School and town officials in Winthrop still don’t see eye to eye about the causes and effects of a school funding error that was made two years ago and discovered this past summer, leaving the school district with roughly $700,000 less than it thought it had. But they agree they’ll need to cooperate to close the shortfall.

“The solution has to be better communication,” Town Manager Peter Nielsen said. “I don’t know how you can disagree with that. … I’m working hard to be as professional as I can. At the end of the day, we’ve got to solve this together.”

The solution also will require some mix of loans, reduced spending and higher taxes — all difficult budgetary decisions that will need to be made by the Town Council in the months to come, Nielsen said.

Officials first discovered the roughly $700,000 funding error in late summer, when they were preparing the town’s tax bills. They realized that officials who calculated the 2015-2016 school budget overestimated by about $700,000 the amount of revenue that the state would provide. The extra $700,000 then was carried over into the $11.2 million budget that voters approved in June this year, leaving the school district with less funding than it thought it had.

The full effect of that funding mistake on municipal finances could be greater than $700,000, according to an auditor who spoke for two hours Monday night at a Town Council meeting. During his presentation, auditor Bruce Nadeau, of RHR Smith & Co., said the town will have to spend an even greater amount — $831,078 — in the years to come to make up for the funding shortfall.

Nadeau’s arrived at that amount after a series of complex calculations, and he was not able to provide a simple explanation for why the actual amount the town needs to raise is greater than $700,000. But one of the reasons for the discrepancy, he said, is that the School Department’s current budget includes a surplus of $100,000 that doesn’t actually exist.

Nadeau recommended that town officials develop a long-term plan for paying the money back — a process he warned could take several years — and create a simpler process for approving future budgets. He also suggested that school and town officials create a joint committee to formulate a long-term plan for addressing the shortfall, an idea that was received warmly by a number of the officials in attendance.

Because of the ripple effects of that funding error two years ago, Nielsen said the town’s day-to-day operations are short-funded at the moment, and he soon will ask the Town Council to approve an extra $900,000 in borrowing.

That borrowing is a regular part of municipal administration and would be paid back once the town collects enough property tax revenue in the spring, Nielsen said, but the town does not normally draw on it this early in the fiscal year.

In the longer term, Nielsen said, the council will have to start creating next year’s budget — a process that could require some difficult decisions.

Several attendees at the Monday night meeting raised concerns about higher taxes and reduced spending in the years to come.

“I’m hoping to God that we’re not going to balance this on the backs of our taxpayers,” said one attendee, Betsy Rowe.

Councilor Richard Henry questioned whether the town now will be able to justify taking a loan out to build a fire station, a project that has been in the works for several years. He also criticized Gary Rosenthal, superintendent of the Winthrop School District, for missing the funding error two years ago and, more recently, for blaming the mistake on municipal officials.

In November, an attorney for the school district sent Nielsen a letter saying it was a town employee who “double booked” the projected state revenue.

At the Monday night meeting, Rosenthal explained the school district’s position, including that the town was responsible for detecting the funding shortfall, prompting Henry to object in a raised voice.

With the exception of that exchange — and despite the lingering disagreement between town and school officials about the root causes of the funding error — the meeting remained civil.

Since the school district’s attorney sent the town a letter blaming it for the mistake, the town has received two legal opinions stating that the school district was responsible for the mistake. Rosenthal has pledged to close the $700,000 shortfall without needing to raise taxes, and he questions whether the long-term impact will be as great as the town’s auditor has projected.

But both Rosenthal and Nielsen said they hope the spirit of cooperation can continue as the town begins trying to resolve the error.

“We are all in agreement that we want to work together,” Rosenthal said. “It’s imperative.”

Charles Eichacker — 621-5642

ceichacker@centralmaine.com

Twitter: @ceichacker

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