated decreased revenues and increased expenses would add $2.5 million to the deficit.

Orr said the district lost $901,828 in state revenue. The district lost about $700,000 in state education formula funding, which is based on average daily attendance. The district scaled back its summer school program, reducing attendance, Orr said. The district lost another $200,000 when Gov. Jay Nixon withheld transportation funding in an attempt to balance the state budget, Orr said.

Increases in local revenue partially offset the loss in state revenue, so the district's net loss was $730,557.

Increases in salaries and benefits added $1.7 million in expenditures, Orr said. Of this, $300,000 comes from sick leave reimbursement. When employees retire they can choose to receive accumulated sick leave pay as a lump sum at the end of their final year, or they can spread the payments throughout the year. If they choose a lump sum, the payment would come out of the district's 2012-13 budget. But an increased number have chosen to spread out the payments this year, increasing the district's 2011-12 expenses, Orr said.

The district added 20 special education staff members. Orr said the district had expected to cut 20 positions, not add them. But an increase in the special education population necessitated adding positions.

As Fort Zumwalt teachers continue their education and receive advanced degrees, they progress on the salary schedule. The district has frozen salary increases for next year. As a result, more teachers are trying to complete more credit hours this year in order to receive a salary increase before the freeze takes effect, Orr said.

Despite the deficit, the district anticipates ending the fiscal year in June with a $30.3 million (16.7 percent) operating balance, Orr said.

The state's school funding formula has not been fully funded for several years. Missouri lawmakers are debating how to implement the formula next year, when funding is expected to again fall short. If school funding is cut, the shortfall might not affect all school districts equally. Some districts are considered "hold harmless" and would not lose as much funding as other districts. Lawmakers are considering adjusting the system to spread funding cuts more evenly.

Orr said it is difficult to predict the impact on Fort Zumwalt. Revenue could vary by $4.7 million next year; the district could see a $2.1 million increase in state funding or a $2.6 million decrease, he said.