BUTLER TWP — The Butler School Board Monday night was presented with a preliminary budget for the 2016-17 school year that includes a $6.9 million deficit and a property tax hike.

The preliminary budget was presented by Deborah Brandstetter, the district’s director of business services.

Overall, the proposed budget shows $99 million in revenue, with half coming from local taxes and nearly half coming from the state.

The state money figures are coming from estimates, based on what the district got in the past, Brandstetter said.

The property tax rate for the district is 94.8 mills, but the preliminary budget assumed the maximum tax increase allowed by law, up to 97.8 mills.

The district’s average assessment value is roughly $17,800, so at 94.8 mills, the average property owner would pay $1,696 per year in property taxes. At the 97.8 mill rate, that same property owner would pay $1,749, only a $53 increase, Brandstetter said.

Under local revenues, the proposed budget shows a $1.3 million increase in real estate taxes, and a $600,000 increase in earned income taxes.

State revenue was projected to increase by $1.4 million, with $1.2 million coming from state reimbursements to the district for payments to the Pennsylvania Public School Employees’ Retirement System.

However, the school district’s PSERS payments reflect an increased contribution, from 25.84 percent to 30.03 percent. This means the district will pay $2.1 million more in the 2016-17 school year.

The total expenditures for the preliminary budget are $106.4 million, an increase from 2015-16 school year’s $100.7 million budget.

Salaries and benefits make up roughly 70 percent of the district’s projected expenses, $44.5 million and $29.6 million, respectively. These represent $1.2 million and $1.8 million increases respectively.

The budget’s $6.9 million deficit could potentially be solved by using the reserve fund balance the district has, but under that solution, the district would fall below its own policy that there be at least a $5.3 million balance in the reserve. Currently, there is $11.4 million in the reserve fund, and Brandstetter has predicted a $2 million deficit for this year’s budget, which would leave the reserve fund at $9.4 million. After the $6.9 million deficit, there would only be $2.4 million remaining in the reserves.

This budget also included a $1.3 million technology budget that would incorporate smart boards into the classrooms from kindergarten to third grade.

Board member Bill Halle said he hoped the district could look at strategic planning for the future so that the district could dig itself out of the financial hole that PSERS has led to. PSERS payments are mandated by the state so the district cannot control those ever-increasing costs.

“We’re raising taxes because of something that is not within our control,” Halle said.

Board member John Conrad stressed that the public should be aware that the increase in taxes is driven primarily by the increasing PSERS payments.

“We have shielded our taxpayers from the action of our state government,” Conrad said. “Basically, we’ve enabled (the state government) to bully us into this increase. Past boards have shielded our taxpayers from this. We should have been increasing like this in our costs and the taxpayers should have been freaking out, as they should have.”

Last year, the school board did not increase the property tax.

Board member Leland Clark said this has contributed to the need to raise taxes this year.

This preliminary budget will be discussed further before the final proposed budget is presented in May. The district’s next finance committee meeting is at 6 p.m. on April 11 at the Harriger Educational Services Center, 110 Campus Lane.