JAY – Selectmen voted Monday to allow the School Committee to include $216,000 in its revenues from the town’s undesignated revenue fund to lower the schools’ tax commitment, Town Manager Ruth Marden said Tuesday.

The board vote, which came after an executive session, was 3-2, with Selectmen Warren Bryant and Tom Goding opposed after Marden explained the auditor’s legal advice.

Marden proposed that selectmen offer the money in order to lessen the impact of the decrease of revenue because of the $107 million increase in town valuation and an anticipated $215,199 school consolidation penalty, she said.

Voters in Jay, Livermore and Livermore Falls rejected consolidating school systems in January and each town faces a state penalty for that vote.

Marden said there was extensive discussion before the board exited executive session and made their decision.

The town’s auditor said that using that money to offset the revenue decrease would bring the town’s undesignated fund down to 87 days instead of the recommended 90 days of money needed to operate between July 1 and when the taxes are collected, she said.

But it is so close to the fiscal year’s end that unexpended money in town accounts would go into the general fund and replenish the account, Marden said.

The town also has to take $450,000 from the undesignated fund to pay an additional six months in county taxes this year.

Prior to the executive session, public discussion was held on a proposed warrant article on the town meeting referendum ballot to let voters decide how to pay the penalty.

Selectmen took no action Monday night on the citizen-initiated article because it was filed too late to meet the referendum time frame.

The school system is facing an estimated $1 million loss of revenue for the next school budget.

School Superintendent Robert Wall said the $216,000 will be plugged into additional revenue. School officials are still trying to get a clear picture of what state funding will look like for the fiscal 2010 budget, he said.

The School Committee and the Budget Committee will meet at 6 p.m. Thursday at the high school library to continue budget talks.

A vote on warrant articles has been pushed to Thursday, April 2, in hope of getting the state subsidy printout by then.

Maine Department of Education spokesman David Connerty-Marin said because Jay has a municipal school system it’s up to the town to figure out how to make up its loss in state subsidy for not consolidating.

“How they pay for it is up to them,” he said. “Either way it’s the taxpayers of Jay.”

Connerty-Marin said it was the first time he had heard of a town stepping up to cover the subsidy loss for a school district.

The state has attempted to make local school districts consolidate in an effort to reduce the cost of education.

Regional Editor Scott Thistle contributed to this article.