Jeffrey Richards, business manager, presented a preliminary budget with a $5.4 million deficit for the 2012-13 school year at Tuesday's Williamsport Area School Board meeting.
"Hopefully, this is a worst case scenario," Richards said.
Thomas Zimmerman, board vice president, said the budget was a strategy, not a certainty, as Act 1 requires the preliminary budget be adopted prior to Jan. 25 to apply for referendum exceptions.
Dr. Kathleen Kelley, superintendent, said in order to help with the budget last year, the district was able to negotiate a pay freeze with employees, but the same action would not make up half of the deficit this year.
Last year's pay freeze was agreed upon with an understanding no employee would be furloughed.
"I cannot keep that promise this year," Kelley said.
She mentioned programs and staff could be cut in order to balance the budget.
"We're not going to be able to keep all the programs we've had in the district. We're not going to be able to keep all the staff," she said.
District administrators have been working on the budget since September and Kelley said they will continue to work on it through January.
Richards said in order for the state to balance its budget, it is looking to take from education funds and using it for the portion it contributes for retirement.
"That makes a lot of sense, doesn't it?" Kelley asked.
Only about $400,000 could be raised if local taxes are raised to the index, Kelley said.
And according to Richards, the deficit increased to $5.4 million on Friday when the district found out the Accountability Block Grant was not expected to be received from the state.
Money from the fund balance could be used to help with the deficit. Richards said they couldn't be certain how much the deficit will be until February when the state's budget is released.
The board voted 7-1 to award tentative bids for the middle school alteration and addition project. Dale Vollman, board member, was the only no vote and Karen Harris, board member, wasn't present for the vote.
"We cannot sign the contracts physically," Vern McKissick, project architect, said.
Richards explained the bids could not be officially awarded because they did not own a property between the middle school and high school properties. The owner has agreed to sell, but it hasn't been sold yet.
Fred Holland, solicitor, said the acquisition should be done by Dec. 19.
McKissick said bids came about $2 million over their original estimate. The reason McKissick gave for it was site costs were bidded for a worst case scenario - soil in a wet year would not be able to be reused and so new fill would be needed.
Bids received were all about the same amount, McKissick said.
"I think it's safe to say we had a relatively competitive bid," he said.
The board unanimously voted to include an alteration to plans for an additional courtyard to be included. The courtyard would be about the size of a gymnasium and McKissick said it could be used for classes and other school functions.
Vollman was the only board member in a 7-1 vote to say no to plants being placed on a first-floor roof outside the library. The addition to the project would be a low-maintenance solution for the roof as it will be directly outside library windows and would not be visually appealing, McKissick said.