With a philosophy of getting them all and sorting them out later, the Northgate School District will apply for exceptions that would allow the school board to increase property taxes more than three times the allowable index for the 2010-11 fiscal year.

Under the coming year's Act 1 index, Northgate should be required to get voter approval of any increase in the the district's property tax millage rate of more than .98 mills. The same law also allows for exceptions to that rule. Northgate School Board members were told in a special meeting Monday that the district could be eligible for exceptions that would allow a tax increase of up to 3.1 mills.

Board finance committee chairman Dan O'Keefe said that without a sizeable tax increase, Northgate is on target to completely deplete its reserve fund balance by 2013.

Furthermore, he said, it would take the entire fund balance plus a tax increase of 1.67 mills just to balance the preliminary proposed budget for 2010-11.

Superintendent Dr. Reggie Bonfield and business manager Marilynn Berner said that local revenue has been dropping over the last two years, and the district has been offsetting the loss with grant funds. Bonfield said the district received more than $2 million in grants and other special government funding for the 2009-2010 school year.

Unfortunately, that funding is neither predictable nor reliable.

"Those expenses aren't going away" when the grants disappear, Berner noted.

Although much has been made of school districts obtaining exceptions for tax increases because of an increase in next year's contributions to the Pennsylvania School Employees Retirement System (PSERS), O'Keefe said that Northgate would qualify for an exception of only .41 mills based on the contribution increase. Increases in the district's special education costs could qualify Northgate for another .22 mill increase, but the lion's share -- 2.47 mills -- could come as a result of the decreases in local tax revenue over the last two years, he said.

Bonfield said that revenues dropped by almost $200,000 between the 2009-10 and the 2010-11 bud-gets, even though the district based its budget on collecting only 93 percent of the local tax revenue due Northgate.

Berner said that although earned income tax revenue is lower, the losses primarily come from property taxes. She attributed that to poor economic conditions and people being out of work. Bonfield noted that 50 percent of the district's students are eligible for free or reduced price lunches based on their families' incomes.

Board president Susan Nolan noted that increasing the millage could result in even more people being unable to pay their taxes, but board member Shannon Smithey said that although the number of people paying taxes may decrease, the millage hike more than likely would result in additional revenue for the district.

"There has been...a tendency to hope that next year will be better," O'Keefe said. "We really can't afford to do that."

Bonfield said that Northgate's millage rate has increased by only 1.5 mills since Allegheny County moved to a market valued assessment system in 2001. While the average increase in county school districts has been 3.75 mills over the last eight years, Bonfield said, Northgate has gone from 23 to the current 24.5 mills. Only one other school district -- McKeesport -- has increased its millage rate less than Northgate, he said, adding that at one time Northgate had the second highest property tax millage rate in the county.

"We still haven't migrated to the bottom of the list by any means," Nolan said, noting that Northgate was still in the top 10 for school district millage rates.

Board member David Natale challenged administrators to make budget cuts, and find $700,000 that could be eliminated from the budget. Both Berner and Bonfield said that cuts of that magnitude would eliminate all sports and school activities, the property maintenance budget, and severely cut the technology budget.

Bonfield said that administrators could"pretend" the district did not need a $100,000 maintenance budget, for instance, "but things still have to be fixed."

Berner said that administrators had tried to find areas to cut.

"We were doing devastating damage to every program" and still could not come up with $500,000 in cuts, she said.

Smithey suggested that the district should not avoid small expenditure cuts just because they would not solve the budget deficit entirely.

"It's going to make a tax increase much more palatable," Nolan agreed.

Bonfield said that school districts are not permitted to cut teachers for financial reasons, only if there was a reorganization of the schools or the elimination of programs.

"There's not a lot of fat in this budget," he said.

Both Bonfield and Berner told school board members that even if the state approves exceptions that would allow a 3.1 millage increase over the .98 mills allowed without a referendum, that does not mean the board has to levy all or any of the tax hike.