The creation of an employee retirement incentive plan figures to save Northern Lehigh School District about $800,000.

The school board unanimously agreed on Monday to adopt the plan for all eligible professional employees, on a voluntary basis, for the 2010-11 school year.

Business manager Jeremy Melber said the program will ask those high-end teachers who account for about $111,000 per position to retire and not be replaced, which would result in a savings of over $1 million with its fund balance and long range plan.

"This is a one-time only program that will allow teachers in the district to submit a letter in writing between tonight and April 6 saying that they will retire from Northern Lehigh School District," Melber said. "We're offering this this year, and this year only."

Melber said the district anticipates that between six to 10 teachers will retire, which would save the district anywhere from $700,000 to $900,000 in the 2011-12 budget.

"This will save the district about $800,000, which will basically put the district on sound financial ground," he said. "We do feel this plan will work, and feel that teachers that wouldn't retire will because of this incentive."

Melber said the district came up with the retirement incentive plan in an effort to lower a projected $1.2 million shortfall in the 2011-12 school year.

As per the program, Melber said the teachers would receive a $25,000 incentive paid into a tax shelter account in two equal amounts of $12,500 on Oct. 31, 2011, and Feb. 8, 2012.

However, Superintendent Michael Michaels noted there is the potential that some of the vacancies may eventually be filled.

Director Mathias Green said he asked Michaels for assurance that the district wouldn't have a mass exodus of teachers retiring.

"That was one of my concerns," Green said. "I've been assured that's not going to happen."

In a related budgetary matter, the board unanimously agreed to adopt a resolution to not raise taxes above the Act 1 tax index, which is currently set at 1.9-percent, or, 1.22 mills.

As a result, Melber said the board will now have until May to adopt the 2011-12 preliminary budget. Otherwise, he said the board would have had to adopt a preliminary budget by February.

Last month, Melber said a proposed 15 percent increase in insurance costs has been whittled down to 8 percent, or a $190,000 savings to the district.

But, with the expected loss of $825,000 in basic education funding, coupled with a $450,000 increase in salary and benefits, the board is still faced with a $1.2 million deficit, Melber said.

However, he said the district may be able to shave about $200,000 from that, which would leave it with about a $1 million deficit that could be offset by the retirement incentive plan.

Also at that time, Michaels told the board the district could save $10,000 on energy costs.

In November, Melber told the board that the district will likely lose about $1.2 million in state funding in the 2011-12 school year; $825,000 in basic education funding, and another $365,000 in Accountability Block Grant funding.

In June, the board approved the 2010-11 budget with a 2.38 percent, or 1.5 mill increase that raised the millage rate from 62.873 to 64.373 mills in Lehigh and Northampton counties.

That meant a person with a home valued at $100,000, and assessed at $50,000, paid $3,219 in property taxes to the district this year, $75 more than last year's $3,144 rate.