MERCER COUNTY School district hails financial recovery

Raising taxes and cutting spending helped make the difference, officials say.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
FARRELL, Pa. -- The Farrell Area School District has made a remarkable financial turnaround, according to an audit of the district's 2002-03 finances.
The superintendent and school board have done a great job over the last two years, said Thomas Libeg of Libeg, Gargano, Bell and Associates, the accounting firm that conducted the audit.
Farrell was on the verge of becoming a financially distressed school district three years ago, Superintendent Richard Rubano said.
The administration made suggestions and the school board made the tough decisions to turn the situation around, such as raising taxes and eliminating positions, he said.
The numbers
Libeg said Farrell had reduced its fund balance -- the equivalent of a savings account for unforeseen emergencies -- to just $368,000 at the end of the 2000-01 school year.
The 2002-03 audit shows that fund balance had rebounded to $1,593,000, an increase of more than $1.2 million, he said.
The district also was able to hold the line on overall expenses, he said, noting that spending for 2002-03 was almost the same as for the previous year.
The district took in $11,629,135 in 2002-03 but spent only $11,065,135, showing a surplus of $564,000.
"We kept a close eye on expenses," said Michael Stabile, district business manager.
A large chunk of that surplus, $291,929, was attributable to a late state subsidy increase that the original budget did not anticipate.
The state limited what the school district could do with the funds, allowing reduction of long-term debt or restoration of any programs that had been cut from the district that fiscal year.
Rubano said the school board opted to allocate the money for the district's long-term debt. About $50,000 was spent this year to pay off an old bond issue, but the rest remains set aside and earning interest to pay off future debt, he said.
District concerns
"We're the fourth poorest district in the state," Rubano said, noting that Farrell, with 1,100 pupils, has a high state aid ratio as a result.
"The district is in an excellent position right now," he said, but he cautioned that rising health-care costs and employee-retirement fund contributions could quickly eat into its savings.
Further, Farrell's buildings are aging. The high school was built in 1970, and the elementary school was last renovated in 1985.
The school board is trying to determine what improvements are necessary, he said. Although efforts will be made to deal only with the necessities, the cost could still be high, he said.
Rubano said he had warned the school board at the end of the 2000-01 year that the fund balance could soon be gone, and that the district faced the possibility of being taken over by the state.
Among actions the board took to prevent that possibility was raising taxes by 5 mills in 2001-02 and by 4 mills in 2002-03.
The latter was the equivalent of a 12-mill increase because the county changed its property-tax assessment ratio that year, tripling the value of one mill of tax. One of the "new" mills cost the average residential taxpayer about $18 a year.
The board has raised taxes an additional 5.5 of the "new" mills in the current school year.
Rubano said the board has left positions vacant; many employees have doubled up on their duties to pick up the slack; and overall spending was tightened.