Hempfield School District is looking at a $4.4 million shortfall in its 2012-13 operating budget.

In a brief presentation to the school board Tuesday, Mary Lynne Kniley, director of finance for the district, said early projections for the coming school year indicate expenditures of $103.8 million and revenues of $98.4 million.

It would take a tax increase of nearly 7 percent to balance the budget, Kniley said after the meeting. State law limits districts such as Hempfield to a 2 percent millage hike, however — unless the state Department of Education grants an exception to the law.

Hempfield is applying for exceptions totaling about $1 million for "uncontrollable costs," such as retirement and special education funding, she explained. The district should hear back from the state in February, she said, which will aid in finalizing the budget by June.

Even with exceptions, Kniley said, the district likely would be limited to an increase of 3 to 3.5 percent — far short of the 7 percent needed to balance spending.

"There are not enough exceptions to make that happen," she said.

She also said that although Hempfield has received exceptions from the state in previous years, the district has used them only rarely.

"We're just keeping our options on the table," she said. "We still have a lot of work to do."

Wages and benefits account for 68.4 percent of the spending plan, Kniley said, leaving the district with relatively little wiggle room.

"We are a very labor-intensive business," Kniley told the board.

She noted that the district has not planned for any growth in discretionary spending, such as books and supplies.

"We're compiling a line-by-line budget plan. We're watching the trends," she said.

District superintendent Brenda Becker said measures in the current budget, such as a pay freeze and an early retirement incentive for employees, helped the district's bottom line this year. However, she said, the district cannot continue to revisit the same wells.

"Everything that was easy to cut has been cut," she said. "Anything else we cut will not be without pain."

The board is expected to approve the preliminary budget report at its meeting Tuesday at 7:30 p.m. Kniley said she will continue to provide the board with monthly updates.

Also Tuesday, the board will vote on a resolution supporting an "open campus" program being developed by Hempfield, Manheim Township and Penn Manor school districts.

The program, which school officials expect to enact on a limited basis in high schools next year and expand in following years, will give students options for taking some classes online or at school in early morning, evening or summer hours.

"We're not forcing this on anyone," Becker said.

The districts are breaking new ground with the program, which is not based on any existing models, she noted.

There are still kinks to work out, Becker added; for instance, students who attend school on a nontraditional schedule might be required to provide their own transportation. In the long run, however, the program should cut district costs significantly.

Eventually, she said, she expects some aspects of the program to expand to the elementary and middle school levels.

"It's going to be an interesting trip, an interesting journey of discovery," she said.

Manheim Township and Penn Manor school boards also are expected to consider similar resolutions this month.

At a special meeting last month, Bill Jiminez was selected to be president of the Hempfield school board for 2012. Board member Loren Good was elected vice president.

The board will continue to hold committee meetings at 7 p.m. on the first Tuesday of the month and a business meeting at 7:30 p.m. on the second Tuesday. Meetings are held in the large group room of the administrative building at 200 Church St., Landisville.

tknapp@lnpnews.com