Members of the Lehighton Area School Board Financial Committee met Thursday to discuss the preliminary budget for the 2010-2011 school year.

The committee members intend to remain within the Act 1 state property tax index, which limits the size of any potential tax increase to 3.9% percent for the upcoming school year. For Lehighton residents, this means a maximum tax increase of 1.78 mills.

District Business Manager Michael Malay stressed that the district will not necessarily raise taxes by 1.78 mills, but that this is the maximum increase allowed by Pennsylvania law.

Pennsylvania Act 1, the Pennsylvania Tax Relief Act of 2006, sets an allowable tax increase in millage for Pennsylvania school district each year. This index is calculated by the Pennsylvania Department of Education. If a school district wishes to raise property taxes higher than the index, they must ask district members to vote on the increase during the May primary election.

Committee members could not comment on any potential tax increase or decrease at this time, noting that a lot can change between now and the final budget's approval in June. This first attempt at balancing the budget is only the beginning of a lengthy process.

"We have a lot of variables out there right now," said Superintendent James Kraky.

These variables include state funding levels, employment levels within the school district's municipalities, and district-wide property values. Because property taxes are assessed in relation to property values, district revenue has fallen as property levels trend downward.

Malay noted that within Franklin Township alone, assessed property values have fallen by $400,000 since last year's budget.

The district is also facing two unresolved contracts for teachers and support staff. Until both contracts are finalized, the finance committee must estimate upcoming salary and benefit costs.

"We did this first budget very conservatively," said Malay, noting that several line items may change before the budget is finalized, and that he is erring on the side of caution this year until more concrete numbers are available. It is only once the budget is finalized that the board will be able to announce if property taxes will remain steady or increase.

For now, superintendent Kraky has done his best to keep spending within the district at a reasonable level. He's worked with each school's administration to discuss next year's budget.

"For the past year and a half, we've been working on a building-level budget," he said, noting that each of the four elementary schools and the middle and high schools each have their own proposed budget. He has been encouraging staff members to justify expenses and reduce costs.

"The bottom line is, we're ensuring that we will keep this budget under the 1.78 millage increase," said Kraky.