The Northeastern School District is building a budget around raising property taxes next year to the maximum the state will allow, but does not plan to file for exceptions as it did last year.
Brian Geller, Northeastern's director of operations, presented a preliminary budget to the finance committee Thursday to go over the administration's recommendations for the 2014-2015 budget.
The district faces a deficit of $1.02 million in the $59.6 million budget for the next school year.
With an increase of 0.69 mills or 2.8 percent more in taxes, the added revenue will be $909,327, to leave a deficit of $115,423.
The increase of 0.69 mills means a homeowner with a property valued at $150,000 would see a tax increase of $103.50. With the increased millage rate at 25.61 mills, that homeowner would pay $3,841.50 in property taxes next fall.
The budget increased from $57.8 million for the current school year.
Pension costs: Geller said the district's contribution toward its pension fund increased by 28 percent for the upcoming year.
"The employer cost of retirement is really what is driving budgets in this state," Geller said. "We're no different."
The district salaries and benefits account for about two-thirds of the total budget, Geller said. Retirement funding increased by $1.1 million for the upcoming budget year, and healthcare costs increased by $500,000.
With the tax increase, Geller said the district should be able to operate the school without any further significant cuts in the next year. Geller said it was also able to avoid some further cuts because of the auditing process from the previous year that added about $700,000 in funding from local resources.
Geller said part of that money came from taxpayers who paid off back taxes. He said he does not expect that to be a trend, but more of a one-time occurrence.
Superintendent Shawn Minnich said there is a long-term planning work group that continues to meet to work on developing cost-saving measures for the district.
Minnich said there are no new positions created in the district, and vacated positions are evaluated to see if they are necessary. If they are, the district tries to make do with a part-time position before hiring another full-time staff member.
Minnich said the district has also dealt with increased class sizes, fewer assistant coaching positions and eliminating a librarian position, among other things, to cut costs in the past three years.
"The bottom line is we still need to be creative with what we do," Minnich said.
The finance committee asked Geller, for the next committee meeting in January, to come up with ideas for how to pay the remaining $155,423 deficit.
Future budgets: Geller also presented a forecast for how the upcoming budget years could look. The largest impact on the district will be continually rising employer contributions to retirement and health-care funding, he said.
Geller suggested the board "commit" up to $1 million from the general fund balance to paying for future retirement funding, so the district can save for those larger payments in the next three or four school years.
Right now, the district's general fund balance is about $3.4 million. Geller said putting some of that money aside for later is similar to how parents save money for their children's college education.
To "commit" that money, a majority of the board members would have to vote to earmark the money for future retirement costs. That process could be reversed by majority vote if the funds were needed for something else in the meantime, Geller said.
Geller also suggested refinancing some of the debt the district has from past building projects. The total debt, with interest, is $114 million. Geller said one option would be to refinance $5.9 million of that into a bond pool loan for a lower interest rate.
- Reach Nikelle Snader at firstname.lastname@example.org.