BUTLER TWP — Butler School Board Monday night approved a preliminary budget for 2016-17 that includes a 3-mill property tax hike.

Even with the tax increase, the proposed budget is $3.9 million out of balance.

The budget includes $100.5 million in revenue and $104.4 million in expenses, according to Deborah Brandstetter, director of business services.

On the revenue side, the district will receive an estimated $49.8 million as local revenue, which is 49.6 percent of the budget.

The proposed tax hike — the maximum allowed by the state — would make the district’s real estate tax rate 97.8 mills. At the current tax rate of 94.8 mills, the average property owner pays $1,696 per year. At 97.8 mills, that would rise by $53 to $1,749, said Brandstetter.

In total, the tax increase would give the district an additional $1.3 million.

Another 47.8 percent of total revenue comes from state funds, an anticipated $48 million. This year it got $46.3 million.

In total, the preliminary budget projects $3 million extra in revenue from the current school year. This year, the district recorded roughly $97.4 million in revenue.

On the expense side, roughly $72.7 million will be spent on salaries and benefits. Another $13.1 million will pay for services, such as transportation. Another $8.2 million goes to financing services, such as $7.7 million for debt service.

The district is mandated by the state to make a certain payment to the Pennsylvania Public School Employees’ Retirement System. For next school year, the district will pay roughly $12.9 million for that, receiving a state reimbursement of $7.4 million.

For this school year, the district has paid $10.9 million, receiving about $6.2 million from the state.

The preliminary budget includes a $1.3 million technology upgrade that will add smart boards in kindergarten to third-grade classrooms and expand wireless access networks.

The district anticipates a $10.1 million reserve fund balance at the start of the 2016-17 school year. With the projected $3.9 million deficit, the district could use the reserve and end up with about $6.2 million.

The board approved that expense amount of $104.4 million.

The district is required to pass a final budget by June 30.

The board’s next meeting is at 7:30 p.m. June 13 at the Harriger Educational Services Center, 110 Campus Lane.