The Lawrence school district is being hit with steep increases in fixed costs even as the state is cutting financial support of public schools.

“It just puts increased pressure on the budget,” said Kathy Johnson, the district’s finance director. “Those are costs you have to take care of. The only way is to go back into the budget and … reallocate it.”

District employees received $2 million more in salary and $558,000 more in health-insurance benefits this year. The cost of the district’s liability insurance went up 25 percent and the price of natural gas for heating schools has climbed 19 percent.

The combination of rising costs and declining resources will make it difficult for Lawrence school district committees when they begin drafting a 2003-2004 budget this month.

The pressures could set off a round of changes more painful than last year’s $3.2 million in spending cuts and fee increases.

A hiring freeze, borrowing from the district’s contingency fund and reducing general operating costs might get the district through the current school year.

“We’re trying to Band-Aid this right now until we get in our budget discussions,” Supt. Randy Weseman said.

He said there would be only two untouchable areas of the district’s budget when the school board begins drafting a new spending blueprint. Sacred to the board are line items for classroom teachers and classroom supplies, he said.

“The last thing they’re going to want to do is increase class sizes,” Weseman said.

That leaves on the table possible reduction in student support services and staff, athletic programs and school consolidation.

Johnson said delivering another 4 percent pay increase for teachers would be challenging.

Continuing to pay the premium on an individual health-insurance policy for full-time employees is another possible target, she said. That benefit was retained last year because the district switched insurance carriers to cut costs.

“If we would not have been able to fund it, the employee would have had to pick up a part of the single premium,” Johnson said.

She expects the district will have to budget for another increase in liability insurance.

Tom Bracciano, the district’s director of facilities and operations, said Mother Nature would have a big say in how the budget for natural gas is handled next year. The entire $400,000 in the budget for heating will likely be needed.

“That leaves us no contingency,” he said. “It’s going to be tight if we have a cold winter.”

Weseman said the budget picture for schools took a turn for the worse after the 2002 Legislature approved a $20 increase in state aid to $3,890 per student but didn’t approve sufficient tax increases to cover expenditures.

Gov. Bill Graves issued a decree in August that wiped out the $20 increase and cut an additional $7 per student. The result was a base of $3,863 per student in state aid to districts.

Graves has said that while he cut $41 million from the state’s $4.4 billion budget in August, another cut is likely in early 2003 to keep the state’s books out of the red.

“There’s no mood to raise taxes,” Weseman said. “What will be education’s share of cuts? We don’t know yet.”