A contract dispute at an agency that serves mentally retarded people could result in the loss of about $100,000 in state funds for Butler County.

County Human Services Director Carmine Scotece said the money must be spent by June 30 or it will be reclaimed by the Pennsylvania Office of Mental Retardation.

The county last year allocated the money to the Association for Retarded Citizens of Butler County as part of a broad program to supplement the pay of those who work with mentally retarded people. The county specified that it be used to boost the earnings of ARC employees who work in direct care of residential clients.

But contract talks were under way at ARC, where a three-year labor contract had expired June 30, 2003, and there was disagreement about how to divide the money among the employees.

ARC employs about 85. Of those, 45 work in residential settings and the rest are in sheltered workshops or are job coaches.

"It's really a shame. The county was taking the initiative to use some unspent [mental retardation program] dollars to increase salaries, cut down on employee turnover. And it's gotten held up by a labor dispute,'' Scotece said.

Even though the state supports the idea of boosting the salaries of direct care workers and gave counties money to do so a few years ago, Scotece said, the county will be forced to forfeit the money if it's not spent by June 30, the end of this fiscal year.

"If they don't spend the money on salaries, then they lose it. And that means we lose it,'' he said.

And that's a no-no in the world of state funding. "The last thing we want to do is tell the state we got too much money last year and had nothing we needed to spend it on,'' Scotece said.

If ARC does not reach an agreement soon and disburse the money, Scotece said, he likely will try to reallocate it to some other agency.

"The administration and the union need to work this out, and quickly," he said.

The ARC employees have been represented by the Service Employees International Union, Pennsylvania Social Service Union.

Phil Rosenbauer, director of ARC of Butler since 1980, said discussions with the union are at a "delicate stage" and he didn't want to comment on the negotiations. He said he is hopeful a resolution will be reached before the county's extra funding is lost.

Scotece said the county discovered a total of $500,000 in unspent money for mental retardation programs and decided to divide it among those agencies that serve as county subcontractors and offer services to mentally retarded residents.

"It's generally acknowledged that the wages are not competitive,'' Scotece said. "We ask so much of these workers. They could get jobs working at retail outlets making as much money or more and without having to be so heavily involved in their work."

The recipients of the money were Lifesteps of Butler, Community Care Inc. of Butler, ARC of Butler and several small agencies with a handful of employees.

Lorraine Widener, the county's administrative service manager in the mental health/mental retardation/ drug and alcohol program, said each of the agencies, with the exception of ARC, accepted the money and divided it evenly among its employees.

Widener said an average employee earns an average of between $6 and $7 an hour. Employees with close to 20 years of experience earn about $10 an hour.