Thanks to some strategic spending cuts and some unexpected increases in revenue, the Philadelphia School District will close this fiscal year with a balanced $3.2 billion budget.

But Michael Masch, the district's chief financial officer, warned the School Reform Commission on Wednesday that the district must figure out how to deal with the loss of $250 million from two-year federal stimulus programs that will end July 1.

"There are things to be concerned about," Masch said as he gave his quarterly briefing on the district's finances at the commission's meeting. "In the end, it is inevitable: I believe you . . . will have to wrestle this spring with making some very tough budget decisions."

He said his office was beginning to draft the next budget much earlier than usual so the district would be able to propose the spending plan for the 2011-12 school year in February to ensure additional time for public comment.

Masch said his goal would be to minimize the impact of any cuts on instruction and the improvements that have resulted in increased test scores for more than eight years.

After the meeting, he said, "We are going to look at everything we do here with fresh eyes."

But he said it would be impossible to make up for the loss of federal stimulus funding "through belt-tightening alone."

He said the district would need to find other revenue sources, including the city, the state, and the federal government.

On the plus side, Masch said that in the current fiscal year, the district had benefited from a $2.7 million increase in funding from the Philadelphia Parking Authority and an additional $3 million from the city as a result of money collected through the tax-amnesty program. He also said the district was in line to receive $5 million from the SugarHouse Casino, which opened in September.

The district also saved $8.8 million on its debt service through refinancing and lower variable interest rates.

But some costs were higher than expected. Masch said the seven low-performing district schools that were converted to Renaissance charters in September as part of Superintendent Arlene Ackerman's Imagine 2014 initiative had cost $6.8 million more than planned.

The district had expected that the same number of students would enroll at the schools this fall. Instead, enrollment rose 15 percent. The district pays tuition to charter providers based on enrollment.

In other action Wednesday, the commission approved the appointment of Leroy D. Nunery II as deputy superintendent and deputy chief executive officer, with a salary of $230,000.

The appointment was made retroactive to June 7, when Nunery began serving in that role.

Nunery is a former vice president for business services for the University of Pennsylvania and the founder and principal of Plus Ultré L.L.C., a consulting company.