DES MOINES -- Gov. Chet Culver and legislative budget architects will face a nearly $543 million gap in funding for K-12 public schools when they begin assembling a fiscal 2011 spending plan next session.

An analysis by the nonpartisan Legislative Services Agency indicates the school aid funding commitment for next school year will call for a built-in increase of $542.7 million that includes "backfill" for the $202.5 million in one-time federal stimulus money and for the $238.5 million lost with Culver's 10 percent across-the-board spending reduction for the current fiscal year.

Another $70 million in state appropriations to K-12 schools would be required to cover the 2 percent increase that was approved last session for base budget "allowable growth," preschool aid and categorical supplements. Also, $31.7 million would be needed to cover a shortfall caused by capping the fiscal 2010 state aid appropriation, according to the LSA analysis.

"We've created a big hole," said House Republican Leader Kraig Paulsen of Hiawatha.

With no change in current law, K-12 school districts would have spending authority for funding totaling $2.689 billion. But Paulsen and others warn that could trigger a shift to property tax increases through the cash-reserve levy.

"All roads go back to the property taxpayers, that's my concern," Paulsen said.

Capping the school aid appropriation at the fiscal 2010 level would reduce next year's funding commitment by more than $100 million but would still leave a $441 million gap for budget-makers to deal with, according to the LSA analysis.

Sen. Bob Dvorsky, D-Coralville, said another possible option that may have to be considered would be to reconsider whether the state can afford to go forward with the planned 2 percent allowable growth approved last session given the unexpected plunge in state revenue collections brought on by a deepening recession.

"Everything's being looked at," said Dvorsky, chair of the Senate Appropriations Committee.

School districts already are looking to borrow money or cutting expenses to absorb all or part of the state aid reduction. School districts also are being exhorted to use current cash reserves to deal with this year's $238 million cut in state aid, although the LSA analysis found 307 districts with positive balances and 54 districts in the red as part of an overall unobligated cash balance of $331 million statewide.

Brad Hudson, a lobbyist for the Iowa State Education Association -- the state's largest teachers' union -- said lawmakers may have to consider new options, such as allowing districts to use proceeds from their local option sales tax for school infrastructure to fund broader general needs.

"If we're going to run quality schools, we're going to have to find the revenue sources somewhere," he said. "Let's look at everything. Let's not just walk in and say we've got to live in the box we've been living in. Let's see if there's some ways we can try to weather the storm we're in to get to better days."

Dvorsky said state officials will have to address budget challenges one at a time, first by dealing with current-year funding cuts and stabilizing that situation before deciding how to attack the fiscal 2011 budget challenges. He held out hope that there would be some economic recovery in the coming months that would help ease the revenue pressures.

Culver spokesman Phil Roeder said funding for K-12 public schools "will be an issue in the budget spotlight" when the governor and lawmakers begin to fashion a fiscal 2011 spending plan next January.

"This is a time that options should be carefully considered, at the state and local level, in order for Iowa to keep our historic commitment to quality public education," he said. "I'd reiterate, of course, that the governor has made clear this is not the time to raise taxes."