Austin school district's June 2002 audit shows the fiscal year ending better than expected.

"One of the highlights of the memo was an increase in the undesignated fund balance of $314,000," said Lori Volz, the district's director of finance and operations.

Volz said it was largely due to factors including: $103,000 in vacant positions that did not get filled and $162,000 in fees, transportation, supplies and substitutes.

Darwin Viker, an accountant with Larson, Allen, Weishair and Co., presented the school board with the audit results early this week. He said the district has continued to make progress in financial conditions. The total on the district's undesignated fund balance stands at $1.2 million, compared to last year's $935,440. The fund balance reflects a 4.65 percent increase in annual expenditures.

Even though the district made progress, Volz said it will be facing some tough challenges in light of the current state financial situation. She said it is most likely that there will not be as much funding from the state.

"We won't know for a while what we will receive," she said.

The district will have to consider inflation increase and a reduction on their state share.

Viker presented several options for the board.

"You might have to go to the voters and ask for support, or look to see where you can make cuts," he said.

The renovation of Wescott Field reflected a negative balance of $1,292,240. Volz pointed out the deficit is entirely covered by $1,551,864 in pledges that are

yet to be received. "A bulk of it is from Hormel and the Hormel Foundation. Due to account guidelines, we cannot recognize it as revenue until we receive the pledges."

It will be difficult to continue to keep having large fund balances, said Viker.

Viker said he would not recommend to use reserve funds to fix the decrease in revenues, but rather to look at making cuts.

"The challenge will be very little revenue. There is no budget surplus," Viker said.

Roxana Orellana can be reached at 434-2214 or by e-mail at roxana.orellana@austindailyherald.com