The Capital Board of Education just barely passed a $98.8 million final budget for the 2012-2013 school year Wednesday night.

It appeared the Capital School District Board of Education would not be able to pass a final, $98.8 million budget for the 2013 fiscal year Wednesday night when board members Matthew Lindell and Brian Lewis got hung up on Capital's management of its reserve fund.

Capital Board President Kay Dietz-Sass and Vice President Phillip Martino appeared ready to support the budget with one amendment to eliminate a last minute, $2,000 subsidy for the newspaper club at Dover High School. But with Dr. Raymond Paylor absent, the budget's final approval headed toward deadlock.

Capital Business Manager Sean Sokolowski could only stand at the podium and wait for the deliberation to finally end after 45 minutes or so at the board' meeting held Wednesday night in the Capital Administration Complex. His budget increased spending this year by roughly 4.5 percent over 2012's $94.5 million.

Increases in salaries, benefits and enrollment fueled much of the increase, Sokolowski said.

During discussion of the budget, Lindell zeroed in on the district's reserve, called a carryover. This was the money left over at the end of each fiscal year and carried over to the next fiscal year to help with things like salary in the summer and early autumn, before taxes came in.

Sokolowski said the district would most likely have $12.8 million left at the end of the 2013 fiscal year, while the carryover was $15 million at the close of the 2012 fiscal year, which ended June 30.

It was common for the reserve to decrease during referendum cycles, Sokolowski said. But the longer the district's reserve lasted the more the district could put off asking residents to approve another operating referendum.

Lindell wondered if the school board artificially raised its tax rate in July, as authorized by Capital's last current expense (operating) referendum. Lindell's comments Wednesday night followed the opposition he expressed in June, when the board voted to increase taxes by 4.2 percent for this school year.

Capital Superintendent Dr. Michael Thomas took umbrage with Lindell's suggestion. He said the district had spent its money prudently and wisely, and the district promised taxpayers it would make the last referendum last five years. That was eight years ago, Thomas said.

It would be easy to spend all of its reserve, Thomas said. But to do so would have meant that the lessons offered by the Christina, Red Clay and a few other school districts were in vain. Namely, those districts spent too much of their local dollars on "locally funded positions" instead of relying on the state formula that guaranteed about 70 percent of funding.

The state used an enrollment based formula to determine how many administrators, teachers and support staff it would pay for each school year. The state paid about 70 percent of the so-called "earned units."

However, Christina had hired more than 100 people above and beyond the state formula and were subsequently 100 percent locally funded under then-Superintendent Dr. Joseph Wise. Christina went broke in 2006, which was headed at point by then Superintendent Dr. Lillian Lowery, and had to borrow $20 million from the state, as reported by the Hockessin Community News, another GateHouse Media Delaware paper. Moreover, a state-appointed finance team led by retired assistant superintendent Frank Rishel took over control of Christina's operating expenditures and hiring for quite some time.

In 2007, Red Clay found itself in the same boat when it hired more than 40 people paid for entirely with local funds. It too soon found its purse strings under state control, led by Rishel.

Thomas, who has been Capital schools chief for more than 10 years, asked former Red Clay Superintendent Robert Andrzejewski, why the district went broke just three years after a referendum. Andrzejewski candidly told him that the district had a pile of money sitting around and once the spending began it just snowballed from there.

Thomas said he would not let that happen in Capital because he would be the first man people came after when they found out the district had gone broke.

Nonetheless, Lindell said he had a different philosophy while Lewis said he thought the $15 million should go back to the taxpayers.

In the end, Lindell agreed to make a motion for the budget's approval on the condition that the board schedule a future workshop or meeting to address the reserve account issue. Lindell said he hoped the board and the community could  reach a solution that protected taxpayers while maintaining the sufficient cushion for the district to operate without having to go to referendum.

He did so with a scolding from Central Middle School PTA President Dennis Hallock, who was in his usual seat in the front row.

"I think it's horrible that you would hold a budget hostage until you got what you wanted," Hallock said.

As for the $2,000 inserted for Dover High's newspaper club, Dietz-Sass, communications director for the city of Dover, said she thought the world of journalism. But she wanted that removed in order to avoid opening Pandora's box.

Indeed, Dover High Co-Principals Kenneth Garvey and Dr. Evelyn Edney said several other clubs had come asking for a handout.

Dietz-Sass said the board would set a bad precedent by making this exception. As such, the $2,000 reverted back to the board as part of the amendment to the budget.

The board then voted 3-1 to approve the budget.

Delaware's school districts usually approved their final budgets in December, well after enrollment figures were certified and the accompanying state funding was approved.