Though Nashville’s public school district is saving money through a hiring freeze and falling gas prices, revenue shortfall projections are continuing to climb. An updated $12 to $14 million shortfall is now being projected for the entire school year, and that does not include the impact of what many believe to have been a depressed holiday retail season.

Metro Finance Director Richard Riebeling said late Monday, after a mid-year meeting between the school district and Metro Council, that holiday figures will be known at this time next month.

“At that point, if the numbers are continuing to decline, then we need to reassess all our numbers for the year,” Riebeling said. “Nobody’s very optimistic.”

Shortfall projections for the entire school year have grown throughout the school year, from $11 million in the fall up to the current estimate of $12 to $14 million.

Steve Glover, chair of the Board of Education’s budget and finance committee, said the monthly shortfalls have also increased — meaning that the deviation between monthly projections and actual sales tax revenues has increased with each month that passes.

“The picture is a bit more bleak than what we’d anticipated, but it’s not shocking,” he said. “We’re falling right in line with where I had a feeling we might be.”

Metro Nashville Public Schools, as a district, has realized savings this school year to compensate for the shortfall. More than 60 vacant positions have been frozen, primarily in areas outside school classrooms.

Declining gas prices may also help. School officials said Monday that they expect to save as much as $1.3 million in fuel expenditures this school year as gas prices have fallen, even though costs of diesel fuel — which powers most school buses — have not fallen as much as costs of gasoline.

District budget issues are expected to be on the agenda for tomorrow’s Board of Education. Newly hired Director of Schools Jesse Register doesn’t officially begin work at MNPS until Thursday, but he’ll be present at tomorrow’s board meeting and he has been kept in the loop about the revenue shortfall.

As the economy struggles, sales tax revenues are coming in below projections with increasing severity. Sales tax revenues reach the district two months after they are collected through retail purchases, so the most serious economic troubles of this fall are only just now beginning to trickle to schools. Two-thirds of all Metro sales tax revenues are directed to schools, so the trouble is not experienced with similar severity by Metro government as a whole.

Though cuts are being made, the district still has a surplus of reserve funds. Currently, MNPS has $52 million in undesignated reserve funds. Metro’s Finance Department has a policy specifying that a reserve balance of 5 percent of total a total fund should be maintained in reserves. MNPS’s reserve balance is still well above those requirements — 5 percent of the district’s operating budget would represent about $30 million.

But about $19 million in funding for the current school year was pulled from the district’s reserve funds for expenses that recur each year, and Glover has said that as much as $5 million additional dollars may be used from the reserve funds this year. Next year’s reliance on reserve dollars is anticipated to be even greater.