Gainesville City Schools officials may have to dip into the district’s reserve funds to balance a $70.4 million spending plan in fiscal 2018 that is 3.4 percent more than the current budget.

Driving up the cost of educating about 8,500 students in the system are an increase in staffing from the opening of the new Mundy Mill Academy elementary school opening this fall, state-mandated higher contributions to the teacher retirement system and increases in providing health insurance to classified employees.

The school board is scheduled to review a tentative budget at its meeting May 15.

However, school officials got a preview earlier this week of what to expect when Chris Griner, the district’s chief financial officer, presented them with a draft budget and overview of projected revenues and expenditures.

The district’s budget will include a 2 percent salary increase for employees.

Although overall fiscal 2018 revenues are expected to eclipse by $1.2 million this year’s budgeted revenues, the district will be spending $2.4 million more than budgeted expenditures in fiscal 2017, Griner said.

To close the $2.9 million gap between projected fiscal 2018 revenues and expenditures, Griner said staff is anticipating transferring more than $2.7 million from reserves to balance the budget.

Griner said that conservative budgeting by the district has allowed it to build a fund balance of $15 million. Even with the projected fund transfer, Griner said the district would still have $12.2 million in reserves.

“Our fund balance is in great shape,” Griner said. “Enabling those reserves through conservative budgeting helps us in situations where we have to use those reserves.”

Griner reminded board members that the district had projected that it would have to use $1.6 million from its reserves to balance the current budget, but may not have to after all.

“We feel comfortable not having to use fund balance in the current fiscal year we’re in, which is key,” Griner said.

Salaries and benefits, which Griner calls “the big-ticket item” in the budget, are expected to increase by $2.1 million to $58.3 million. He said that makes up more than 80 percent of the general fund budget.

Also, the state’s increase to the teacher retirement system from 14.27 percent to 16.81 percent will increase the district’s cost in teacher retirement system funding to about $1 million, Griner said.

School officials have scheduled a budget hearings for May 22, and final budget approval by the board is set for June 19.