The Penn Hills School Board voted 5-4 to approve a $74.3 million budget for 2008-09 and increase property taxes by 1.42 mills.

Penn Hills' new property tax rate is 24.81 mills. With the 1.42-mill increase, the owner of a $100,000 home will pay $2,481 in annual taxes, an increase of about $143 a year. The last tax increase approved by the school board was 3.48 mills in 2006.

Penn Hills is the only school district in eastern Allegheny County to raise taxes so far this year. The Penn Hills vote followed several weeks of cost-cutting by the board to bring expenses in line with declining revenues and enrollment. For the past three years, the district has had operating deficits ranging from $735,000 to $5.3 million.

Cost-reduction measures taken this spring include temporarily closing Shenandoah and William Penn elementary schools, furloughing teachers and other staff, restructuring administrative positions and shutting down the high school vocational education program.

The cuts, which were generally unpopular with the public, reduced 2008-09 expenditures by about $2.4 million, said Business Manager Richard Liberto.

At a previous board meeting, Mr. Liberto presented the board with data showing that the proposed 2008-09 budget, including the 1.42-mill tax increase, would help restore the district's fund balance and position the district to meet future needs without additional tax increases. He said the district's surplus has dropped from $7 million to $133,000 over the past five years because it was used to balance the budget.

Two new expenditures in the budget are $300,000 in technology and $190,000 toward new textbooks for elementary students.

Board members Joseph Bailey Jr., Bob Hudak, Margie Krogh, Barry Patterson and John Zacchia voted in favor of the budget and tax levy.

"It's tough," Mr. Zacchia said, noting that pressures on the district include unpredictable state funding and rising costs. "None of us [school board members] want to do this, but unfortunately, it's a fact of life."

Mr. Hudak said the tax increase is an investment in the school district and community. "The way to increase our housing values is to ensure a good educational system," he said.

Voting against the budget were board President Erin Vecchio and members Deborah Faggioli, Donald Kuhn and Catherine Mowry.

Mr. Kuhn had announced at previous meetings that he would not vote for a budget that included a tax increase. "Not this year. Not with the state of the economy," he repeated at the voting meeting.

A handful of parents spoke in favor of the budget and tax increase.

"Am I happy? No. But I would rather see my money go here," said parent and PTO Council President Meryl Thomas. "It's time we step up and invest in what we have."

Board members said they would continue to seek cost-reduction opportunities throughout the next year. At the suggestion of a community member, the board said it would explore whether the district should continue using a former school building for the district's administrative offices.

The board also:

• Recalled three teachers who had been furloughed on June 3. With these rehirings, 13 of the 34 teachers furloughed have been rehired.

• Furloughed 17 instructional aides.

• Hired John Plazarin as director of transportation and child accounting under a three-year contract at salary of $63,000. His annual salary will increase by $2,000 after a six-month probation period.

• Demoted Patricia Panuccio to assistant food service management director. Ms. Panuccio, formerly the food service director for the district, has one year left on a three-year contact. In her new position, she will report to The Nutrition Group, the district's new food service contractor.

• Accepted the resignation of Tina Mayer as associate principal of Penn-Hebron Elementary Academy and appointed Kathleen Little to the position.