Ann Arbor school officials warned against over-excitement at the news that the district could end the school year with a $3.9 million budget surplus based on a first-quarter budget report Wednesday night.

Nancy Hoover, Ann Arbor Public Schools director of financial operations, presented to the full board the budget report for the first time. The district had budgeted for a $268 per-pupil cut in funding from the state, in addition to a $154 per-pupil cut taken last year. School officials now believe that cut won't happen.

However, interim superintendent Robert Allen said the district still doesn’t know what it will receive in funding from the state this year. He said the cut could come as late as in May, when state officials hold their second revenue conference. The first such conference is in January.

“Although the best information we have says that $268 per pupil cut is not coming, it’s not a guarantee that it will not happen,” he said.

Portions of the anticipated funds could be spent on increased staff costs caused by unexpected enrollment in foreign language classes that the district is contractually obligated to pay, Hoover said. Board members will vote on the appropriations of first quarter funds at the next meeting on Dec. 15.

The anticipated $3.9 million is still just a sliver of what the district lost during funding cuts in the last fiscal year. Board President Deb Mexicotte said there is still $16 million of money that was meant for Ann Arbor Public Schools that isn’t expected to fill the district’s coffers any time soon.

The addition of the $3.9 million into the district’s fund balance would bring the total money in the district’s “rainy day” account to $20.93 million.

Trustee Glenn Nelson said, while he was happy to see a projected surplus, it seems as if funding from the state is coming in waves that match up with state legislative elections.

He said this surplus was caused in part by federal stimulus funds the district expected to be spent last year but which were delayed by one year — until an election cycle. This hurt many school districts, which had budgeted for the funds to be spent in 2009-10 and were caught off guard.

“We at the local level have to deal with cyclical funding based on state officials' election cycles,” he said, “and I’m proud to say that in the interest of students having as stable an education as possible, we try to smooth out the cycles, rather than expose them to the depths and peaks of school funding.”

Allen said the district is planning to have four amendment periods during this budget cycle to deal with possible changes from the state late in the fiscal year. In the past, there were only three amendment periods.

Trustee Christine Stead said she hoped the money would go unspent during this fiscal year, in case the state did decide to take the cut in funding. She said creating financial stability through revenue enhancement is in line with the district’s strategic plan.

“We did not know last year what the budget was from the state until the last two weeks of the fiscal year,” she said. “As we publish these reports, we’re doing our best to be fiscally responsible in Ann Arbor so we don’t have to be reactive and do things that will effect a lot of people.”

In addition to the expected surplus, Hoover said the district’s athletic programs will have about $373,000 more this year to spend, mostly on transportation to and from sporting events. The additional funding comes from a small fund balance that has been built up in the district’s athletic fund, which is separate from the general fund.

Kyle Feldscher covers K-12 education for AnnArbor.com. He can be reached at kylefeldscher@annarbor.com.