HAYWARD -- The city's schools will remain in the hands of Hayward trustees for the time being, as a district report released Wednesday night stated the latest budget outlook shows solvency through June.

The report has Hayward Unified ending the fiscal year with a surplus of nearly $2 million, but district officials made it clear that it doesn't portend a rosy future -- shortfalls will top $20 million by July 2013 if nothing is done to further slash the budget.

Interim assistant superintendent Sandra Lee Lepley attributed this year's reprieve to the final state budget, which didn't reduce attendance funding by the expected amount.

However, the current year uses one-time federal stimulus funds, and takes advantage of the temporary use of funds in areas they aren't earmarked for, such as money rerouted from the adult school and into K-12 education and funds tied to the discontinued Class Size Reduction program.

Lepley said that after next year, those funds will have to be used for the given purpose, meaning another source of money will need to be found for the nonconforming uses.

She said staff members are "painstakingly reviewing every position in personnel" looking for areas that can be trimmed, but told trustees she could not say, at this point, where those cuts might come from.

However, Superintendent Janis Duran reiterated what she said during the summer, when it was believed that $8 million would have to be cut this year to stay afloat: There's no way to make those kinds of cuts without union concessions.

Late last month, the Public Employees Relations Board concluded that the district and the Hayward Education Association were at an impasse in negotiations, and Duran said the first mediated meeting has been set for early February.

The district has carried a negative certification since summer. That means the budget cannot be shown to be in the black for the current year and each of the two following years.

It also means a financial adviser was appointed by the Alameda County Office of Education, and is the first step toward a state takeover if the district cannot balance its budget. The Alameda County superintendent ultimately has the power to reject any actions taken by Hayward board members believed to be detrimental to reaching positive certification.

Because status quo spending would amount to a deficit down the line, the district Wednesday night voted to submit another negative certification.

"Even if we meet our obligation this year, everything we know puts us negative next year, and the year after that," Lepley said. "In a perfect world, we could say we are positive (because of this year's balance), and all go home. But we have to certify negative."

The next budget update will come in March, although the board will hold workshops on possible actions before then.

Contact Eric Kurhi at 510-293-2473. Follow him at ekurhi@bayareanewsgroup.com. Read his blog at www.ibabuzz.com/hayword.