When Farrell Area School Board agreed a year ago to a financial settlement with the state over the kindergarten program for 4-year-olds, Superintendent Richard R. Rubano Jr. considered the issue resolved.

That's still the way he sees things.

"I consider it dead," he said.

But the state Auditor General's Office does not feel the same way and still thinks the district owes the state money.

In an audit of the district for the years ended 1997-2000, three of five findings relate predominantly to the K4 program, Rubano said.

The experimental program combines 4-year-old Head Start students with elementary students and was developed under former Superintendent John G. Sava.

While Sava claimed he had the proper state approval - the district acknowledged under Rubano that it did not - and sought state approval.

The program mixed federal and state money and guidelines, and the district altered the program to meet state regulations.

The state approved the program Aug. 21, 1998.

But the state argued that, since the district received state funding for a program that it had not approved, the district should forfeit the state money paid into it prior to the approval.

How much money owed was a matter of whom you talked to. The district said $300,000, the Auditor General's Office said $400,000 and the education department settled on $160,000.

Whatever the figure, it was too high for the district to swallow, said officials, who offered a settlement of $18,028. The state agreed to the figure and withheld it from subsidy payments.

In January, the Auditor General's Office released an audit with these findings:

   » The district owes $214,483 for reporting incorrect pupil membership figures for the 1996-97 and 1997-98 school years. "The discrepancies consisted of the district's inclusion of membership days for all K4 enrollees for which the district lacked program approval," the audit said.

   » The district owes $84,514 for having employees who were not properly certified serve in the regular and early intervention classrooms and the K4, Community Intervention Center and family center programs. Rubano said 90 percent of the certification problems are from staffers assigned to the K4 program.

   » The district owes $2,830 for improper reimbursements of health and dental costs, also from including K4 students in reports.

Rubano said he was surprised when the pupil membership finding appeared in the audit because he had not heard from the education department that there were any unresolved issues.

But the education department will get a copy of the audit, and it will be up to the district to contact the department and ask if anything remains to be settled.

"It's in their lap right now," Rubano said. "It will be interesting to see what they do."

In its response to the audit -- the school board approved responses June 10 -- the district noted that it followed the recommendations the Auditor General's Office made in a previous audit.

Rubano acknowledged some employees will need to undergo additional training to clear up certification issues, including preschool Director Terri Lengyel.

He said he went to Harrisburg to discuss certification with state officials, and soon will be talking with Frank Meehan, deputy secretary of education.

"We're going to have a conference call to address these issues," Rubano said. "He told me not to worry."

"The department understands the uniqueness of our program," Rubano said. "We broke new ground statewide."

School psychologist Scott Andrzejewski also is not certified to oversee some of the special education students he has been handling, Rubano added.

The district has not decided how to handle the special education issue, but Rubano said another teacher is properly certified and could be assigned to that program.

"It will be done the way it's supposed to be," he said.

Of the medical reimbursements, Rubano said the district will try to negotiate with the state so it does not have to pay.

The other findings concern bookkeeping in the athletic fund and the process of how solicitor James Nevant II's medical insurance is paid through the district.

In the athletic fund, auditors found that payments were made without record of who authorized them, and 21 blank checks were pre-signed.

Those problems are carry-overs from a previous audit, but other problems have been corrected, including poor documentation of gate receipts and lack of control over voided checks.

The board has authorized allowing Nevant to buy health insurance through the district. The district has paid for the insurance, with Nevant reimbursing the district.

The audit said Nevant can take advantage of the district's lower rates, but must pay for the insurance directly.

The audit also alleged district Business Administrator Ronald Pendel acknowledged at a Feb. 13, 2002, meeting "that the board was aware that purchasing insurance for the solicitor was contrary to the Public School Code."

Rubano said no one from the district who was at that meeting remembers Pendel making that statement.

Rubano added Nevant and the auditors have different interpretations of state law on the issue, but he said he believes it can be worked out.

"He'll do whatever is necessary, I'm sure," Rubano said of Nevant.

You can e-mail Herald Staff Writer Joe Pinchot at jpinchot@sharon-herald.com