For the first time since the 2004-05 school year, Philadelphia School District officials are projecting that they'll end the fiscal year with a budget surplus, they said during yesterday's School Reform Commission meeting.

Also yesterday, the officials said textbook audits at high schools revealed serious book shortages at three or four schools.

And, they announced, district schools will be not close on Jan. 20, a Tuesday and the day after Martin Luther King Day, for Inauguration Day. Schools will instead use special curricula at every grade level that day to turn President-elect Barack Obama's Inauguration into a teaching moment, district Superintendent Arlene C. Ackerman said.

"Believe me, you don't know how we agonized over this, back and forth," she said of the decision to keep schools open.

Because many students would not have parental supervision, the decision was made to hold classes, Ackerman said, so students would be able to watch the Washington festivities on television and learn from the event. Also, if parents request it, their children can get the day off to attend the Inauguration.

Regarding the budget, if expenses stay on course, the district will have $490,000 left when the fiscal year ends next June 30, said the district's chief business officer, Michael J. Masch. He noted that last spring the schools were grappling with a $29.7 million deficit.

A fraction of that deficit remains on the books - $476,000. It will be erased and replaced by a surplus "as long as we keep spending under control," Masch said in an interview.

The improved financial situation is due in part to a hiring freeze that reduced salaries by $16.7 million; $5.7 million less being spent on charter schools due to smaller-than-projected student enrollments, and $6.5 million less being spent on transportation, due to SEPTA's agreement to charge the district only for TransPasses that studentsuse rather than for all passes given to them, Masch said.

Commission members said the financial projections from Masch - the state's former budget director - should remind state lawmakers that the taxes that have been invested in city schools are being managed well.

"It's very important that this is the type of message that gets to Harrisburg . . . These are dollars that have been well-managed, well-spent and accounted for," Sandra Dungee Glenn, chairwoman of the reform commission, said during the meeting.

Commission member James P. Gallagher pledged, "We are tough-minded enough and prepared not to fall into the canyon again."

Last week the Daily News reported that despite the district's spending $124 million in the last five years on textbooks, students were still complaining that their schools do not have enough textbooks for them to take home.

Textbook audit teams found that many high schools have enough books, said Tomas Hanna, chief of school opeations.

"You might find that in one room they may be short a book or two here," he said. "They could go across the hall or into the book closet and identify that book.

"We did find schools that knew they were short and placed orders and indicated such to us," he added.

Still, there was "very uneven" implementation of the district policy, which requires students to pay for lost books, he said.

Also "uneven" are schools' policies on letting students take books home, said Hanna, a former principal.

After finishing audits of the high schools, the teams will move to middle and elementary schools. *