District faces budget cuts

An unanticipated jump in health-care costs will be paid for over five years.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
FARRELL, Pa. -- The school district is looking at a $350,000 shortfall in a proposed 2003-04 budget.
Directors won't officially begin their review until 6 p.m. May 22, but after a school board meeting Monday, Superintendent Richard Rubano and business manager Michael Stabile said the board has some cutting to do.
The budget to be presented to the board May 22 stands at $11.9 million -- a 7.3 percent increase, Stabile said.
Rubano said the administration has already cut $150,000 from budget requests, but there's still $350,000 in unfunded proposed spending.
That's the equivalent of nearly 5 mills of property taxes. The board raised taxes 4 mills last year.
That was a big increase because Mercer County changed its property tax assessment ratio from 33.3 to 100 percent of assessed property value last year, thereby tripling the value of one mill.
That means the 4-mill increase approved by the board last year was really a 12-mill increase on the old assessment ratio.
One mill now costs the average residential taxpayer in the district $18 a year.
Health-care costs
Rubano and Stabile said health-care costs are up 30 percent, or about $400,000, and employee retirement contributions mandated by the state will rise about $150,000. Utility costs for gas and electricity are expected to rise about 15 percent and, of course, there are wage increases to be figured into the new spending plan, they said.
To make matters worse, the board will have to come up with about $106,000 a year in each of the next five years to cover an unanticipated jump in health-care premiums this year.
The board voted Monday to borrow $488,843 from First National Bank of Pennsylvania at 3.38 percent for three years to cover that expense.
The annual debt service to pay it off will have to be worked into the budget, Rubano said.
Farrell is part of the Western Pennsylvania Schools Health Care Consortium, which developed a cash flow problem earlier this year and notified its members that it needed an additional $4.6 million from them by June 30 to pay its bills.
Farrell's share of that cost is $488,843.
Rubano said there's not much to cut out of the district's operations. It is already operating with "a bare bones staff," he said, noting that administrators would like to add a couple of high-school programs rather than see some cuts.