Chris Johnston, business manager for Penn Manor School District, said Monday that declining revenues, rather than rising expenses, will have a greater influence on the 2012-13 budget.

But the state budget, Johnston said, was the biggest unknown.

Speaking to district officials one day before the release of the governor's budget, Johnston said, "I'm not anticipating good news, I'm just not sure how bad the news is going to be."

Salaries and benefits continue to be the biggest cost drivers, Johnston said.

Declining wage tax revenue and stagnant growth in real estate values also will hurt the bottom line. Last year, teachers agreed to a salary freeze and many district employees took early retirement -- compromises which Johnston said were "very helpful" when developing the current year budget.

However, Johnston said Monday he is not looking at furloughs or eliminating programs when drafting this year's spending plan. Instead, cost savings will come from operational efficiencies and building budget reductions.

Balancing this year's budget will require borrowing from the fund balance, raising taxes or both. Those decisions, Johnston emphasized, will have repercussions in future years.

Johnston noted that the district again avoided filing for exceptions to the tax rate and will stay within the state mandated index.

The district is planning to adopt a preliminary budget on May 7 and a final budget on June 18.

Despite loss of real estate taxes due to stagnant growth and assessment appeals, the board Monday approved the continuation of a property tax rebate program which Johnston said "affects people that need it the most."

This year, Johnston said he projects $50,000 in property tax rebates.

The district's program, which began in 2006, is loosely based on a state tax rebate program.

Qualifying applicants may receive up to $650.

"I think it's a great program that really doesn't get the recognition it deserves," board member Herk Rintz said.

In other business, Superintendent Michael Leichliter said the district will soon begin interviewing candidates for the position of assistant superintendent, due to Ellen Pollock's retirement on June 30.

Leichliter said he is seeking school board members, administrators, teachers and district parents to participate in the interview process and will make a recommendation to the board in April.

Also Monday, the board agreed to participate in a consortium with local districts to negotiate lower utility delivery rates.