The Dover Area School Board faces a $6.17 million deficit in the district's 2014-2015 budget and a variety of options for dealing with the issue.
The board could raise taxes above the 2.8 percent limit set by the state Department of Education, take money from its fund balance or reduce spending by cutting staff, salaries and programs.
For the next school year, the district's revenue is figured to be about $52.5 million, compared to about $58.7 million in expected expenditures, creating the $6.17 million deficit, said acting superintendent Jason Conway.
Budget talk: He did a budget presentation during Monday's school board meeting. The board is scheduled to adopt a final budget May 19.
In the meantime, the school board will have to decide whether to exceed the tax cap set by the state.
Raising taxes to the 2.8 percent cap would bring in an additional $754,390, but still leave the district with a sizeable deficit.
The district's current millage rate is 21.48 mills. An increase to the cap would raise the property tax rate to 22.08 mills, meaning an extra $90 in taxes for the owner of a $150,000 home.
But school districts can apply to the state for permission to exceed the tax cap if they face expenses beyond their control.
Rising costs: Conway said the district's financial woes stem from $4.35 million in increased expenses in the areas of salaries, benefits, transportation costs, special education and retirement contributions.
For example, retirement contributions will increase more than $986,000, going from $3.55 million this academic year to $4.52 million for 2014-15; and insurance costs are expected to rise from more than $4.9 million this year to just over $6.08 million next school year.
Also, salary costs will reach the $22 million mark next school year, an increase of more than $403,000, Conway said.
While explaining that the school board has the option to make reductions to save money, Conway said that the administration already operates at a "very frugal and very bare bones" level.
Keeping up: As its third option, the board could use the fund balance that consists of $3.8 million in unassigned funds and close to $6.8 million in committed funds, which includes money for PSERS, debt service, health care and technology.
However, using money from either of those funds would hinder the district's efforts to keep up with current and future financial obligations, Conway said.
Board member Julie Ann Emig said if the board forgoes raising taxes for the 2014-15 year, the district will not be able to recoup those dollars to help the district meet future obligations.
"I don't like raising taxes," she said. "But I don't want the district to go bankrupt either."
--Reach Eyana Adah McMillan at firstname.lastname@example.org.