CAPE ELIZABETH — If the state subsidy to schools is approved as currently proposed for fiscal 2010, the School Department will lose more than $500,000 in funding compared with this year’s budget.

The subsidy is proposed by the state at just below $2.6 million. The total school expenditures budget has been proposed at $20.2 million, an increase of $381,000 from this year.

State funding is distributed based on a formula that uses student population and property valuations, but some School Board members are questioning why Cape stands to lose so much while similar towns would gain money.

School Board members referenced Yarmouth, which like Cape chose not to consolidate and has a similar projected decrease of students along with high valuations, but is expected to gain $418,000. Superintendent Alan Hawkins noted, however, that about two-thirds of school districts from every region of the state are facing losses.

School Board members said they plan to take their questions to the Department of Education and local legislators.

The subsidy news, which came last week, has disrupted the town’s budget process. A joint meeting of the Town Council Finance Committee and School Board nearly broke down Monday night because the scheduled discussion of the school budget could not proceed. Facing revenues significantly down from projections, the School Board will revisit its budget in a special meeting on Monday, April 6, at 7:30 a.m.

In order to help address the expected shortfall, councilors supported a plan – which must go before the Town Council – to shift $200,000 of undesignated municipal funds to the school budget. The School Board supported, but must also formally vote on, a plan to shift $163,000 from what would have been a contingency fund to the operating budget.

The Town Council this year had voted to allocate $200,000 to make up for a state curtailment of $421,000 in this year’s
budget, but the transfer wasn’t necessary because of the infusion of federal stimulus funds.

The School Board hopes
to maintain $70,000 in its contingency fund – the same level as in
this year’s budget – to address funding issues that come up
next year.

If both re-allocations are approved and nothing else changes in the proposed budget or expected revenues, the total property tax increase, including the school and municipal budgets, would be 0.6 percent. A majority of councilors said a school budget leading to that increase was appropriate to send to voters in the May 12 referendum. A minority, including Councilor Anne Swift-Kayata, want to see the schools reduce their budget by another $145,000 to prevent any tax increase.

By transferring $163,000 from contingency funds, the schools essentially eliminate the possibility of taking part in a state-proposed high school laptop computer program.

The laptop initiative has not yet been approved by the state, but would cost schools regardless of their participation. If Cape opted into the program, which would provide Apple Macbook computers to every high school student, the district would have to pay a percentage of the computers’ cost.

If they opt out, the district must surrender laptops given to teachers in the first phase of the laptop program. To replace those 60 computers, which are an essential part of the curriculum, according to School Board members, the School Department would have to come up with about $60,000.

In order to prevent the budget process from stalling, the Finance Committee followed its agenda in scheduling a school budget public hearing for April 13, despite the fact that figures are not yet final. The School Board may firm up numbers at its special meeting Monday, and details are expected to be posted on the town Web site as the public hearing approaches.

Councilors said it is not unusual for budgets to change between Finance Committee approval, the public hearing and the final approved budget.

The budget hearing April 13 will be in Town Hall, beginning at 7:30 p.m. The school and municipal budgets will both be discussed. The meeting will also be televised.

Sarah Trent can be reached at 781-3661 ext. 108 or strent@theforecaster.net.