BUTLER TWP - The Butler School Board introduced its preliminary 2004-05 budget Monday night, which includes a 5.5 mill tax increase.

The board approved the preliminary budget by a vote of 5 to 2, with board members Kathleen Sherman and Craig Lucas voting against it. Board members Larry Goettler and Cindy Davis were absent for the vote.

The $74.4 million budget reflects a 6.7-percent increase in expenditures over the current year, with 3.31 percent of that coming from the announced plans to renovate the Butler Intermediate High School.

Of the 5.5 mills, 3.5 are due to the $20 million bond issue that will be taken out to renovate the intermediate school, said business manager Greg Faulk.

"It is the only building that has not been renovated in the district and it is now 32 years old," said Superintendent Ed Fink.

The renovation will focus on the heating/air conditioning systems, the roof and the electrical and lighting systems, Fink said.

A lack of energy efficiency in the building, along with a failing roof, is costing the district exorbitant amounts of money each year in operation costs, Fink said.

Without the renovation, the district would only be looking at 2 mills in real estate tax increases.

The property tax rate would increase from 97.5 mills to 103 mills under the preliminary plan.

The increase means a $45.71 increase in yearly taxes for the owner of a property with a median assessed value of $8,310.

A mill is equal to $1 for every $1,000 of a property's assessed value.

In the Butler district, a mill generates $287,635.

New line items for the preliminary budget include:

$49,374 for an elementary guidance counselor

.

$30,000 for the conversion of a part-time computer technician position to full time

.

$400,000 for textbooks

.

$834,000 for a Pennsylvania Block Grant

.

$996,992 for debt service for the intermediate high school project.

The preliminary budget includes a fund balance of $4.8 million, down from $5.1 million for the current year.

The largest expense in the 2004-05 budget is for salaries, at $36 million.

Benefits will cost $7.2 million, which reflects an 11-percent increase over the current year.

The district helped save money in this area by switching over to a preferred provider organization, or PPO, from a point of service, or POS, plan for its employees, Fink said. A PPO is a self-insured version of an HMO.

The change in plans will provide more than $500,000 in savings during the life of the existing contract with its teachers, Fink said. The change is allowable thanks to a clause in the current teaching contract that allows for a switch in insurance plans so long as the new service provided is equivalent to the old service.

"Other districts are seeing 26-percent increases, but thanks to this clause, we've been able to reduce that," board vice president Diane Snyder said.

Projected revenue sources for the 2004-05 year include $36.7 million from local real estate taxes; $33.1 million in state subsidy; $3.6 million in federal subsidy; and $2,000 from other sources.

A total of $640,000 was transferred from the capital projects reserves to help reduce the hike in the property tax rate.

The district lost $134,444.51 due to tax reassessments this year, and stands to lose another $90,000 on two more appeals that are pending, Faulk said.

Revenues also include an $831,932 state block grant.

This money will be used to help focus on the No Child Left Behind mandates, which is a requirement of the grant, Fink said.

It will be used to:

Hire a first grade teacher for Center Township Elementary School at $52,662

.

Hire six early intervention teachers to reduce class size for kindergarten through third grade for $315,973. These are all new positions. Desired class size for these grades is 17.

Instructional supplies at $115,000.

Hire six reading/math teachers to tutor basic and below-basic students at the secondary schools at a cost of $300,000.

Provide professional development needed to implement the elementary literacy program, early literacy diagnostic program and the new remedial program in the secondary schools. Total cost, $48,297.

Fink cautioned the money should not be looked at as helping the district with its budget since it must be spent on certain things, all mandated by the state.

"You really can't think of this as helping us with our budget," he said. "This is strictly money coming in and going out."

Board president Russ Greer said he is pleased with the budget, especially the savings realized by switching health insurance plans.

"Overall, I think it's a decent budget," he said.

Snyder agreed, noting the bulk of the property tax rate increase is to make much-needed repairs to the intermediate school.

"I do believe this is the healthy way to go," she said. "If you look at it, 3.5 (mills) of that is renovations that I feel need to be done to that building. The 2 mills is costs that we don't have much flexibility on."

Snyder said if taxpayers look hard at the budget, they'll realize board members did a good job of maintaining existing programs without introducing any new ones to help keep a control on spending.

The preliminary budget is available for review weekdays during school hours at the Harriger Education Center.

Final adoption is slated for June 21.