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In 2001-02, the school district ran in the black for the first time in five years, since the 1996-97 school year. But the school district had a deficit budget in 2001-02, as well as in the 2002-03 fiscal year, which just ended on June 30.

Whether the district ran in the black or the red for 2002-03 will not be known until the district's annual audit is completed this fall.

The 2003-04 budget - approved by the school board last week, before the new fiscal year started on July 1 - predicts a general fund balance of $155,000 for the coming school year, with expected revenues of $8,567,000 and expected expenditures of $8,412,000.

In the past three years, the school district has made budget cuts totaling over $1 million. General fund expenditures in 2003-04 are down nearly $75,000 from 2002-03. This winter, the school board approved $216,000 in budget reductions and $22,000 in fee increases, but reinstated $55,000 in programs, netting around $183,000 in savings to the school district for the coming school year.

The biggest change, though, for 2003-04, is the levy referendum. This was approved by district voters in April 2002 but was not added to property taxes until 2003. At $415 per pupil unit, the levy should generate nearly $465,000 in additional revenue for the school district in 2003-04.

In 2004, extra state aid will reduce the local tax levy for that levy referendum by $100,000 ($50,000 for 2003 and $50,000 for 2004). But while state aid increases for this, the school district will lose $42,000 in aid for debt service in 2004, resulting in a higher tax levy for debt service.

The levy referendum is the main increase in school funding for 2003-04. According to the Department of Education, basic state aid to the Paynesville Area School District will decrease by 0.2 percent in both 2003-04 and 2004-05.

The school district, by law, has to approve a budget by the start of its fiscal year. But the budget typically is adjusted during the course of the school year, said superintendent Howard Caldwell.