The tide of red ink dried up last year as Farrell Area School District, for the first time in years, posted a surplus.

For 2001-02, the district brought in $288,672 more than it spent, said Thomas E. Libeg, partner in accounting firm Libeg, Gargano, Bell and Associates, Hermitage, which audited the district's books.

"A very favorable picture for the Farrell Area School District for the year ended," Libeg said Monday.

The district took in $11,333,100, buoyed by an increase in local tax revenue -- the school board raised property taxes 4 mills in June -- and hikes in state and federal funding, Libeg said.

While employee wages went up, the district managed to hold the line on many fixed costs, including transportation and maintenance.

With the surplus, the fund balance -- a rainy day savings account -- stood at $657,146, an 80 percent increase over 2000-01, he said.

The fund balance has continually fallen from a high of $2.3 million in 1994-95.

Board member Jerome Flint said he was happy to receive some good financial news for a change.

"I know four years ago I was worried about the financial condition when I walked in," Flint said. "We're not out of the woods but we're light years ahead of where we were four years ago."

Flint praised Superintendent Richard R. Rubano Jr. for being open in sharing information with the board so that school directors could make "informed decisions."

"I want to compliment Mr. Rubano and his staff for everything they've done," added board member James Guerino.

Rubano said that while he's gratified at the audit, he's also "a realist and practical."

"We still have to watch our spending," he said.

Rubano wouldn't speculate on what the surplus will mean when the board is considering the tax rate for the next year. Some board members have said they expect taxes to go up again.

While opinions differ on how much the district's fund balance should be, past auditors have recommended keeping it at one month's expenses. For Farrell, that would be about $940,000.

Rubano said he would feel comfortable with a $1 million reserve.

One bit of bad news from the audit was that the district's day-care program still is losing money. It ended last year with a $20,000 deficit, and that money must be made up from the general fund.

In 2001, the district closed a day-care program that served students in grades one to six before and after school. Officials said not enough students were enrolled and the program was losing $20,000 a year.

"We'll have to take a look at that at budget time," Rubano said. "I don't know how much longer we can continue" losing money.

While the board believes the program is good for students and families, "It's very difficult to make a profit in the day-care business nowadays."