The financial picture for the East Baton Rouge Parish school system as it nears the end of the fiscal year is looking brighter, but still more budget cuts loom.

The school system, the second largest in Louisiana and home to about 42,000 schoolchildren, is expected to reach June 30 with $42.4 million in its reserves. That’s $18 million more than was estimated when the 2015-16 fiscal year began July 1.

Credit a healthier-than-anticipated surplus — schools call it a “fund balance” — carried over from the year before that came in $9.1 million more than estimated. Reduced spending so far this fiscal year is also helping, almost $8 million less than budgeted. There are two primary reasons:

— 522 fewer students enrolled in district-run charter schools: $6.3 million in savings.

— Cheaper fuel for school buses and cheaper electricity and natural gas for buildings: $2.2 million in savings.

This good news is contained in a revised 2015-16 general operating budget released earlier this month. Even so, the school system is still expecting to spend much more this year than it’s taking in. The revised budget calls for spending $453.3 million while collecting only $431.2 million in revenue. While better, the remaining $22.1 million gap is unsustainable unless revenue increases or spending decreases, or both.

“It’s still a deficit but it’s less of a deficit,” said Catherine Fletcher, chief business operations officer for the school system.

Fletcher presented the revised budget to the School Board on Tuesday. The board is likely to approve the 112-page document when it reconvenes April 21.

“This will be the foundation for us to start planning the 16-17 budget,” Fletcher said, a draft of which will be completed in late May.

The general fund accounts for 70 percent of the more than $600 million the school system spends each year. The fund is the system’s primary source of unrestricted money to pay for operating expenses, to finance new initiatives or to cover emergencies. Since 2010, the school system has cut the budget annually because of a mix of tight state funding, a variety of expenses and growing competition from charter schools.

Superintendent Warren Drake has set a target of cutting $15 million in spending for 2016-17 and has given his departments until April 30 to settle on a final list of recommendations to meet that goal.

Drake has already signed off on some cuts that should get the school system well on the way to $15 million:

— A new staffing formula that includes cutting dozens of positions in middle and high schools but more positions in the early grades : $7 million.

— Reduced purchases of new school buses in 2016-17: $1.5 million.

— Co-locating two alternative schools, EBR Readiness and Northdale superintendents academies, on the Northdale campus, by ending EBR Readiness’ current lease at Town South shopping center: $180,000 a year.

Despite all the cutting, Drake’s office is still expecting to spend more money in 2016-17 than it’s taking in and will draw on reserves to stay in the black as the school system has in recent years. The plan is to get out of deficit spending by fiscal year 2017-18.

A possible reduction in state education funding could force cuts beyond the $15 million target. Lawmakers are laboring to fill an anticipated $750 million shortfall in the budget that starts July 1. One scenario being debated would reduce funding to East Baton Rouge by $2.3 million. The current session of the Legislature adjourns June 6, when parish School Board members will be seeking to finalize the 2016-17 budget.

Some new expenses are beyond the school system’s control. For instance, in December, over Drake’s fierce protests, the state approved two new charter schools in Baton Rouge to open in fall 2016. Drake said those schools could cost the school system as much as $3 million in 2016-17 and more in the future if the enrollment of those schools grows, taking with them per pupil state funds that otherwise would go to the parish school system.

Enrollment also is a concern. After holding steady the past couple of years, enrollment dropped by about 600 students this school year from the year before. That cost $2.5 million in state funding. Further enrollment declines will make the budget situation worse.