Uncertainties over the outcome of Mars School District’s contract negotiations with teachers and support personnel plus a $1.2 million 2012-13 budget deficit have the district wrapped in financial questions.

Even with a $5.2 million general fund balance projected for the end of the current fiscal year on June 30 — a sum that technically will resolve the upcoming year’s shortfall — the district isn’t out of the financial woods, especially with the unknown additional costs of the new employee pacts.

But one thing is certain: If the district is committed to avoiding a financial crisis for the short and longer terms, the school board cannot negotiate a multi-year contract with teachers and support personnel with raises well above the rate of inflation. Nor can it afford to not require those employees to pay a reasonable amount toward their health care coverage, which they currently do not do.

If the district agrees to contract provisions beyond its ability to pay, the stage will be set for much more serious financial woes than the district encountered this year and last year due in part to the state’s financial problems and the commonwealth’s inability to significantly increase school subsidies.

Out of the $5.2 million projected 2011-12 budget surplus, $2 million already is committed for future employee retirement increases stemming from the state Legislature’s unconscionable 2001 pension grab that included increasing teachers’ pensions by 25 percent — amounting to a deferred pay increase.

The $2 million allocation toward pensions will leave only about $3.2 million in surplus funds — not an excessive amount for a district of Mars’ size.

That’s why the board and administration intend to seek additional cuts in the district’s operation beyond those already implemented for the new year — cuts that decreased the deficit from the $2.5 million shortfall announced in April.

By law, school districts are not permitted to pass a deficit budget such as Mars’ unless there are funds to cover the deficit.

Mars is fortunate to have the needed money.

The board has demonstrated confidence in its own and district administrators’ ability to deal with the uncertain money issues without extracting additional money from property tax payers, and that’s commendable.

The easy thing for the board would have been to raise taxes to bolster incoming revenue for the $38.8 million 2012-13 spending package, but the board instead voted Tuesday, in conjunction with budget passage, to keep the property tax at 99 mills.

The full impact of that tax decision won’t be known until negotiations are concluded, and they aren’t proceeding well. But the availability of tax-increase revenue would have been a basis for union unwillingness to agree to a contract in line with the district’s ability to pay.

Both unions have twice rejected a state Labor Relations Board fact-finder’s report that recommended some additional pay for the employees, but also payments toward health care coverage, including co-pays.

Mars teachers currently pay nothing toward their coverage, contrary to what most district taxpayers face in their jobs.

Meanwhile, the district must maintain a reasonable fund balance to protect the school system in the event of unanticipated expenditures, such as a costly repair at a school.

“This newly adopted budget responsibly balances our educational responsibilities with the unfortunate economic realities,” said Dayle Ferguson, board president.

Despite having a budget in place for the start of the new fiscal year, the board and district employees must keep in mind the uncertainties and challenges that lie ahead.