WINTHROP — The town’s school system doesn’t have enough money to pay employees over the summer for work done this school year, so further cuts will be needed before town budgets can be approved.

A preliminary audit report shows that the school department’s deficit at the end of June will be greater than anticipated. Continuing appropriations resolutions approved by Town Council on Monday will fund municipal government and the school department until more information is available about the state budget and additional cuts can be made to deliver a tax-neutral school budget.

School officials built a budget using $202,118 in revenue from a budget line that is actually in a deficit, auditor Ron Smith reported to town and school officials Monday. In addition, the school department will have an overall deficit of $420,000 when this fiscal year ends on June 30, not $214,000 as school officials projected, because of other revenues coming in under budget.

The school board has approved about $330,000 in reductions to arrive at a $10 million budget, and more cuts will likely be necessary. But it’s not clear how much because the state’s budget is still in flux.

Taking a cue from Brewer, Superintendent Gary Rosenthal asked Town Council on Monday for more time. The council approved two continuing resolutions that will fund the school department and municipal government at the same level as their 2012-13 budgets.

The resolutions will expire July 31. Councilor Larry Fitzgerald said they can be extended if needed, but new budgets should be passed as soon as possible to maximize the savings from cuts in the draft municipal budget.

The auditor’s report provides more information about the source of money that school budgets for years have used to pay summer salaries. That had become the basis for a dispute between the school board and council this year over whether money school officials were counting on actually existed.

School employees are paid year-round, including July and August payrolls that fall in the fiscal year after the one in which the money was earned. This year’s summer salaries are about $700,000.

For at least a decade, the school district has not been able to pay summer salaries out of the revenue from the fiscal year in which they were earned, so a portion of them is paid out of the following year’s budget.

That makes the summer salaries a liability, but they have been listed as a revenue line in previous Winthrop school budgets. The money has come out of the town’s surplus, Smith said.

“The town has been the bank for the school department,” he said. “The town’s been the one basically financing these summer salaries.”

That’s common practice in many communities, Smith said, but it appears that Winthrop Town Council has authorized it only implicitly when approving school budgets.

Concerned by Smith’s warnings that the town surplus should be higher, councilors said last month that they do not want the school department drawing on it at all this year.

Smith estimated that it will take three to five years for the Winthrop school system to pay off its deficit.

Rosenthal has said the district will do that by redirecting money going toward debt obligations, which will taper off in the coming years.

Smith’s firm, RHR Smith & Co., reviewed Winthrop’s audit report for the first time last year, and this is the first year they’ve looked at the town’s budgets before approval.

Neither Smith nor anyone else from the firm was available to answer questions at Monday’s meeting, so a special meeting will be scheduled for more discussion about Smith’s report. Public hearings on the school and municipal budgets had been tentatively scheduled for Monday, but they will be postponed.

Susan McMillan — 621-5645
[email protected]

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