Although the numbers were better than expected, J. Sterling Morton School District 201 ended the school year in the red, and will likely face an even tougher battle next year.

Preliminary budget results, presented to the School Board July 8, indicated a nearly $3 million shortfall for the 2008-09 school year. Gail Kopf, assistant superintendent of finance and operations, estimated revenues at around $79 million and expenses at about $81.9 million. She does not expect next year to get any easier.

“The 09-10 school year is going to be a tough year,” Kopf said. “I’m estimating that revenues will only go up under a million dollars for the year.”

That is largely because some of the district’s major revenue sources, including real estate and business taxes, are millions of dollars lower than expected.

After an increase of 4.1 percent last year, the 2009 tax levy will increase by only 0.1 percent. The state tax cap permits school districts to raise taxes by 5 percent or the rate of inflation, whichever is less.

“That’s hitting all school districts really hard,” Kopf said.

Kopf said the 4.1 percent increase in 2008 resulted in about $1.3 million of additional revenue over the previous year. In comparison, Kopf said the district may receive an increase of as little as $125,000 for the 2009 levy increase.

Tax revenue from local businesses also has fallen and is likely to continue next year. The business replacement tax, which businesses pay when filing state income tax returns, had previously been a constant source of increased revenue for the district.

In the 2007-08 school year, the district received $7.2 million from that source alone. But by the last school year, the positive trend turned and revenue dropped to $6.18 million, a 14.8 percent decrease. Kopf said she is estimating it could drop another 10 percent next year, bringing in only $5.5 million.

Meanwhile, expenditures are predicted to increase 5 percent. The increase reflects the newly negotiated teachers’ union salary increases, and several large capital improvement projects with which the district must move forward.

“We’re still working on that tentative budget number, but I’m thinking it could be a deficit of a few million more than this year,” Kopf said. “We need to just see how revenue numbers come out and work on how we can minimize the shortfall to the extent possible.”

The district also is keeping an eye on $2.5 million in grants that have largely been tied up because of the state’s budget, said Assistant Superintendent Michael Kuzniewski.