WINDHAM – As proposed by Superintendent Sandy Prince at last week’s Regional School Unit 14 school board meeting, the preliminary school budget for next year is up 2.26 percent, a “modest” increase Prince said.

Driving the budget increase is a 2 percent, across-the-board salary hike for teachers, support staff and central office staff, as well as the prospects that the district will have to pay toward teacher retirement and possibly receive less in state subsidy.

Holding back an even-larger increase is the still-sagging economy that Prince and the school board’s finance committee chairman, Toby Pennels, said weighed heavily on them as they developed the budget, which now goes to the full board and public for review prior to a vote in June.

“It’s a needs-based approach,” Prince said of the $39.84 million budget. “Marry that with what’s going on in the economy and the finance committee’s thinking that it’s going to be a year that we cannot walk in with a huge budget.”

Prince said the increase is also driven by anticipated increases in fuel and food.

Prince said the district has averaged annual tax hikes of .52 percent each year since 2010.

That average increase “is good and bad,” Prince added.

“It shows we have tried to hold the line knowing that people are financially challenged in this economy,” he said. “However, the downside is it’s been an incredible challenge for us to open the doors with fixed costs and salary increases and to maintain the services and programs that we want to continue on in the district. We have unfortunately reduced staff in the past, and we’re not proud of that. It certainly has an impact on the district.”

A bright spot for local property owners could come if the Maine Legislature alters Gov. Paul LePage’s proposal to require school districts to cover a portion of teacher retirement pay. Prince has budgeted $500,000 for teacher retirement pay in next year’s budget.

“If that goes through that’s an expense we’ve never had to budget for,” Prince said. “The Legislature is looking at that. So, the good news would be if that doesn’t go through we could deduct that money out.”

Based on preliminary figures, Assistant Superintendent Donn Davis said Windham taxpayers will likely cover about 67 percent of next year’s budget, with Raymond picking up the remainder. The cost split was 64/36 this year.

School subsidy is determined by the state, which uses a complicated formula based on a town’s taxable property value, recent property sales figures and the number of children receiving free or reduced lunch, as well as other factors. Davis said he expects to receive final subsidy figures from the state at the end of March.

Raymond’s share of the school budget increased from last year to this year, as well. School board Chairwoman Catriona Sangster, of Raymond, said the state’s complicated funding formula, which takes into account home sales from the previous year, is factoring sales of multi-million-dollar properties that have been making up the bulk of Raymond sales in recent years, “so I think it’s skewing things a bit about the wealth of Raymond,” she said.

Sangster said she hasn’t given up on the state’s formula yet, but is keeping vigilant.

“I think it’s something we have to keep an eye on, in both communities. Is this funding formula working for our communities?,” Sangster said. “But we’re still in the early stages of consolidation. I think this is our fourth budget together and [Raymond] had a couple of years of decrease and then a sharp increase last year and now we may have another increase this year.

“So I think we’re going to have to see how the trend is, and if it seems to be unfair to one community then we’ll have to bring that to the state and reassess that.”

Also driving the budget is debt service, which makes up about 8 percent of the budget. Davis said the bulk of the debt is the Windham High School renovation project, which annually adds $2.3 million to the budget. Raymond Elementary School renovations add about $522,000, and renovations at Manchester Elementary in Windham add about $263,000. Each project was completed more than 10 years ago but debt service adds about $3.1 million to the annual budget, Davis said.

Sangster said she needs to further examine Prince’s budget, and looks forward to the input of board members and the public at upcoming meetings. But initially, she says, the Windham-Raymond education compares well with other schools in the area.

“We are high-performing and highly efficient if you compare us to most of the other districts in Cumberland County,” she said. “So I feel like we’ve been pretty responsible. I feel like the administrative team has looked closely at what they can reduce without negatively impacting students’ learning. And they’re doing the best they can to continue to move our district forward in a positive direction educationally but also being responsible to the public who’s paying.”