WESTBROOK – The Westbrook School Committee is beginning budget season with a plan to cover gaps left by state budget deficits.

The School Committee’s Finance Committee met Feb. 6 to hear where things stood in this fiscal year and what the plans are to cover the state’s funding curtailment and handle the debt service before the work begins on a new budget.

There was some good news. A spending halt ordered by Marc Gousse, superintendent, at the beginning of the year created surpluses in a number of areas in the budget. The freeze was placed on the purchase of all unnecessary supplies and upgrades as a defensive move to help cover the $205,000 hole left by a decrease in state funding.

But those surpluses are seen as temporary, and committee members fear another curtailment could be on the horizon.

“I’m concerned. We keep taking and the lines are going to 0 and I’m concerned,” said Mary Hall, Finance Committee member.

Alex Stone, chairman of the Finance Committee, said there were other carry-over funds in other accounts, but the district was not prepared to continue covering the unexpected shortfalls.

“For next year’s budget, we must have a curtailment fund,” said Stone.

The school budget for the 2012-2013 fiscal year is $30.9 million, with approximately 50 percent coming from the state. Gousse said the $36 million deficit at the state level is “cascading” down to the public.

Concerns arose during the meeting that next year would see the first significant increase in the budget since 2011, when the district’s operating cost was approximately $33 million. In last year’s budget, that number was decreased to $30.8 million, where it has remained fairly steady, but the decrease hasn’t come easily and concerns arose that next year would see a budget increase

“We’ve suffered because of it,” Hall said.

News on the plans to handle the curtailment and debt service were positive. With caps on spending and replacing staff only when necessary, Gousse and other members of the finance team found some $213,000 in the staffing budget. Gousse proposed using this surplus to cover the curtailment shortfall coming through the next few months.

School districts receive General Purpose Aid through monthly checks from the state. The monthly subsidy checks will be reduced to reflect the curtailment order.

In what could have been a significant blow to the budget, Gousse said he found a previously undiscovered line item that made it appear the district owed another $200,000 in this year’s expenditures. Dean Flanagin, director of operations at the school department, said after exploring possible causes, he concluded the deficit was a place holder meant to be removed after staff benefit numbers were confirmed.

“We got the number from benefits. The $200,000 was put in as a place holder, but the cost of benefits didn’t go up as much as we thought,” said Alicia Gardiner, comptroller for the city.

The placeholder has now been removed.

Gardiner also shared good news stemming from the city’s recent refinancing of its bond debts. The project has officially been closed out by the state. There is still approximately $695,000 owed to the state for the middle school project bond, but $81,000 in the non-allowable expenditures accounts left over in the project budget will be used to pay part of that down.

According to Flanagin, when a project is complete, the state reviews the expenditures for the project. Some of those, in this case things like wiring from Time Warner Cable and cleaning supplies, won’t be paid for by the state, even though they were included in the project budget. Because the project stayed in budget and the funds were already allocated for those items, the money is still in the budget and can therefore be paid to the state.

The refinancing also lowered the projected debt service to the school by $57,322 for the next fiscal year, starting July 1.

Both the school and city budget talks will officially begin in March. The City Council must vote on the school budget before it goes to the voters for final approval.