The School Administrative District 54 board of directors on Thursday approved a $48.89 million budget for the next fiscal year. Of the $2.38 million spending increase, $1.04 million is from increases in negotiated salaries and $655,000 is from increases in health insurance costs. That leaves an overall increase in other costs of about $688,000. “That’s a very small number in a $48 million budget,” said SAD 54 Superintendent Jon Moody, pictured above, center, speaking with students last year. Anna Chadwick/Morning Sentinel file

SKOWHEGAN — The School Administrative District 54 board of directors on Thursday unanimously approved a $48.89 million budget, which will go to voters in the district’s six towns for approval later this spring.

Overall, district spending is up $7.05 million, or 16.84%, over the current fiscal year. But much of that increase is offset by state funding that passes through the district for the construction of the new $75 million consolidated elementary school.

That means the portion of the budget funded by local property taxes is set to increase 3.95%.

The state is picking up about 94% of the cost to build the Margaret Chase Smith Community School on Heselton Street in Skowhegan. Local fundraising, which hit its goal of $3 million earlier this year, and $1.9 million in federal funding will cover the rest, meaning that local taxpayers are not expected to pay for any of the construction.

Subtracting the state funding for the school construction and other state revenues, the budget reflects an effective increase of $2.38 million, or 5.70%, in spending over the current fiscal year.

The budget cuts more than 20 positions, many of which were created as a result of the COVID-19 pandemic.

Of the $2.38 million spending increase, $1.04 million is from increases in negotiated salaries and $655,000 is from increases in health insurance costs. That leaves an overall increase in other costs of about $688,000.

“That’s a very small number in a $48 million budget,” SAD 54 Superintendent Jon Moody said.

One key factor driving the increase on local taxation is state funding that did not keep up with inflation and increasing costs, Moody said. The valuation of SAD 54’s six towns collectively grew, and their poverty rate declined, which both bring down the amount that the state sends to the district.

To mitigate the effect of the district’s spending increase, the district plans to use $1.22 million in available fund balance, Moody said. A typical budget in recent years used around $600,000 in fund balance, according to Moody.

That move, along with $200,000 in pre-K funding returned to the district by KVCAP, brought the local impact to under a 4% increase.

Had the board not approved the use of the $1.22 million in fund balance, the increase in the amount raised through local taxation would have been more than 11% over the current fiscal year, Moody said.

“The goal here is to put towns in a pretty good situation based on what happened last year,” Moody said. “But if it (cost increases) happens again, we may need to come in at 8% (increase) or a higher number.”

Spending on the new $75 million Margaret Chase Smith Community School in Skowhegan is included in the SAD 54 budget approved Thursday. But because the state is picking up most of the tab for the new elementary school, it is not driving the tax increase in next year’s budget, from which taxpayers will see an average increase of 3.95%. Zara Norman/Morning Sentinel file photo

Even so, because changes in state valuations are beyond the control of the district, taxpayers in some of the district’s six towns are looking at increases greater than the budget’s overall 3.95% local increase.

Those towns are Canaan at a 7.14% increase, Mercer at 6.63%, Norridgewock at 5.67% and Smithfield at 9.54%. Skowhegan’s share is set to increase 2.69% and Cornville’s just 0.73%.

“There are winners and losers … because of what happens with valuation, which is a state formula,” Moody said.

Over the last six years, the portion of the budget funded by local property taxes has increased on average 2.14% per year, Moody said.

Moody said he plans to meet with town officials in the coming weeks to address any concerns about the board-approved budget.

The budget then is presented to voters to approve or reject, with a May budget presentation and a June referendum planned.