WINTHROP — Hearings on the municipal and school budgets were canceled at the last minute Monday after an auditor flagged potential problems in the school budget.

The Town Council postponed the hearings until June 17, meaning the June 11 referendum on the school budget must also be rescheduled.

Ron Smith, managing partner of RHR Smith & Co., said Winthrop Public Schools may not have all the money that officials are counting on in the 2013-14 budget that the school board approved last week.

“I do not think it’s in the best interest of this town to move forward with any proposed town budget or school budget, based on what we believe to be some issues that we’re still trying to understand,” Smith told councilors on Monday evening.

He said his firm will need about a week to investigate and report back with their findings. Town Council will meet June 10 to discuss those findings, then allow the school district to make any necessary changes before the hearing on June 17.

Superintendent Gary Rosenthal said any problems that exist are the result of bookkeeping errors, not malfeasance. He said more cuts to the school budget may be necessary, depending on Smith’s findings, because Town Council has asked the district to deliver a tax-neutral budget.

School officials and councilors have been engaged in a dispute over the use of about $200,000 from the “designated fund balance” to make the district’s $10 million tax-neutral for Winthrop property owners.

That revenue line has appeared in the last five budgets, and school officials said it would not affect town finances unless the district suddenly went bankrupt. Some councilors contended, however, that it would deplete the town’s surplus, which is already lower than typically recommended.

Municipal and school officials met with Smith Monday morning to review their budgets.

At about 4 p.m., Town Manager Jeff Woolston said he expected Town Council to hold the hearings and vote on the budgets at their 7 p.m. meeting. Officials learned of Smith’s concerns shortly after that.

Smith said there may be a problem with the school district’s projections of its carry forward, which is money that has been appropriated for previous budgets but never spent. School districts and municipalities often apply carry forward funds toward their next budget to reduce the amount of money to be raised through local taxes.

“The school carryover may not be what they think it will be,” Smith said after the meeting.

Town councilors must approve the municipal and school budgets. The school budget then goes to the ballot for a townwide referendum.

As approved by the school board, the school budget is 0.58 percent higher than this year’s. The draft municipal budget would reduce spending by 5.4 percent.

Susan McMillan — 621-5645
[email protected]

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