KARNS CITY - The Karns City School Board has approved an $18.4 million budget for the 2004-05 school year that does not include a property tax rate increase.

"This is the 12th year in a row we've been without an increase, and we're kind of proud of that," said Superintendent Larry Henry.

The board approved the budget on June 14.

To help keep an increase at bay, the district transferred $1.6 million from its budgetary reserve and saved money through several retirements, said Boyd Hillwig, the district business manager.

Spending is expected to be up 2.7 percent for next year, but the use of the reserve funds has covered those expenses.

However, the district will be left with only $80,783 in its reserve account following the transfer. Many districts use a yardstick of 5 to 10 percent of their budgets for the size of their reserve fund. But some districts have been dropping below that standard to keep tax hikes at a minimum.

According to Hillwig, a long-term concern of the district's administration is the trend of its expenses increasing 4 percent a year while revenue is trending at a 3-percent increase per year.

During this school year, the board transferred about $150,000 from the reserve account to cover expenses, but it still has about $100,000 in expenses to pay.

One area of financial stability is the fund used to pay for future retirement and risk management liabilities. That is because at the end of the 2002-03 school year, the board moved $1.48 million from the general fund budget into that fund.

The money was carried over into this year's budget and will be carried into the new budget for 2004-05.

While there was no millage increase, tax rates for the three counties served by the district have been adjusted to reflect current assessed values on real estate for those areas.

Due to a state formula used to make sure taxpayers in the counties served by the district maintain their proportionate share, the rates are subject to change even without an overall millage increase.

Tax rates for the district for 2004-05 will be 83.95 mills for Butler County, up from 83.93; 28.62 mills for Armstrong County, up from 28.39; and 46.22 mills for Clarion County, down from 48.02.

Increases in spending in the 2004-05 budget include:

Medical insurance, $177,050.

Retirement contribution costs, $36,743.

Transportation, $60,233.

Cyber charter school tuition reimbursements, $71,570.

The district has 131 full-time teachers and one part-time instructor.

The biggest decrease in the budget is for maintenance and equipment, which dropped $80,896.

Revenue sources include a 2.1-percent increase in the state basic education subsidy and a 4.9-percent increase in the special education subsidy from the state.