HUGHESVILLE – The latest budget for the 2012-13 school year for East Lycoming School District uses a lower real estate tax increase than anticipated.

In December and January, when the budget committee started the preliminary budget, the proposed millage rate was expected to be a 1.2 mill increase from the 2011-12 millage rate of 11.53 mills, David L. Maciejewski, business manager, said.

After the board challenged him to decrease that to 25 percent or less, a new proposed 2012-13 rate was presented at 11.78 mills.

Real estate tax makes up 58.5 percent of the local revenue. Local revenue accounts for 39.9 percent of the budget. The hike in the real estate tax is expected to cost the average person $19 to $20, Maciejewski said.

The earned income tax rate is expected to stay the same for the upcoming year at 1.2 percent of earned income. The earned income tax makes up 25.4 percent of the local revenue.

A 5.63 percent budget change resulted from the 2011-12 budget to the 2012-13 one. The budget change is concentrated in three major areas: state sources, which includes construction reimbursement at $359,310 and retirement reimbursement at $159,507, and a reserve savings account for future expenses at $380,664.

“We’re utilizing some of that (reserve) in next year’s budget,” he said.

The budget for the 2011-12 budget was $20.19 million. The anticipated budget for 2012-13 is $21.32 million.

He anticipates using the reserve for the next 10 years.

One of the big changes from the state budget that reflects in the district’s budget is a student achievement block grant of $9.03 million. It is made up of the instructional subsidy of $7.86 million, transportation costs of $710,000 and the state’s share of social security of $420,000.

The student achievement block grant is designed to give school districts more flexibility with how to allocate funds. “The expenses are still there,” Maciejewski said.

What also helps the budget is 13 people retiring. Of those 13, nine positions are being replaced and four will remain open.

Those positions that are continuing will save money because the senior positions will be replaced by newer staff, who will receive a lower salary than their predecessors.

The School Board passed the 2012-13 proposed general fund budget of more than $21 million. The budget has an increase of more than $1 million, or 5.03 percent, from the 2011-12 budget.

“To balance the budget, the real estate tax rate will increase to 11.78 mills for the upcoming school year, which is a 0.25-mill hike, or 2.17 percent,” said Maciejewski.

The increases come from four main areas: health insurance, state school retirement system, cyber-charter school tuition and debt service for prior building renovations.

The budget will be open for public inspection at the school district. The final budget adoption is scheduled at the June 19 meeting.