Facing a legislative funding freeze and following $700,000 of budget cuts, officials spent months promoting a levy referendum to bring $1 million into the school district — and voters shot it down Tuesday.

While 2,077 voters said “yay,” a slightly louder 2,193 said “nay” to an increase in property taxes — which would have cost the average homeowner $84 a year — designed to stabilize the district’s budget, paying for employee contracts and maintenance.

Just one day after the election, the district’s director of finance and operations said he is already beginning to analyze what this will mean for the district. Though it is too soon to know for sure, Stotts said the district may face $750,000 to $1 million in cuts.

“It may impact our number of employees, and potentially class sizes,” he said. Eighty percent of the district’s budget is in employee salaries and benefits, Stotts explained.

The 2009-2010 budget is balanced, but it cost the district $700,000 in efficiencies.

Stotts said next year’s budget will be planned within the coming months.

The proposed referendum would have rolled two of the district’s three referendums into one; the first ($53.35 per pupil) expires in November 2010 and the second ($251.18 per pupil) expires in November 2011. Instead of asking for a renewal at $304.53, the district asked voters for $531.32 per pupil.

An August survey of 400 registered voters in the Austin Public School District revealed that most would be in favor of increasing the operating referendum.

The district’s third operating referendum — $415 per pupil — generates $2.07 million per year. Its last date for renewal is November 2013.

The school board could again approve the roll-and-increase referendum, sending it to the ballot next election before existing referendums expire. The school board unanimously approved the referendum this year, with board members Diana Wangsness and Curt Rude absent. Newly elected members Aaron Keenan and Jeff Kritzer both supported the referendum.

According to the Minnesota School Board Association, 41 out of 58 districts reporting operating levy results passed at least one this election, a 71 percent passage rate.