GROTON -- "At a minimum there was negligence and at a maximum there was incompetence," Selectman Joshua Degen told the Groton-Dunstable Regional School Committee at a special meeting Wednesday.

Degen was responding to a shortfall in the district's operating budget amounting to millions of dollars that, if no new sources of revenue are found, will likely have to come from layoffs, cancellation of programs or closure of school buildings.

There has also been talk of a Proposition 21/2, override which some residents spoke out against.

How does the School Committee hold itself accountable for the oversights that led to the shortfall? Degen asked.

The comments were among many strong words leveled at the School Committee by Groton and Dunstable officials grappling with an imbalance in the district's budget that could leave up to $2.5 million to deal with in 2015 alone.

The approved school-operating budget for fiscal 2013 was $35,200,000, but a review revealed that total obligations by the district came to $36,204,212, a difference of $1,004,212.

Initial cuts totaling $126,095 were immediately authorized by the administration, bringing obligations down to $36,078,117.

At the same time, other sources of revenue were sought out, including $263,533 taken from the schools' Excess and Deficiencies account, totaling $440,548.

That reduced the difference to $464,485 for 2014.

But due to unfunded obligations that rolled over with each year, plus built-in increases expected for utilities, insurance and union contracts, fiscal 2015 looked to be challenge.

School Committee Chairwoman Allison Manugian said the whole thing will come down to what the community will support.

But if it decides the current budget is unsustainable, it would likely mean layoffs.

According to member James Frey the district has applied for up to $100,000 in emergency aid from the state, has placed discretionary spending on hold and is talking to vendors about ways more money can be saved.

"We're doing anything we can do to bring in more revenue and savings," said Frey adding that a priority was to preserve existing educational programs.

When asked by Degen why the district had not used $350,000 still remaining in its Excess and Deficiencies account, Frey said it was needed as a "cushion" against the 2015 budget.

Noting the ongoing decline in student enrollment, which has gone down 10 percent over the years, Finance Committee Chairman Jay Prager asked about a simultaneous rise in payroll.

"That's a pretty dramatic increase," said Prager.

"We've got a huge problem that's getting bigger, and bigger, and bigger until the rabbit comes out of the hat and it explodes," said Finance Committee member Bud Robertson, wondering why nothing had been done about the figures. "I don't understand how we got this far off."

"We had no idea this was going on," said Frey.

Prager asked how the committee could not look at their budgets and see the problem coming?

School Committee member Jon Sjoberg said while the district was in negotiations with unions, they based projections on payroll rates from the previous contractual period which ended up being lower than under new agreements.

The question of blame was not black and white, continued Manugian, because many of the people who were around when past budgets were formulated had left the district.

Ultimately, however, the School Committee itself was responsible.

What was needed, said Robertson, was more control over the budget process.

While some changes to the process had already been implemented, replied Manugian, any more will have to await the outcome of an audit whose results were due at the end of February.

Calling the question the "800 pound gorilla in the room," Prager wanted to know about 2015, projections for which were not included in graphs supplied by the district to illustrate the fiscal issues being discussed. 

"We're looking at a level-serviced budget," said Manugian of plans to tackle what was described as $2.5 million in liabilities for the next year.

Even if both towns tax residents to their levy limits as allowed by state law, said Degen, it would not be enough to cover the amount coming due in fiscal 2015. He asked if the district had any plans to address the shortfall.

The School Committee then ran through possible measures like cutting programs such as sports, arts, and foreign language instruction; personnel layoffs; and closure of school buildings.

In addition to local officials, a group of parents helped pack the High School library room.

Speaking in defense of spending and retaining small class sizes while warning of declining property values, Groton resident Amy Kelly received applause from other parents in the room.

Calling the whole situation a "terrible, perfect storm," interim Superintendent Anthony Bent said it was the first time in his career that he has had to deal with three school budgets at the same time.

Meanwhile, the School Committee planned to continue the discussion about the shortfall and how to deal with it at a pair of informational meetings planned for Jan. 28 and 30 at which time, the public will have a chance to have its voice heard on the issue.