The Northampton Area School Board Monday night got its first look at the administration's preliminary 2014-15 budget, which calls for a 3.5 percent tax increase of 1.67 mills from 47.71 mills to 49.38 mills.

Based on the NASD average residential property assessment of $57,503, the school tax bill will increase from $2,743 to $2,839 annually, or a yearly increase of $96.03.

Approximately 60 percent of school district taxpayers are at or below the average assessment.

"Our goal is to get that 3.5 percent below the index of 2.5 percent," Superintendent of Schools Joseph Kovalchik told school directors at Monday night's board meeting.

"I can promise you that that number is going to come down," Kovalchik said at the conclusion of the one-hour presentation by himself and NASD Business Administrator Terry Leh.

"1.67 mills we're hoping to get that down," Leh agreed.

Expenditures in the preliminary budget are $91,349,344. Revenue is $87,633,234. The deficit is $3,716,110.

Leh pointed out that of the budget amount, $85,899,963, or 94 percent, is nondiscretionary.

The budget commits $1.035 million in funding for the new Northampton Area Middle School and secondary campus renovation project.

The preliminary budget is expected to be on the agenda of the board's Jan. 27 meeting in the administration building, 2014 Laubach Ave., when the administration will ask directors to approve it.

NASD officials expect to have a better idea about the level of state funding after Gov. Tom Corbett's Feb. 4 budget presentation.

The administration is also expected to ask the board to approve an application to the Pa. Department of Education (PDE) for a referendum exception which would allow NASD to exceed its 2.5 percent tax hike cap. PDE approval is hoped for by April 14. Exceptions include those for reasons of construction costs and retirement contributions.

"The exceptions are a safety net. Our goal is to not use them," said Kovalchik.

School district budgets are required to be approved by July 1.

Kovalchik cited a number of ways the administration has sought to control expenses.

The 2014-15 budget calls for no new positions. Those retiring have until February to inform the administration.

In discussing the need for the budget increase, Leh and Kovalchik noted that $1.8 million is set aside to contribute to the Pa. Public School Employees' Retirement System and there's a $750,000 increase in employee health-care costs.

Also cited were special education costs. Kovalchik said, "The state has level-funded special education for six years, but costs have increased."

The average cost of educating a special education student is $20,500, compared to $9,300 for other students.

Kovalchik also mentioned the cost of educating charter and cyber school students. There are 181 students in NASD enrolled as charter or cyber school students.

Director Dr. Michael Baird questioned the impact of required Keystone Exams remediation. Keystones were taken in December and will be given again in May. If students don't pass they must retake the Keystones. Student remediation is required.

Baird said the preliminary budget sets aside $200,000 in the budget reserve. He said that might not be enough to cover the cost of hiring more teachers. "How are we going to address that?" he asked.

"Right now, our plan is to use existing staff," said Kovalchik.

"We're going to have to make a determination in the summer. It's an unknown," he added.

"I'm hoping the governor's budget comes through with a little extra funds," Leh said.

Kovalchik said another factor is administrative staff time required to meet the new state-mandated Pupil Information Management System (PIMS).

"That's one of the unfunded mandates that has consumed resources," said Kovalchik. "And by that I mean staff."

"A significant part of my day is required," said Kurt Paccio, NASD director of technology. Kovalchik estimated 10 NASD staffers spend a portion of their work day on PIMS.

"How would you like it if we had to cut teachers and hire data people?" Kovalchik said.

"You can't put a dollar amount on the loss of productivity," said board Vice President Jennifer Miller.

Kovalchik said Northampton and Lehigh counties' school superintendents are trying to make their case with state officials.

"Since September, local superintendents have met with local politicians," said Kovalchik.

The proposed Federal Express facility, projected for completion in Allen Township in 2015, is not expected to have an impact on the 2014-15 budget.

"There has been much talk about FedEx coming to Willowbrook Road in Allen Township. Terry [Leh] and I did not project any of that in our budget," Kovalchik said. "We're not sure where Allen Township and the county is going."