Winthrop Middle School in Winthrop, as seen on Sept. 20, 2024. Joe Phelan/Kennebec Journal

WINTHROP — The current budget for the Winthrop Public Schools has an estimated deficit and budgeting shortfall of nearly $700,000, Interim Superintendent Becky Foley told the Winthrop School Board on Wednesday.

Becky Foley File photo

Foley, who started on the job two weeks ago, said she found that when the current year’s budget was formulated, school officials overestimated the amount of money the school department would be able to carry over from last year’s budget. At the same time, she said, they did not allocate enough money for this year’s salaries and benefits, leading to a shortfall.

She plans to bring the information to the Winthrop Town Council on Monday and discuss the next steps with the school board at a later date.

Foley said she reviewed the budget line by line with Nick Poole, finance director for the town of Winthrop as well as business manager for the school system, and Ida Simmons, the school system’s finance specialist. Together, they found a deficit and shortfall. She also worked with the nonprofit Maine School Management Association, which provides support for superintendents and school boards, on the calculations.

It’s not unusual to have changes in the budget after the budget is approved in June, as with an employee deciding not to take health insurance, or a change in benefit plan, Foley said. But the size of the shortfall surprised her.

She said that when former Superintendent Jim Hodgkin created the budget for the school year that ended June 30, he had $996,859 in the undesignated fund balance from the 2022 to 2023 year.

Hodgkin led the school system from 2020 until he stepped down in August.

With a school budget, it’s normal to have money left over at the end of the year, which can then be used in the budget the following year. Money that isn’t carried over is sent to an undesignated fund that schools can use for emergencies, such as when a boiler breaks.

Hodgkin used $275,000 from the fund balance as a revenue source to reduce the amount raised by taxes for last year’s budget, which left it with $721,859. In April 2024, he asked the Winthrop Town Council to allocate $600,000 of what remained to a capital improvement project, which the council approved.

This left $121,859 in the fund balance to use for the current school year. The budget that ended June 30 had an estimated unaudited balance of $33,305, giving the school district an estimated $155,000 in undesignated funds, Foley said.

However, Hodgkin designated $395,000 from the fund balance to be used as a revenue source when creating this year’s budget. If the unaudited balance of $155,000 is correct, it creates a revenue deficit of about $240,000.

On top of that, there is an estimated shortfall of $441,371 in this year’s budget because it did not fully account for pay raises, so not enough funding was allocated for salary and benefits.

With the $240,000 mix-up in carryover funds added to the $441,371 shortfall, it creates an estimated total deficit of $681,207, equal to about 5% of the school system’s $13.45 million budget.

The budget had a long road to approval this year. After a divided school board approved the first draft and sent it to the Town Council, the council sent the budget back to the board, saying they could not support a budget that the school board did not fully support.

The board ultimately passed a revised budget, which was approved by residents in July.

School board members at Wednesday’s meeting did not have any questions for Foley, with the exception of Ivy Corliss, who brought up what she called “misinformation” about the amount the school district spent on attorney fees to deal with conflict on the school board.

However, Foley confirmed that the cost of legal fees related to the dispute is part of the reason for the shortfall, with the district spending $38,000 on legal fees after budgeting for $10,000.

“We did have an overage in that,” said Foley.

School Board Chairwoman Alicia Lawson did not respond to a request for comment.

Hodgkin, the former superintendent, said his budget was checked thoroughly and did not have a shortfall or deficit.

“I have no idea why that is,” Hodgkin said.

He said he would be happy to sit down with Foley and discuss the budget.

“The only thing I would say is I offered to help and she (Foley) hasn’t called me about any of that, so I would be happy to help assist,” he said.