CAPE MAY _ Teachers at Cape May Elementary School will get salary increases of four percent per year under a new three-year contract.

The district found itself in a position where it almost had to give the raises. It had money to spend under state law.

A public hearing on the budget is set for Tuesday at 6:30 p.m. at the Cape May Elementary School, 921 Lafayette Street.

 "We're not allowed to decrease the tax levy," noted Chief School Administrator Victoria Zelenak.

The district expects to raise $1,483,921 from taxpayers, the same as last year, and will not increase the tax rate but still had money to spend.

The state has a school funding law that uses property values and income levels of resident to determine the supposed "local fair share" that residents can afford to pay. This is set at almost $9 million in Cape May. When the tax level is below this, which it is at less than $1.5 million, taxes cannot be reduced. Even if the teachers did not get the raises, the district could not have reduced taxes.

Kate Wyatt, president of the Taxpayer's Association of Cape May, said even without the raises taxes could not be reduced.

"They need to change the state law. It's craziness. We shouldn't have to spend money if we don't need to spend money. We should conserve our resources going into the future," said Wyatt.

Jack Wichterman, a member of the TPA, thought the raises were too high. He said they are more than four percent a year because it is compounded each year. Wichterman said the tax rate could have been reduced without the raises, though he also had heard about the state funding law that would not allow it.

"I think its nonsense, it really is. They should have reduced it," said Wichterman.

Teachers had been operating without a contract and Zelenak said the new deal is retroactive to the school year that began July 1, 2009. Teachers get four percent raises for the 2009-2010, 2010-2011, and 2011-2012 school years. Zelnak said there are about 25 teachers at the K-6th grade school here on Lafayette Street. The budget does not anticipate any need to cut staff.

"It was a year of negotiating and the reason that agreement was awarded is because the teachers are in the low one-third of salaries in Cape May County," Zelenak said.

Zelenak said the proposed $3,976,423 budget, up from $3.4 million last year, would carry a tax rate of 6.7 cents for each $100 of assessed valuation, the same as last year.

The district gets federal funding for a large and rising number of Coast Guard children, about 80 percent of a student body of 182 pupils. Zelenak said the district is expecting about $860,000 this year in federal aid. The district is getting $374,241 in state aid, a drop of $155,000.

"I do feel we run a tight ship here. We've been frugal over the years," said Zelenak.

The Taxpayers Association of Cape May is not objecting to the teacher raises.

"If they're in the bottom third it makes sense but let's get the state law changed that says you have to spend money. Show me the numbers and make the right decisions," said Wyatt.