BUTLER TWP — As the legal battle between the county controller and the county's community college continues, the college claims it has the numbers to prove county dollars aren't going elsewhere.

The community college's two out-of-county locations — Mercer and Lawrence counties — showed a net income of $637,759 in 2009, according to a report prepared for Butler County Community College trustees.

Fear those out-of-county sites are being supported by Butler County dollars is the crux of a lawsuit filed jointly by the college and county commissioners to force the county controller to hand over a payment to the college. Controller Jack McMillin is withholding the money because he says the college hasn't proven that Butler County tax dollars aren't leaving the county to help pay the operating expenses of the satellite schools.

"Intuitively, I believe BC3's 'double tuition rate' probably covers all current satellite campus costs. However, without a properly prepared indirect cost plan, there is no reasonable way of knowing whether or not satellite campus costs are being fully (covered) by satellite campus revenues," McMillin said in an e-mail to county solicitor Julie Graham.

The college said the lack of cash could jeopardize its national accreditation and its existence. This year the college is due $4 million from the county. The quarterly payment being withheld is for more than $1 million.

McMillin said in his response to the lawsuit that it is within his rights as a controller to withhold the payment until he is certain the county money is not supporting programs in other counties.

The county commissioners, in their suit, say that without evidence of fraud or misuse McMillin is obligated to cut the check.

Earlier this year, the college prepared the report to show the Lawrence and Mercer campuses were self-supporting. That report extracts expenses and overhead from the revenue of the out-of-county sites and shows there is money left over. That, the college says, proves Butler County tax dollars aren't subsidizing students at BC3 @ Lawrence Crossing in Union Township, Lawrence County, or BC3 @ LindenPointe in Hermitage, Mercer County. This spring there are 180 students registered at LindenPointe and 699 students at Lawrence Crossing.

The college has two locations in Butler County, it's main campus in Butler Township and BC3 @ Cranberry in Cranberry Township.

But, McMillin is now attacking the method the college used to determine overhead costs and asking for another report.

"I'm giving them a way to defend criticism," McMillin said.

The college determined collegewide overhead costs as a percentage of total revenue, then it applied that overhead percentage to the out-of-county sites. It also subtracted direct costs.

Jim Hrabosky, vice president of finance at the college, said the college felt the percentage-of-revenue method was a more accurate way to represent its overhead cost than a percentage-of-costs.

"It made better sense," Hrabosky said.

McMillin said the percentage-of-revenue method is inferior to using the calculations the state requires of certain county programs.

"The corner drugstore could do a better job of preparing a cost allocation report," he said.

He also took issue with the report's lack of signature or caption. He said he wants a report called an indirect cost plan prepared by a third party.

The county agreed to be the college's sponsor when the college was founded, providing one-third of the operating cost for the operations within the county.

Hrabosky said the money that comes from the county doesn't even cover things like salaries and upkeep on the main campus.

"There's a huge gap there," he said.

Another third of the revenue is to come from the state and the final portion from student tuition and fees.

Students who are residents of Butler County pay $79 in tuition per credit. Because out-of-county students don't benefit from the county dollars, they pay $158 per credit. Students who reside out of Pennsylvania pay triple tuition, or $237 per credit. All students pay $20 per credit in fees.

The state provides the final third.

Funding comes from the state and tuition. The college separates this money and assigns it to the correct portion of the budget, it said.

The college based its overhead calculation on four types of costs. Those are academic support, which includes the library and lab support; administration, which include salaries and benefits for top officials; plant, which includes maintenance and equipment; and student support, which includes tutoring and admissions. The college concluded that the costs of those four types of things is 45 percent of the total college revenue, which is $22.8 million.

To calculate the overhead costs, Hrabosky said the college used numbers from its internal accounting system and its 2009 audit.

The college terms the overhead as conservative, saying that other colleges put overhead between 35 percent and 40 percent.

Using the same formula, the college determined in-county sites had a net income of $38,818. Collegewide there was $676,577 in net income.

That excess revenue is used to fund the college budget, build reserve for capital projects, and to lessen tuition increases.