It's a classic trickle down effect: The state is facing a budget crunch and that means the Fort Mill School District is trying to close a funding gap.

The district's budget is rising to $68,146,102, up from approximately $63 million last year. The district is expecting 930 or more new students next year, and it plans to hire 34 teachers before August.

However, because the source of school funding was switched to state sales taxes rather than from local property tax revenues, the district estimates a roughly $1.7 million shortfall, said Assistant Superintendent of Finance Leanne Lordo.

District officials are thrashing out cuts to economize without detracting from classroom education. One of the casualties is the annual $3,000 bonus for teachers who apply or achieve National Board Teacher Certification.

The Fort Mill School Board Monday night reluctantly but unanimously voted to eliminate the bonuses. Board members Lewis Graham and Jan Smiley were absent.

The state gives the teachers who qualify a $7,500 bonus per year in addition to Fort Mill's $3,000 bonus. There are currently 140 national board certified teachers in the district, and about 20 more are expected in the coming year.

Jonelle Gardner, a Gold Hill Elementary national board certified teacher who attended Monday's meeting, said she fears cutting the bonuses will create "a domino effect."

"I hope the state won't look at this as something they should do," she said.

Although nothing else has been decided, more cuts are on the way.

"This is just the beginning," Superintendent Keith Callicutt warned.

"With a projected 930-student increase, under normal circumstances, we'd hire about 50 teachers," Callicutt said. "Now we'll only hire 34."

The district is facing several major obstacles this year and in the coming years if drastic changes are not made to the property tax reduction law that changed the way schools are funded.

It went into effect last year and schools are feeling the pinch as the economy stagnates.

In addition to a sluggish economy,, by taking residential property taxes away from school districts, the state has effectively lowered the value of a mill - the basic unit of taxation - in Fort Mill by more than $100,000, from $260,000 last year down to $151,000 this year. On top of that, by law, the district cannot raise the millage rate more than six mills each year.

District staff are still ironing out the details of the final budget. One proposed expenditure that does appear safe, however, is an elementary school swimming program. None of the board members present objected to it.

The school board will take up the budget for first reading at its next meeting on Monday, May 19.

• Herald reporter Karen Bair contributed to this story.