The Lawrence school district’s budget was slashed by $2.5 million by the time the first bell rang in the 2009-2010 school year.

And now, with lower tax revenues going to state government, the local school board might have to look at more cuts in January.

“It’s going to get kind of ugly,” school board President Scott Morgan said.

State tax receipts for the first quarter of the fiscal year, which began July 1, are down 12 percent compared with last year. During the 2009 legislative session, the state budget was cut three times. Gov. Mark Parkinson made additional cuts after lawmakers adjourned last spring.

The Lawrence district is trying to brace itself for further reductions in this year’s budget.

“We have gone into the fiscal year knowing that it was very possible that we would have a cut yet in this fiscal year,” Morgan said.

To help protect itself, the district is only spending half the money it allocated for instruction materials and professional development. Superintendent Rick Doll said the district is holding $500,000 in reserve.

“That will not sit well with (principals) because they’re already really pinched and have not purchased some things that they need to,” Doll said. “But that may be the only option we have.”

The district also has a contingency fund to dip into if necessary.

Rather than getting state funding in one lump sum, each district in the state receives a monthly check from Topeka. Sometimes, those checks don’t make it in time to pay district employees.

“With the way Kansas operates, we face the risk of not getting a monthly check from them,” Morgan said. “People are expecting their check from us and that’s why we have contingencies.”

And paying certified employees just got a little more expensive.

The board ratified new teacher contracts earlier this month. It will cost the district about $523,000 in increased pay, which ranges from $200 to $1,500, depending on a teacher’s experience and education.

Doll said teachers deserved the raise. But he acknowledged: “It puts us even deeper in the hole.”

The school board cut custodial staff, busing for students who live closer than 2.5 miles from their school, and elementary school clerical aides. The board might have to start looking at classrooms for new cost-savings measures, something it tried to avoid during the last round of cuts.

“With 85 percent of our budget spent on staff, after a while, you lose options as to where you can make cuts,” Morgan said.

Doll says the district and board tried to protect teacher jobs, and, ultimately, class sizes, but potential mid-year cuts could affect that by impacting next year’s budget.

“I’m not sure that we’re going to be able to hold to that commitment in the future,” Doll said.

Both Doll and Morgan think the district can make it through this year. The 2010-2011 school year, however, is another story.

“Between contingencies and the way that we’ve delayed spending … I think we’ll be fine,” Morgan said. “It won’t be fun, but we can do it.”