Evanston Township High School faces a potential budget deficit of up to $3.6 million for the 2004-05 academic year, according to an early assessment of budget proposals for the upcoming year.

Computer budget models prepared for Evanston School District 202, which serves the high school, show the deficit in the school’s educational fund could grow to nearly $8 million by 2010 if district employee labor costs continue to rise at the current rate and property tax caps remain at their current level.

The computer model will be used to determine the possible financial outcomes of actions the district considers taking to reduce the deficit.

“We’re going to look at the budget overall and we will probably make some cuts because we can’t be living with a deficit forever,” D202 board member Margaret Lurie said.

“We have to take a hard look at programs we value and see what we could do away with,” she added. “But we’re not there yet.”

District officials think local property taxes, which make up 83 percent of D202’s revenue, are unlikely to bring more money to ETHS anytime soon. But property tax caps limit taxes to about 2 percent in 2004.

“(Tax caps) create the deficit problem,” Lurie said. “It’s been a terrible burden for a school district like us.”

Business Manager Jeff Taggart said the tax caps do not change as the district’s financial needs change because they are based on the Consumer Price Index, which does not take into consideration increases and changes in labor costs.

Taggart said tax caps based on the Employee Cost Index would allow tax increases to better accommodate changes .

The school has not had a major budget deficit since 1977. Since then, D202 has occasionally run small deficits, Taggart said.

“We have had a balanced budget until last year — we pride ourselves on that,” Lurie said.

— SCOTT GORDON AND LILY LEUNG