Still facing possible investigation into the district's past fiscal practices by two state watchdog agencies, Yough school directors last week voted 6-1 to adopt a $27.2 million 2008-09 operating budget that includes a 3.78-mill property tax increase.

The increase is 3.43 mills lower than the 7.21-mill increase proposed in a preliminary spending plan approved by the board in May. One mill nets the school district about $115,000.

Director Linda Knor dissented. Board members Ruth Bisko and Joseph Spano were absent.

The new budget spends more than the $25.4 million 2007-08 budget, which included a 2.87-mill property tax cut.

The school district began the fiscal year that expired Monday with an unexpected $204,000 deficit instead of an anticipated $30,000 surplus.

According to Westmoreland County figures, the average property assessment in the school district is $13,579 based on a total combined assessment of $128,486,232 for Sewickley and South Huntingdon townships and West Newton borough.

The tax bill for the average residential property owner in the three municipalities will increase by $46 to $1,022, minus a $163.05 homestead exclusion for those eligible under the state Tax Relief Act of 2006.

"The biggest obstacles we were forced to deal with was increased health care costs and trying to make up for the $204,000 deficit this school board inherited," said Solicitor Gary Matta.

A routine audit of the 2006-07 budget earlier this year disclosed the deficit.

Total salaries of nearly $11.8 million for the district is the largest expenditure while debt service is $3.1 million, of which $1.8 million will be reimbursed by the state for some projects.

Annual health care costs increased by approximately 24 percent to about $3.4 million in the second year of a premium-based insurance plan dictated by the district's bargaining agreement with teachers.

Prior to 2007-08, the district was self-insured.

Concerns of several new directors that some past board members may have accepted, or paid premiums for, health care coverage offered by the school district led to an internal investigation conducted by Mr. Matta.

He told the board last month that several former members and one current member did have health insurance through the district.

"Due to confidentiality, I can only say my findings have been turned over to the Auditor General's Office and Ethics Commission," Mr. Matta said.

Meanwhile, in a cost-cutting measure, the board furloughed Joan Fogg effective Monday. She had served as principal of Mendon Elementary School in South Huntingdon.

Beginning in the fall, one principal and an assistant will supervise the district's three elementary buildings.

In other action, directors appointed high school Principal Earl Thompson as acting superintendent of schools. He replaces Lawrence R. Nemec Jr., who resigned after 42 years with the district.

Director Nancy McClaren, board secretary, said the interview process for a superintendent will continue.

"The district is reviewing a large number of qualified applicants," she said.

The board also appointed Connie Sullenberger, a school district employee who helped develop the budget, as acting business manager at $1,000 per month on a monthly basis. She replaces Vince Belczyk, who resigned May 1.