SAN MARCOS -- Parents and teachers who oppose the San Marcos Unified School's District proposal to increase elementary class sizes heard little words of encouragement at Monday night's board meeting.

Superintendent Kevin Holt, in fact, told the packed board room that the proposal to increase the size of first- and second-grade classes from 20 to 24 students was good news, because staff members had considered an increase to 30 until just last week.

"At 24 to one, it's good news," he said, adding that the district can bring back 22 temporary teachers and all probationary teachers who had faced layoffs as part of budget reductions because of the increased class sizes.

Several people did not see the move as good news, however.

"This decision is being made despite an ending balance of $20 million this year," said Michael DeVries, president of the San Marcos Educators Association. "We find this unacceptable."

In a budget update earlier in the meeting, Holt showed the 2009-10 budget with a beginning balance of $19 million after several cuts, including the class-size increase to save the district $700,000.

Decreasing revenue from the state during the last few years has prompted the San Marcos board to dip into its reserve and make several cuts. Holt presented a bleak outlook for the next few years, and cautioned the board that the news could get even worse as the state's fiscal crisis continues.

The proposed district budget scheduled to go before the June 29 meeting is $19 million and includes a $1.8 million deficit that will require using its reserve. Projecting to 2010-11, Holt said the budget will be $17.4 million, and the reserve will be depleted. Under the current downward trend, the budget may be as low as $2.7 million in the 2011-12 fiscal year, and the district could go into receivership, meaning the state would take over its operation, Holt said.

With two weeks left before it votes on its budget, Holt said staff members will continue to crunch numbers and negotiate with teachers before making a final decision on class sizes.

Some speakers Monday night argued that studies have shown that smaller class sizes improve academic performances. Some first-graders from San Elijo Elementary School also spoke against the increased class sizes, with one student saying the result would make the rooms "squishy."

In fiscal year 2006-07, revenue in the district was $128.7 million, and expenditures were $123.8 million. The following year, revenue in the district was $133 million and expenditures were $135 million.

In fiscal year 2008-09, revenue was $134 million and expenditures were $139 million.

In fiscal year 2009-10, which begins July 1, projected revenue is $130 million and expenditures are $134 million.

Call staff writer Gary Warth at 760-740-5410.