NASHUA — Not since it overran its operating budget by $3.3 million in 2010 has the Nashua School District not returned money to the city at the close of the fiscal year.

This year the district will return $684,468 to the city from its $94.5 million budget.

According to SAU 25’s Chief Operating Officer Dan Donovan, the district is returning about seven-tenths (0.7) of a percent of its allocation.

“At the end of the year, any money that is not spent by the schools, the money goes back to the city,” Donovan said.

According to the city’s finance office, surplus funds received from the departments do not necessarily translate into lower taxes. After the surplus is analyzed it is decided whether the leftover money should stay put, or go towards easing the tax burden.

Most of this year’s surplus comes from lower-than-budgeted staff expenditures. Due to fluctuations in staffing, Donovan said it’s impossible to budget the exact amount needed.

“Keep in mind we have 2,000 employees. You really don’t know who’s coming and who’s going,” Donovan said.

The Nashua School district is the city’s third largest employee, behind Southern New Hampshire Medical Center and BAE Systems.

Payroll represents about 80 percent of the budget, while benefits for district employees are paid by the city.

The amount budgeted is based on current payroll and projected increases and decreases. Donovan said unforeseen changes, such as replacing four teachers earning $69,000 with four that will earn $40,000, result in savings by attrition.

In addition, each school is given a certain amount of money each year, some of which is returned to the district. Energy prices and weather also affect the district’s expenditures.

As of the most recent audit, Nashua has a $25 million surplus, with a 2012 operating budget of $240 million.

Donovan emphasized that the district is forced to live within its means.

“In a budget in a regular company, you could overrun your expenses, and if you had more revenue that would offset it you’d be okay,” he said. “This is a cost budget. They give me a pot of money, and I can’t spend a dime more than what I have.”

Donovan said the school budget will likely increase this year because most of the workers’ contracts are set to expire. On August 30 the contract with the teachers union ends, with negotiations starting in the coming weeks.

The school district was the first to report its surplus to the city this year. The rest of the city’s departments are expected to file later this month.

- - - - - - - -

Simon Rios may be reached at srios@newstote.com.