Watkins and chief financial officer George Crawford said some cuts would come from eliminating up to 45 positions from administrative, teaching, and support staffs in the 3,000-student district.
Officials hope to slice an additional $5 million from the final budget, which would still be underfunded by $13 million, or $10 million less than this year.
"To be able to cut $10 million from our projected deficit is a huge deal, something most districts are not able to do in a year," Watkins said.
To make up the difference, school directors are looking to the state to kick in extra dollars to pay for the district's biggest fixed cost, charter-school enrollments, which will account for $54 million next year.
"If we were able to get help from our legislative friends to help us get closer to balancing our budget we would have an excellent district," Watkins said.
The district's basic education subsidy of about $59 million is projected to remain the same - Gov. Corbett hasn't won passage of his final budget yet - but the district expects an additional $688,000 in the form of a state Ready to Learn grant.
Real estate taxes were down almost $1 million.
Like other districts, Chester Upland is struggling with an increase in the employer contribution to the state retirement plan from 16.93 to 21.4 percent, a $861,000 impact, and $1 million more in health premiums.
Crawford said the initial proposal to cut 20 employees would save $1.6 million, with an additional 20 to 25 staff layoffs expected in the final budget.
In March, the district cut 11 or 12 administrative positions for a $1.5 million savings, Watkins said.
With a new superintendent and high school principal, the district has worked hard to promote itself as the "New" Chester Upland with stronger academics and less violence.
The effort has paid off, officials said, with a 900-student bump in enrollment this year.
The district is betting on even more students signing up next year, which is why its anticipated charter-school payment is $6 million less than this year.
"With some improvement in PSSA scores, lower number of violent incidents, and improvement of kids in lower grades to be more reading-ready," Watkins said, "that means that fewer kids will drop out in time."