PROVIDENCE — The proposed 2008-2009 school budget is so bare-bones that the district’s chief financial officer, Mark Dunham, said the School Department will barely be able to keep the buildings clean and the lights on.

At $322.9 million, the proposed budget includes a shortfall of $9.7 million, and Dunham said he had no answers as to how that deficit will be made up. The budget does not set aside any money for salary increases during a year in which teachers are negotiating a new contract, which is in its second year of discussion. A 1-percent salary hike, for example, would cost an additional $1.9 million.

The budget presumes that there will be no additional aid from either the state or the city.

“It feels like we are bankrupt,” said School Board President Mary McClure at last night’s board meeting. “What can we do if we don’t meet our legal obligation [to balance the budget]? We’re very close to not meeting our legal obligation.”

Dunham responded that the district was “close to not being able to run the schools. We’re close to being in peril.”

Last year, the district took extraordinary measures to balance the budget, increasing class sizes for special education students, a move that infuriated teachers and parents and caused the union to appeal the change to the state commissioner of education. Commissioner Peter McWalters, however, upheld the district’s request. And in 2006, the school district helped close its budget shortfall by temporarily closing Nathan Bishop Middle School on the East Side, another unpopular decision.

The proposed budget represents an increase of $8.6 million or 2.7 percent over last year’s $314.3 million budget. Of that increase, pension fund contributions and medical insurance absorb the largest piece of the pie, $4.4 million; out-of-district placements for special education are expected to cost $400,000 and contracted salary increases add up to $600,000.

There is hardly any money in the budget, Dunham said, to pay for programs that would contribute directly toward improving student achievement, measures like reducing class size, offering common planning time for teachers and providing more professional training.

“We’ve been living modestly,” he told the board. “But we’ve been regressing as far as resources go.”

According to Dunham, 350 employees have been shed over the past 10 years and 42 teachers are expected to receive the ax this year. Meanwhile, both state and local aid have been declining for the past two years. Last year, Providence received no increase in school aid from the General Assembly and Mayor David N. Cicilline and the City Council cut a total of $8 million from the School Department’s original budget proposal.

Complicating matters, a new state law further limits how much cities and towns can raise taxes. This year, Providence can raise a maximum of $12 million in new tax revenues, Dunham said.

The school district, however, is required by state law to provide a number of services, from textbooks to school nurses for private and parochial schools, which cost approximately $3 million. The City Council recently hired a lawyer to investigate how the public schools are funded, including the private school issue, Dunham said.

The district is facing several big unknowns, including the amount of school aid allocated by both state and local government and any salary increases in the new teachers’ contract.

The budget must be sent to Cicilline by April 28, well before the state aid figures are finalized. The school budget is submitted to the council in May and should be back before the School Board in July or August.

lborg@projo.com