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The Tucson Unified School District Governing Board passed a $578 million budget Tuesday night, despite protests from employees and parents about some of the board's decisions in closing a funding shortfall for the next fiscal year.

About $362 million of the overall budget is for the district's operating costs, an increase of $2.1 million from last year's budget despite a drop in student enrollment of about 1,300 over last year. The increase, though, is being absorbed by increased utility costs and a settlement in a tax lawsuit brought by Qwest Communications.

Dana Champion, a parent of a student at Bloom Elementary School, complained about the death-by-a-thousand-cuts happening at her school. Not only is Bloom slated to share a principal with another school, but it lost other staffers, including an instructional support coach, an attendance clerk and a safety resource officer. With charter schools and other districts wooing students, the district can't afford to bleed schools, she said. "Those parents will look elsewhere," she warned.

"It's one thing after another, and I just don't feel they took other options into consideration," she said after the hearing.

Meanwhile, about 30 retirees packed the meeting, protesting a recent decision to eliminate medical insurance options for retirees, which would save about $46,000 in administrative costs. Retirees, who have been enrolled with Aetna through the district, would get their health insurance from the Arizona State Retirement System, which is offering PacifiCare.

Barbara Needle, a school psychologist who retired in 2002 after 30 years of service, told board members that she must take expensive anti-rejection medication for a double-lung transplant she had in 2001. She predicted her annual out-of-pocket health costs would jump 48 percent, to nearly $11,000. Needle said she turned down a more lucrative position in private practice. "I did so because TUSD promised that health insurance would extend into my retirement years," she said.

Superintendent Elizabeth Celania-Fagen, who arrived in the district a week ago, told board members that she has directed the staff to come up with a solution.

Steve Courter, president of the Tucson Education Association, told board members that he was happy to hear there may be a fix for retirees in the mix, but he demanded that work furlough days for employees be removed from negotiations. With a balanced budget, the teachers union leader said, employees deserve to hear that they won't be asked to lose days for pay. "Do you want TUSD to become known as the district of last resort?"

Board member Judy Burns, the sole dissenting vote on the budget, said she couldn't vote for the budget for some of the same reasons outlined by Bloom's Champion. "I feel some of the decisions made this year were done rashly and are not good for kids in the long run," she said.

But fellow board member Joel Ireland defended the budget, saying the district did the best it could in a bad situation. When the board decided earlier this year not to close schools to adjust to lower student enrollment, he said, that meant the money needed to come from somewhere. So while sharing principals isn't popular, and while cutting health care for retirees isn't popular, he said, "I think we did pretty well considering we started with a $20 million budget shortfall."

Although the board was required to tell voters that the primary property tax may increase by $10 to about $227 on a $100,000 home, staffers indicated that's a worst-case scenario and that homeowners might actually see a tax decrease. The district will not have a definite answer until property valuations are finalized in August.