AUGUSTA — Faced with a larger revenue shortfall than expected, Augusta school officials find themselves stuck between not being able to make spending cuts and not having funds to fill the hole.

School officials presented a proposed school budget March 10 to the Augusta Board of Education that has a nearly $3 million revenue hole, after a miscommunication with auditors left officials believing they had more money to put toward the upcoming year’s budget.

At its workshop meeting Monday, board members attempted to make additional cuts, but they said said they were reluctant to cut anything that would affect students’ learning or programs. The board made about $120,000 in cuts, mostly to capital projects.

Next Monday, the Board of Education is expected to vote on sending the proposed 2025-26 school spending plan to the Augusta City Council for review. If voters approve the school and city budgets as they now exist, and Kennebec County’s budget is approved as it stands, the city’s property tax rate would increase $3 to $27.53 per $1,000 of assessed valuation, officials said.

The miscommunication happened when Karla Miller, the school department business manager, asked auditors for predicted numbers left over in this year’s school budget. Administrators said the auditors provided them with figures from the school year 2022 to 2023 — $3.4 million — rather than the money left over from the 2023 to 2024 school year, which is $450,000.

School officials built the upcoming proposed budget using the larger, incorrect amount.

Miller has since submitted notice of early retirement to the board, which the board unanimously accepted at its regular business meeting March 12.

Augusta Public Schools Superintendent Michael Tracy Jr. Rich Abrahamson/Morning Sentinel file

On Friday, Superintendent Michael Tracy Jr. acknowledged the mistake.

“Our most pressing concern, however, involves the unassigned fund balance — money that remains unspent over the years and can typically offset future budgets,” Tracy said. “Our auditors informed us they had provided incorrect information, and our fund balance is substantially lower than previously reported. Without this fund balance to help mitigate costs to taxpayers, the entire budget increase would need to be passed on to them unless additional cuts are made.”

Earlier in the school year, Tracy and the Board of Education had to find additional funding as unpredictable factors in the special education department and transportation department brought the budget up by $1.6 million. By freezing the budget and cutting costs in other areas, the underbudgeting sorted itself out.

Before that, Tracy’s predecessor James Anastasio had several issues with the budgets he presented to the board, including using the wrong numbers to create the 2023 to 2024 school year budget.

Tracy said that he takes his responsibility for building the budget seriously.

Already this budget year, 16 positions have been cut to reduce the proposed budget by $1.1 million. The proposed superintendent’s budget represents a 6.5% increase to the current spending plan, an increase of almost $3 million. Last year’s budget was approved at $38 million.

“I want to assure you that I take this responsibility seriously, balancing my obligations to both taxpayers and our commitment to providing high-quality education for our children,” Tracy said. “Both the City Council and the school board directed us to build a responsible budget with these considerations in mind.”

Money from the previous year’s undesignated fund, which is any money that is left after everything in the budget is appropriated, can be used to offset increases to taxpayers in the proposed budget. Typically, about half of the undesignated fund is used. Maine law does not allow accumulated undesignated funds to be more than 3% of the year’s budget.

“This situation is extremely unfortunate, as we believed we were in a stronger financial position,” Tracy said. 

Tracy and Miller received heat from members of the Augusta Board of Education who could not figure out how the mistake happened.

At Monday’s Augusta Board of Education workshop meeting, Tracy presented another round of cuts to capital improvement projects, special education and computers that totaled about $235,000. The board said it did not want to cut spending on technology, which brought the cuts to about $120,000. Board members said they want to make more cuts, but not to positions or programs.

Board members said they worry about the fund balance, which is expected to be empty.

With the school audits falling behind, Tracy said building an accurate budget can be difficult because it relies on estimating amount of money that administrators think they will have at the end of the year to carry forward to the next budget. The Board of Education is still awaiting the audits for fiscal 2023 and 2024.

Board member Kati McCormick asked for a forensic audit of the budget, but her request did not gain traction from other members. She recommended the board cut about $2.5 million — the equivalent of the budget hole — because she does not think the budget’s proposed increase is fiscally responsible or sustainable for taxpayers.

“I asked for it two years ago, and had we done it, we would be on better grounds,” McCormick said.

The staff positions that have been cut from the proposed budget include seven permanent substitute teachers, six teachers, one superintendent’s office staff member and two administrators. Tracy did not provide the budget documents to the Kennebec Journal because he said the budget is still changing.

The Board of Education is expected to vote on the proposed budget at Monday’s workshop meeting, scheduled to begin at 6 p.m. in the council chambers at Augusta City Hall at 16 Cony St.