Mathews Public Schools will need almost $300,000 above the current appropriation from the county just to "break even" in the system’s 2011-2012 budget, according to Superintendent of Schools David J. Holleran.

And that doesn’t account for the possibility of employee raises to offset the loss in wages that workers will experience once they have to chip in 5 percent of their gross salaries into the Virginia Retirement System.

Holleran gave school board members their first peek at next year’s budget during a work session Tuesday afternoon, which was held in the Thomas Hunter Middle School media center.

The school division is actually facing a cut of more than $500,000 in state aid in the coming year, driven primarily by two factors. The first is the loss of the "hold harmless" payment made during the current budget to offset a change in the state’s composite index.

The composite index is the formula used by the state to determine a locality’s ability to pay its share of education, with wealthier counties bearing more of the burden. In 2010, the composite index shifted dramatically, for the most part due to a drop in property values in Northern Virginia.

Rather than forcing cuts on struggling school divisions by fully implementing the index, legislators came up with a temporary fix—"hold harmless" funds to cushion the blow. Mathews now has to find a way to make up the difference, Holleran said.

The second factor in the $511,387 decrease in state funds is the shrinking enrollment. Holleran’s projection is based on an enrollment of 1,185 students; the 2010-2011 budget is based on an Average Daily Membership of 1,225.

The school division could have been facing a significantly larger hole if it had opted to spend the money it received from the federal Education Jobs Fund Program. Applying that $218,744 to next year’s budget is how Holleran arrived at his figure of an additional $292,643 needed from the locality.

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