KARNS CITY — The closing of the Indspec Chemical Corp. plant in Petrolia likely will be costly for the Karns City School District and its residents.

Karns City is proposing a 2016-17 budget with a tax increase of 2.8 mills for Butler County residents, said Deana Turner, district director of business affairs.

The budget includes $23.1 million in expenditures, this year's budget had $25.8 million in expenditures. The district's property tax rate would increase to 91.95 mills for county residents, which would mean a hike of about $42 on the bill of a house assessed at $110,315.

District residents in Armstrong and Clarion counties would see a 1.2-mill increase too.

Indspec announced earlier this year that the plant will cease operations at the end of July, which means about 220 employees there will lose their jobs.

That includes 93 employees who live in the district and pay earned income tax, Turner said. District officials expect losing $40,000 in earned income tax revenue from those employees, she said.

Officials also anticipate an increase of about $100,000 for medical expenses for six district employees whose spouses were employed at the plant and will lose their health insurance, Turner said.

The district had four professional staff members retire this year and will see $200,000 in savings on salaries and benefits by hiring entry-level teachers to replace them, Turner said.

School Board President Brian Fleeger noted that the required state pension contributions and also cyber school costs continue to put fiscal pressure on the district. The increase in next year's pension obligations will be more than the district could bring in with a maximum tax increase.

The announcement of the closing of the chemical plant will have a number of negative impacts on the community, Fleeger said.

“It is a devastating loss for our local community to lose an employer such as Indspec. This closure affects the workers, their families, our school district and our community at large in a very negative way,” he said.

District enrollment has been dropping in recent years, which means it receives less state aid, per the current formulas, Turner said.

This year the district had 127 students graduate and as of late last week it had only 77 students signed up for kindergarten next year, she said.

The Karns City district includes Fairview, Parker and Donegal townships and Petrolia, Fairview, Karns City, Chicora and Bruin boroughs in Butler County.

The school board can vote to adopt the budget at its meeting Monday.