SOUTH OTSELIC – Otselic Valley Central School District Superintendent Richard Hughes said he was well aware the biggest challenge he would face when he took over in July was the 2011-2012 budget.

Due to an estimated 9 to 10 percent increase in health insurance costs, approximately $170,000 in retirement system increases, expected increases in energy costs, the loss of $154,000 in federal stimulus aid and an expected 5 percent, or $255,000, reduction in state aid, Hughes reported a total estimated budget gap of $516,500 for the approximately $9 million 2011-2010 budget.

That figure, however, does not include payroll increases, and Hughes admitted the total budget gap could soar to $750,000 or higher.

To address the issue, the district has once again formed a special Board Advisory Team for Facilities, Buildings and Grounds. The committee is comprised of approximately a dozen local residents and chaired by former superintendent and local resident Jim Franklin.