The South Williamsport Area School Board unanimously approved to submit a draft of a preliminary 2012-13 budget, which showed about a $800,000 deficit at Wednesday's meeting.
"Anything can happen," said John Engel, board president. "There's a lot that can happen in the budget year."
The preliminary budget will be displayed publicly for 15 days, as required by law.
Dr. Mark Stamm, superintendent, explained the district faced a $1.2 million deficit last year but managed to balance it by cutting each school's budget by 15 percent and having a district-wide pay freeze.
About $320,000 also was saved by individuals on the administration team taking on extra duties so positions, such as assistant superintendent and assistant principal, could be cut.
Stamm said those options are not available to the district in this upcoming budget process.
"That kind of low-hanging fruit isn't there to pick anymore," he said.
The two main parts of the budget that have put the district in a deficit are increases to retirement and health insurance - which will raise 22 percent - Stamm said.
To aid in the budgeting process, the board also approved to file for two tax exceptions to go above the 2.4 mills the state has set for the year.
"(Filing for exceptions says) your expenses have risen locally above what the state is offering," Stamm said.
The district will file for exceptions for retirement and special education. Stamm said increasing the tax rate to 2.4 mills would generate $112,000, which wouldn't be enough to balance the budget.
The board was quick to point out that just because it would file for exceptions, it doesn't mean taxes would increase.
"It does not mean we will raise taxes," Stamm said.
"It is not a vote to increase taxes, period," Engel explained to the board before voting.
Stamm said he expects the budgeting process to be challenging, but it would give the district an opportunity to examine everything they do with a critical eye.
"We're addressing it and we'll continue to work on it," he said.
The board will meet to further discuss the budget at 7 p.m. Jan. 23 in the Rommelt Building.