WINTHROP — Tensions between the school board and Town Council during budget development are coming to a head as the school budget goes to the council for approval on Monday.

Problems with school accounting that were flagged by an auditor and councilors’ desire to cut costs have led to school department accounts being frozen and fears on the part of school board members that they could face legal action because of pressure from the council to reduce health insurance coverage.

Town Council Chairman Kevin Cookson has accused school staff of abuse of power, financial mismanagmement and illegal use of school checking accounts. In emails to school and town officials and the town’s auditor, Cookson said the town may need to seek an investigation through Attorney General Janet Mills, whom he refers to as a close friend.

Cookson said today that town officials are investigating the use of money in certain school accounts, but he wouldn’t go into specifics.

“If in fact there is something that has been done wrong, civilly wise or criminally, being a former law enforcement officer, then yes, whoever is responsible has to pay for any wrongdoings that have been done,” he said.

School board members said this week that they feel unfairly maligned and threatened.

“It’s upsetting to me, both personally to be accused like that, and secondly, for these people that serve wonderfully for this town, for $300 a year,” school board Chairman Ike Dyer said at the board meeting on Wednesday, when the board approved the $9.9 million school budget.

They voted to increase the legal services line in their budget from $10,000 to $15,000 to deal with Cookson’s allegations or any legal action resulting from what they view as Town Council interference in their negotiations with staff.

Town Council will hold hearings on the municipal and school budgets at 7 p.m. Monday.

In Cookson’s emails, he expresses concern about school bank accounts that were opened with the town’s federal tax ID number, apparently without town approval, as well as commingling of funds that makes it difficult to tell where money is coming from for certain expenses, such as a fence for an athletic field.

Winthrop Public Schools Superintendent Gary Rosenthal said the accounts were opened by parent groups, some of them years ago, to hold money from fundraisers, and no funds have been misused. The accounts were frozen by a unanimous vote of the Town Council in late June, leaving the school department unable to pay some bills.

Town Manager Jeff Woolston said the accounts range from $1,000 to $100,000, but he doesn’t know much else about them yet.

“The central issue is that we want to find out why they were established, what they’re being used for,” Woolston said. “There apparently wasn’t the authorization from a previous town treasurer to open them using the town’s tax ID number.”

The management letter from the school district’s 2012 audit flags the problem of the accounts not appearing on school ledgers but does not allege any wrongdoing.

The letter makes several other recommendations for changes to accounting practices and notes that the school department overspent in two budget categories but not on its overall budget for 2012.

Rosenthal said school staff have already addressed or are moving to address all of the recommendations, despite not receiving the letter until Thursday.

The auditors were called in to do a preliminary review of the fiscal year that just ended, as school officials and the town council disputed the existence of revenue that the first draft of the school budget depended on.

The auditors found that the district’s deficit would be greater than anticipated, and the town postponed a school budget referendum scheduled for June 11. Councilors told the school board to bring back a budget that would not increase taxes or draw on town surplus funds.

With further cuts and an increase in state aid, the school board has met those targets, but it may not be enough to garner Town Council’s approval.

Cookson said he can’t support any school budget that includes raises or does not cut health insurance costs. He and school officials said a straw poll at Monday’s Town Council meeting showed support for that position by all councilors except Sarah Fuller, who was absent, and Priscilla Jenkins, who opposed it.

Rosenthal said the school budget is based on the salary scale and health insurance coverage remaining unchanged, which is what will happen if the school board and the employee unions can’t come to agreement on new contracts before the current ones expire in August.

Some employees will receive step increases based on attaining new credentials or reaching longevity milestones, but there are no across-the-board raises. Health insurance premiums are flat.

School officials say they can’t commit to anything — such as a pay freeze, a switch to a cheaper health plan or requiring employees to pay more for health insurance — while negotiations are ongoing.

Union representatives and school officials said that because Town Council controls the purse strings of the school department, the councilors are holding the school board hostage and engaging in illegal third-party bargaining.

Maine Education Association has warned the school board that they, as they employer, could be subject to a labor complaint if Town Council attempts to intervene in negotiations.

“The employees and the board have a good labor relationship and have had a good labor relationship,” said Joan Morin, an MEA staffer. “We understand that the board of education is not causing the issue at this time; however, we bargain with them. And so the council is possibly putting them at legal risk.”

Cookson disputed that, saying that town attorney Lee Bragg has told councilors they are well within their rights to cut line items for salaries or health insurance, just as they have reduced spending on town employee benefits by $100,000 even as negotiations are ongoing.

“They’re negotiating contracts as we speak, and they’ve been given the same message: No raises and a reduction in the premium costs,” Cookson said.

Two other councilors interviewed about Monday’s meeting, Ken Buck Sr. and Don Ellis Jr., said most of the discussion they recalled was about opposition to wage increases, not a demand for a reduction in benefits. Both said they would have to look more closely at the school budget before deciding how to vote.

If Town Council approves the school budget, it will go to a public referendum. Continuing resolution approved by councilors earlier are funding the town and school department through the end of July.

Susan McMillan — 621-5645
smcmillan@mainetoday.com