The Troy Board of Education approved a $20.6 million budget Tuesday that included a $365,000 deficit.

Mickey Daughtry, CFO, said the expenditures will be covered through a “similar instrument” to a line of credit to fund the school system through the rest of September.

Daughtry said city and board officials are still deciding exactly which instrument to use, with one option being a bank placement that would have a shorter term than a bond.

The shortfall comes partially from a $460,000 increase in the principal debt service beginning in the next fiscal year. Daughtry said the $460,000 increase will be applied for 10 years.

The board also chose not to include $700,000 in expected appropriations from the City of Troy, a number that had been included in the previous budget.

“That was a line item that we’ve been working with the City to find extra revenue,” Daughtry said. “Nothing has worked out unfortunately, but we’re still working on it. But we won’t have the money in the next year.”

Daughtry said a study is being done on the school system to determine the needs the school system and community have and the options available to meet those needs.

One option Daughtry said officials have been looking at is an increase in the millage rate on property taxes.

The millage rate require by the state, Daughtry said, is 10 mills, and the current millage rate is 10.7. A raise of four mills, Daughtry said, would more than cover the gap, with each mill raising about $160,000 for the schools.

Any raise on millage would have to go through the state legislature and a referendum, said Dr. Lee Hicks, superintendent.

“The track record for other cities that have tried to do that though, to be honest, it has failed,” Hicks said.

Hicks and Daughtry said their understanding after speaking with city officials Monday is that the legislature would have to allow the referendum to raise the millage rate.

Hicks said he and the board have been working to make cuts since he arrived in 2011.

“When I arrived, we had $2.5 million in locally-funded (teachers),” Hicks said. “We began reducing that through attrition – if we lost 10 teachers we would only hire 6 or 7. Now we’re down to under $300,000 in locally-funded units. And, by law, Mr. Daughtry and I have to be considered local units.”

Hicks said there have also been other cost-saving measures made throughout the years such as contracting out lawn care, hiring younger teachers to replace teachers with decades of experience and replacing textbooks with Chromebooks.

“We’ve been able to cut and whittle without people really noticing,” Hicks said. “We’re at the stage now where, could there be more cuts? Yes. But they would be felt.”

Hicks said he could have come in and made the cuts quicker, but said that would have caused problems that he does not believe the system could have bounced back well.

“I don’t think Kimber or Rex (Lumber) would be here if we came in and did that,” Hicks said. “Maybe not Publix either. I’m not trying to take credit for bringing them here, I’m just saying the public education system is one of the first things companies look at when they’re thinking about coming somewhere.”

The board unanimously approved the budget.