Hartselle School Superintendent Mike Reed believes that his school system will likely see another round of proration during the 2011-2012 fiscal year, cuts that could cause the system to lose an additional $500,000.

During the school board’s first budget hearing, Reed said he heard talk about a 3 percent proration for the upcoming fiscal year.

“I think it could be as much as 5 percent, but I hope I am wrong,” Reed said. “I’m pretty sure that we’ll get another 3 percent this coming year.”

School chief finanical officer Sarita Tapscott presented a proposed 2011-2012 budget Monday night. She is anticipating the school system will receive just over $17 million from the state before proration, which was less than the proposed budget last year by $161,000 but $321,000 more than last year’s prorated budget.

Tapscott said that those additional cuts could equal an additional $500,000.

In all, Reed said the state’s funding has decreased by 27 percent over the last four years of proration. The state funding is the majority of the school system’s budget.

One big area of cuts will be from federal funding. Tapscott is projecting that the city will lose $1.725 million in federal funds, most of which was due to the loss of stimulus funding. At least 30 employee units were paid out of federal funding.

Hartselle’s state funding is based on its average daily attendance last year of 3,120 students, which gives the system 194.78 earned units and a total of 354 total employee units.

The school system’s general fund revenue is expected to be $22.7 million while its expenditures are anticipated to equal $22.4 million.

However, when other expenditures are included, the general fund is expected to decline to $7.6 million.

Tapscott said that will still give the school system a four-month reserve before proration. If a 3 percent proration is declared, that reserve total would drop to 3.92 months.

“The state only requires us to have a one-month reserve,” Tapscott said. “We’re much better off than other school systems, but we’re not where we want to be.”

The school system will also be spending $39.4 million in capital projects for the new high school in this year’s budget. It will also spend $2.3 million in debt service payments.

The second budget hearing will be Aug. 29 at noon.