Voters in the Southwestern Central School District turned down a proposed $11.2 million budget Wednesday by a vote of 560 to 520.
Superintendent Donald Ogilvie said the 40-vote difference makes it hard to accept defeat.
"We attempted to put a budget together within the constraints of state aid," Ogilvie noted, "and we kept the tax levy as low as we could."
Ogilvie said the budget maintained programs and services and that the board had cut the budget considerably.
"Now we're back to a planning session to determine what to do next," he said.
The package called for a tax increase. Taxes would have gone up by $1.25 per $1,000 assessed valuation in the town of Busti, $1.19 in Ellicott and $2.62 in Harmony.
Ogilvie called the budget "a tight one" said the board has several options, including splitting the package into several propositions for another vote.
All three incumbents seeking re-election to the board were unapposed. J. Christopher Creighton, David Fessenden and Beverly Ungerer will serve new terms.