The Winthrop School Board faces significant budget challenges based on apparent accounting problems that add up to a nearly $700,000 shortfall. Winthrop Middle School, seen Friday, is one of the district’s three schools. Joe Phelan/Kennebec Journal file

WINTHROP — Town officials have postponed action on the Winthrop Public Schools’ nearly $700,000 budget shortfall until school district leaders learn more about the causes of the deficit and how to make up the funds.

Becky Foley File photo

Winthrop Interim Superintendent Becky Foley found the shortfall last week — her second week on the job — and informed the Winthrop School Board on Wednesday. She presented the information to the Winthrop Town Council on Monday night but said she wanted to be more sure about exactly why the deficit happened before suggesting any budget adjustments.

The budget shortfall comes following a tense start to the school year in which former Superintendent Jim Hodgkin abruptly resigned over what he called a “lack of understanding” by some members of the school board. Hodgkin informed the board of his resignation nearly two months ago and had planned to stay on until November, but the board instead decided to terminate his contract effective Aug. 30.

In a memo sent to the Winthrop Town Council on Friday, Foley said the budget called for about $240,000 more in fund balance revenue than the district actually has in the fund. The district began the fiscal year with about $722,000 in the fund and allocated $600,000 for capital improvements in April. After accounting for the leftover money from the previous year, the account contained $155,164.

But, in this summer’s approved budget, the school board approved $395,000 from the fund as a revenue source.

The budget also failed to account for many pay raises, leading to an additional $441,371 shortfall for salaries and benefits — including $91,000 for substitute teachers and a total of over $200,000 for teacher salaries at the district’s three schools.

In all, according to Foley’s memo, the Winthrop Public Schools budget has a $681,207 deficit.

While district leadership learns more about the deficit, Foley has frozen discretionary spending.

She said the district may be able to reallocate about $318,000 from the capital improvement fund back into the general fund to help cover the deficit, but she said she wasn’t ready to formally ask the council for that change yet.

“My first priority is to find a path right now where I’m avoiding having to call a special budget meeting and asking the voters for additional money for the current year,” Foley said. “My second priority is creating a budget for next year that gets us back on track and prioritizes safety.”

Alicia Lawson, the chairperson of the Winthrop Public Schools board, said members did not have specific projections about the budget during the approval process — they only received broad updates and overviews during meetings from Hodgkin.

Because the budget was not presented in detail by the superintendent during meetings, Lawson said in response to a question from council member Aaron White, she could not have seen the overspending coming.

“We were not given those items; it’s not broken down,” Lawson said. “It’s really just by article.”

Council member Roy Weymouth said he was particularly concerned about the $91,000 overage for substitute teachers — the largest of any single line in the deficit. In response to Weymouth’s question about the line, Foley said such a substantial overage would not be an acceptable practice in budgets she has built.

Foley said she would have done the entire budgeting process differently, with more input from other administrators and with more historical data to pull from.

“I think there is definitely room for improvement in the process area,” Foley said in response to a question from White. “And I assure you that the process will be done differently than it was this past year.”

Hodgkin told the Kennebec Journal last week that he checked over his budget and was sure it did not have any shortfalls or deficits. During her presentation to the town council, Foley said she met with Hodgkin on Monday at her request to look over the budget, but she said they could not find any additional savings.