After months of contemplating cuts, a rise in the Consumer Price Index and large number of teachers set to retire could reduce District 181’s deficit by about $1 million.

During a School Board meeting Monday, school officials said the projected $3.8 million deficit next year will be closer to $2.8 million due to a rise in the CPI during the first nine months of 2009.

“Our initial projections several weeks ago of a $3.8 million deficit were based on an assumption of a CPI of 1.5 percent,” said Troy Whalen, assistant superintendent for business. “At this point, we are now using 2.5 percent for what we believe the CPI will be at the end of the current fiscal year.”

The state limits school districts from collecting taxes more than the CPI or 5 percent  — whichever is lowest — compared to the previous year. Recently, the CPI has never been more than 4.1 percent, said Michael Frances, senior financial advisor for PMA Financial Network, Inc.

Last year’s CPI of 0.1 percent produced significant reductions in public school district tax revenues statewide.

“Right now the nine-month trend for the CPI is about 2.7 percent,” Frances said. “It is very reasonable to project a 2.5 percent CPI.”

The financial projection provided some good news to a School Board facing difficult decisions as they begin preparing the 2010-11 budget.

School officials have been looking at ways to deal with sharply declining revenues that could result in the spending down of its $20 million in cash reserves during the next several years.

The current forecast indicates district cash reserves could fall to $8.9 million by the end of the 2013 fiscal year, and less than $200,000 by 2015 if projected revenue levels and expenditures remain the same.

School Board President Marc Monyek said he is confident the CPI trend should remain in the 2.5 percent range.

“Usually the CPI doesn’t change drastically over the last two months of a calendar year,” he said.

Monyek said an additional $500,000 will be gained after 17 teachers retire after the 2009-10 school year.

The number of retirees is expected to drop to two after 2010-11 school year, then another 14 the following year.

During Monday’s meeting, Mario Castillo, a teacher at Clarendon Hills Middle School and negotiations chairman for the Hinsdale/Clarendon Hills Teachers’ Association, urged the School Board to use fund balances during the next two years instead of making substantial cuts to programs or teachers.

Castillo said other districts facing similar budget issues have opted to spend cash balances in order to maintain high levels of educational services.

“(Wilmette Public School) District 39 chose not to compromise programs or instruction, and took any such cuts off the table immediately,” Castillo said. “We think District 181 would be better served to emulate District 39’s approach and preserve our excellent programs and weather the storm instead of considering massive program cuts.”