Photo by Jerry Sowden - West Forest moved its elementary school from its aging building in Tionesta to a new $11 million addition completed in the fall of 2006. The new school was added to the existing West Forest High School several miles north of Tionesta.

(Editor's Note: This is the second in a series of three articles examining financial troubles in the Forest Area School District.)

While additional state funding might be the last, best hope for resolving the Forest Area School District's financial crisis, the district must first convince the state of its need for more resources.

Because of its peculiar circumstance, the Forest Area district is in many ways an anomaly, and its unique challenges go largely unrecognized in the state's calculations.

The district includes all of Forest County as well as President Township in Venango County and a portion of Elk County, making it the largest district by far in the region. At 501 square miles, it is nearly twice the size of the Franklin district, which covers 189 square miles.

Forest Area's buses travel nearly 4,200 miles a day, compared to 2,600 for Franklin buses. With residents scattered throughout the large, rural district, bus stops are sometimes 10 miles apart and serve only one student.

In addition to transporting students to its own buildings, the district also transports residents to private schools in Clarion and Venango counties; to the Tidioute Charter School in Tidioute; to Riverview Intermediate Unit 6 in Clarion, which provides special education and support services to 17 districts in the region; and to Venango Technology Center in Oil City, acting Superintendent Nancy Cherico said.

Unlike Franklin, the population of the district is very small, with 11 people per square mile. Only two other districts in the state are more sparsely populated, according to state Department of Education data for 2005-06: Austin Area School District in Potter County with 5.8 people per square mile and Galeton Area School District, also in Potter County, with 9.9 people per square mile.

The district's enrollment is likewise very small and is getting smaller. In 2005, only nine districts in the state had fewer students than Forest Area.

Over the last decade, enrollment has dropped by more than 20 percent, Cherico said.

It is expected to drop next year to 575, down 25 students, with 228 at East Forest in Marienville and 347 at West Forest in Tionesta.

This year, East Forest graduated 22 students and West Forest graduated 46. Unless there is an unexpected influx of students at West Forest, class sizes will not be above 40 again in the foreseeable future.

Enrollment projections for the coming year at East Forest show class sizes ranging from 10 (for kindergarten and fifth grade) to 28 for ninth grade, with an average class size of 17.5. At West Forest, projections show class sizes will range from 16 students in the fifth grade to 37 in 10th grade, an average of 26.7 students.

And yet because of the large size and terrain of the district it must maintain two K to 12 buildings 30 miles apart in Tionesta and Marienville.

As a result, its spending is roughly on par with the Valley Grove district, even though that district has about twice the students.

"Our low enrollment is a reflection of the economy of this area," Cherico said. "There is no employment here. And with rising fuel costs, people will not be able to live in Forest County and drive to Oil City or Clarion for a minimum wage job and make a living," she said.

Nearly half of the district's students qualify for free and reduced lunches. In 2004, 14.8 percent of Forest County residents were living below the poverty level, compared to 11.2 percent statewide.

The median household income for the county was $27,581, 66 percent of the national median household income of $41,994, according to the U.S. Census Bureau, and it is now about half of the state average, according to Cherico.

While the district's high poverty rate should result in plenty of state funding, it doesn't because of the district's market value, the other indicator used by the state to determine a district's relative wealth (and consequent need for state funding) compared to other districts.

But once again, Forest Area's market value is the product of peculiar circumstances and the numbers used by the state tell only part of the story.

Nearly 70 percent of the district, or 123,197 acres, is occupied by the (tax-exempt) Allegheny National Forest.

The scarcity of the remaining property drives up prices as does its recreational value.

Real estate tax rolls for Forest County include 1,762 residential parcels and more than twice that number (4,528) of seasonal parcels, according to Cherico.

While the district includes some luxury camps along the river worth hundreds of thousands of dollars, most of the properties are "your typical camps," she said.

Many of the residential properties are occupied by retirees on fixed incomes, she said.

The district's personal income aid ratio as calculated by the state is relatively high at .6817, a ratio that on its own would fetch significant state funding. Its market value aid ratio, however, is .2629, one of the lowest in the state. When the two are combined to form the market value/personal income aid ratio, which governs the level of state funding and reimbursement a district receives, more weight (60 percent) is given to the market value, and the district's overall aid ratio plummets, resulting in minimal state aid.

Its market value in 2005 was roughly $320 million, about $5 million more than the Cranberry district's, according to state Department of Education data. But when divided by the district's weighted average daily membership according to the state funding formula, the district's market value per student - at $382,342 - was nearly twice Cranberry's of $192,550. Forest Area's personal income per weighted average daily membership was $72,967, less than Cranberry's, which was $81,151. The resulting market value/personal income aid ratios were .4303 for Forest Area and .6355 for Cranberry. In Department of Education rankings, Forest Area's low aid ratio places it in the company of the state's wealthiest districts.

"Their formula is just not going to work for us," Cherico said. "It makes it look like every person in the district owns a huge parcel of land and is very wealthy."

The formula has failed the district since its inception and in the past, the district "hasn't really relied" on the state subsidy, which all told (including state special education funding) accounts for about 43 percent of the district's revenues Cherico said. With the loss of other funding streams, however, the impact of minimal state funding is profound.

To complicate matters, the district's small enrollment also affects its portion of state aid, which is distributed according to the number of students served. The district would seem to benefit from the its high number of seasonal properties: it gets taxes from those properties but does not have the expense of educating those children. It would probably fare better in the long run, however, if those students did attend district schools as they would help fill the buildings and would pull in state aid.

The district's relatively low tax rate compared to other districts in the state also works against it in the state funding formula. Its equalized millage rate according to the state is 13.7 mills, compared to 16.8 for Cranberry, 23.2 for Franklin, 24.7 for Oil City and 16.8 for Valley Grove.

With its high poverty rate and prevalence of retirees, however, the district's relatively low tax rate is not felt to be low by many of its residents, Cherico said.

Those districts with low tax rates are caught in a Catch-22, punished for their prior restraint but with little leeway under Act 1 for bringing their rates into conformity with the state's expectations.

"We are unique," Cherico said. "We are so large and so rural. There are only one or two other districts in the state that have similar features. There is not going to be some easy solution," she said of the district's financial crisis.

(Wednesday: There are no easy answers for the Forest school system.)