LIVERMORE FALLS — Regional School Unit 36 had to transfer money from the system’s general fund to cover deficits at the end of the school year, according to an auditor’s report.

The school system, which serves Livermore and Livermore Falls, has also lost out on some state funding for bus lease purchases over the years because payments were not budgeted in the proper year, new Superintendent Judith Harvey said. Harvey took the helm July 1 and has been working to straighten out financial issues that have surfaced.

During the fiscal year that ended June 30, and in the subsequent months, the school system became aware of a number of programs, funds and transactions that resulted in deficit balances. Ultimately, they had to be paid with the general fund, according to a report by Runyon Kersteen & Ouellette, an accounting firm of South Portland which conducted the audit.

The firm has made recommendations for the school system to follow.

“We are working hard to really get things back on track . . . and we will be much more cautious in going forward,” Harvey said. “Luckily we had enough of a balance to take care of it.”

The fund balance as of June 30, is $273,567, which includes two accrued payrolls, Harvey said.

The auditors recommended in their report “that in the budget process annually, care be taken to fully fund all programs currently. Additionally, when revenues do not materialize to fully fund a program, expenditures should be curtailed or alternative revenue sources be assigned as soon as possible such that deficits are addressed as soon as possible.”

Harvey said in some instances programs were not budgeted for but, from what she has learned, there was a plan that the money would come out of different accounts to cover the expenses.

Former Superintendent Terry Despres, who was also the school system’s business manager, resigned as of Jan. 31, citing medical and personal reasons. School directors hired interim superintendents to oversee the district through the remainder of the school year.

Interim Superintendent David Wallace discovered during that time that a total of $110,000 raised by voters in 2006-07 and 2007-08 was not transferred from the general fund to pay off a food service debt that accumulated over the years. The debt has since been paid off, but the deficit was listed in the auditor’s report.

Other areas that required transfers from the general fund to resolve were:

• A revolving renovation fund was charged a number of expenses that exceeded revenues by about $68,000. The work was done at the middle and high schools, Harvey said.

• The alternative education program had expenditures exceeding revenues by about $55,000. The program originally started under the adult education and was initially paid for by money from that program, Harvey said. The state now requires it to be under the district’s regular instructional budget.

• The E-rate fund, a federal program which provides school systems with discounts for telecommunications services, was charged for a number of expenditures through June 30, 2008, totaling about $50,000. However, no revenue was recorded in the fund and in 2009 the deficit was closed out to general fund. An application was never submitted to get the money, Harvey said.

• A behavioral program, which is shared with Jay, was also not fully budgeted for in the general fund. Expenditures were charged to separate fund accounts, while some revenues were recorded in the general fund. Overall, the program experienced a deficit exceeding $120,000. Jay paid its share of $60,000 of the program, which went into the general fund as revenue, Harvey said. RSU 36 planned to take its share out of different areas in the budget but they were not designated in the budget.

The school system has also lost some state subsidy in previous years from bus lease purchase agreements because some payments were not budgeted properly, she said. The money is not recoverable.

A calculation of the loss has not been done, but an average yearly payment for a bus is usually about $25,000 spread over three years, she said.

“We could have been affected this year but the Department of Education has worked with us to get us back on track,” she said.

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