After a couple of years of investments and no painful cuts, the Duluth school district once again faces familiar deficit territory.

About $3.3 million in costs must be eliminated from an $85 million unrestricted general fund budget for next year, a number not seen since planning for the 2014 budget.

The Duluth School Board heard from district administrators Tuesday night about the preliminary budget, which they'll vote on in March so staffing decisions can begin. A final budget will be up for approval in June.

While the past few years have seen a surplus for the district, Superintendent Bill Gronseth said "expenses have finally caught up to us, and we knew they would because our increases haven't kept up with the percentage increase of expenses."

That's why when the 2013 operating levy was approved, investments were conservative, he said. That annual money still will be used for the things it was intended: maintaining class size reductions after record highs and working on student achievement. But it's not likely that class sizes will be reduced further, Gronseth said.

The deficit was created largely through declining enrollment. More than $500,000 of it is a holdover from fewer students related to this year's budget; enrollment projections for this year were off by 85 pupil units, a weighted enrollment measure of students. Another $1.6 million in enrollment reduction is projected for next year, with an estimated loss of 140 pupil units. That loss of student revenue could mean some teacher layoffs. The state allocates money to school districts based on their numbers of students.

Overall, the district - which has experienced declining enrollment for more than 20 years - lost nearly 2.5 percent of its students between October 2014 and October 2015, with the largest decrease seen in elementary schools.

While an increase to the state per-pupil funding formula next year adds more than $1 million to the budget, the district will add $1.5 million to teacher salaries. Those increases come from contract stipulations and pay raises for things such as experience and education. Other likely expenditure increases come from inflation and projected health care costs - estimated to be 6.5 percent - although that health care number has come in lower than projected in recent years. If nothing is done and state per-pupil aid doesn't increase for the 2018 budget, the deficit could nearly double.

"The focus isn't on the second year out," said business services manager Bill Hanson. "It's just to give you a feel on where we are headed."

While board members for years have talked about reinstating the seventh period at the middle and high schools - cut in 2012 and 2003, respectively - the cost would be about $2.4 million, Gronseth said, and would mean "considerable structural change."

The district has been exploring different types of scheduling that would allow more variety in class choices, such as block scheduling.

No reduction or investment options were proposed to the board Tuesday, with work beginning this week on a plan to balance the budget.

The 2014 and 2013 budgets both dealt with more than $3 million in reductions, and in 2012 cuts totalled $6 million.