PRESQUE ISLE – After months of budget work and a last-minute drop in expected general purpose aid to education, the SAD 1 board of directors has approved a 3.7 percent increase to the school budget for 2004-2005.

On Wednesday night the board approved the $18,292,229 budget, which in mid-June will be presented to residents, according to Jeff Bearden, assistant superintendent for the district.

The budget is up $661,158 from last year. If local residents approve the budget, taxes raised for education will be about $12.90 per $1,000 of valuation, Bearden said Thursday.

“What the overall mill rate will be for each municipality will be decided by the municipality,” he said.

SAD 1 includes the municipalities of Castle Hill, Chapman, Mapleton, Presque Isle and Westfield.

The major impact driving this year’s budget is salaries and health insurance. Of the $661,158 increase, $543,586 of it, or 82 percent, is for salaries and health insurance.

“What that tells you is that, other than salary and fringe, there was very little increase,” Bearden said.

Major spending includes $130,000 for two new school buses and $150,000 for the district’s first payment on its middle school project.

The budget received a major reworking last week when the district learned that it would be receiving approximately $112,000 less in general purpose aid to education than it had expected. The district had proposed to cut into its fund balance by about 9 percent to stabilize its budget. The proposal was approved Wednesday night with board passage of the budget.

Bearden said that this year, the state paid approximately 43 percent of the cost to educate children in Maine. The district is pushing for passage of Question 1A in June, which would require the state to pay 55 percent of the cost of education.

“They’ve never reached that level,” he said. “That’s why you’re seeing budgets passed with potential mill rate increases … because towns are making up the difference.”

As the district awaits the June referendum, Bearden said, officials have done the job they set out to do with this year’s school budget.

“We’ve been calling it, from day one, a status quo, no-frills budget. All we tried to do when we built this budget was maintain the same level of service we provide right now for our students,” Bearden said. “We think we accomplished that, but it was a very challenging task.”

The district budget meeting will be held at 7 p.m. May 26 at the Presque Isle High School auditorium.

In other news, the board:

. Approved hiring Donald Hanson for a technical education position at Cunningham Middle School.

. Discussed adjusting the board stipend pay, which hasn’t been raised since 1986. Board members receive $20 per meeting, or an average annual salary of $300. The board’s rationale, according to Superintendent Gehrig Johnson, was that many other budget items had been adjusted for inflation during this budget process. The board decided, however, that this year was not a good time to change the stipend, given the educational finance circumstances.