An excess tax levy, or larger class sizes, are the two options for the Austin school district, Finance Director Lori Volz said Monday.

Volz estimates a shortfall of $1 million or more for the 2004-05 school year. The shortfall will come from rising costs and no funding increase from the state. Inflationary costs, including salaries, health insurance and special education tuition increases, were more than $1 million last year.

She said the school system would have trouble absorbing that kind of figure.

"Unfortunately budget reductions of a million dollars would be devastating for our district," she said.

Volz said the district is already trimmed down about as far as it can go. If cuts are the answer, they would try to start this year. However, contracts will be set, and there will not be much left to cut from this year's budget.

Reductions next year would impact students.

"It absolutely will be affecting our class sizes, and that is a big concern," she said.

To find out the public's feelings about a levy, the district has hired a consulting group to survey Austin citizens by phone. Officials hope to find out whether there is support for a levy as well as other things such as what programs are important to citizens. That information could be used in discussions about future budget cuts.

Adding to budget woes is an expected drop in enrollment. The district expects to lose 20 students next year and 68 in 2004-05. Each student lost reflects a loss of funds for every year they would have been in school.

"The loss of revenue will really magnify as time goes on," Volz said.

Board member David Simonson said they can never seem to hit a comfortable number for running the district.

"We're chasing a figure we just can't catch up to," he said.

Volz said a big reason is that Minnesota's ranking for education funds continues to drop compared with the rest of the nation.

Board member Dick Lees said the situation is unavoidable with the decisions made in the legislature.

"Until the state changes its funding, this is just going to be the way of life for schools," he said.

The district currently levies about $1.4 million. The last time a referendum passed was November 2001, from which the district currently gets about $1 million per year.

The school board will have to move up its September board meeting in case they decide to run a referendum. The deadline to set that is in mid-September.

Matt Merritt can be reached at 434-2214 or by email at matt.merritt@austindailyherald.com