NEW MILFORD — Despite learning the state may give New Milford more money in school funding than expected, the school board will still have to move forward with $600,000 in budget cuts it had planned to decide on last week.

Some of those cuts may be reinstated once the new fiscal year begins, if an expected surplus is realized.

The additional $433,000 in state funds, however, would not be available to fill the gap, but could go into the school capital reserve, the Town Council told school officials Monday night.

The news didn’t sit well with the school board.

Board members questioned why the funding couldn’t be used — alongside an expected $200,000 from the possible surplus — to close the entire $600,000 gap in its spending plan created when voters this spring approved a $64 million school budget, which was over half a million less than the school board had requested but still more than they received last year.

The conversation became heated and Town Council members said it didn’t seem like the board appreciated that they were getting more money than they asked for.

“Say you understand and that you appreciate it,” councilwoman Katy Francis told some of the school officials.

The council said the board could keep — with finance board approval — $200,000 of the schools’ expected $300,000 surplus in this current year once the audit is complete, and the town is sure that money is there.

The finance board’s next regular meeting is scheduled for July 10. It’s unclear if the board would schedule a special meeting to address the school board budget.

But the council voted Monday to put the additional $433,000 or so expected from the state, known as education cost sharing, into the schools capital reserve, which can only be used for capital projects not operating expenses.

“That’s the key thing,” school board chairman David Lawson said. “That’s the part that affects programs and personnel.”

They also said the audit wouldn’t be completed until January, though some town officials said that $200,000 can be used July 1 when the new fiscal year begins.

Town officials were still skeptical they would get all of the state money promised, especially because the governor hasn’t signed the budget yet and New Milford has gotten less money than planned in the past.

“We can’t offer money we don’t have in our coffers,” said Greg Osipow, the town’s finance director.

Councilman Peter Mullen opposed the ECS move, asking instead for the council to approve a previously request from the board to have the town assume the total costs of the bills they share with the schools, including the cost of the audit, and then use any additional ECS funding they may receive to cover the schools portion.

This would total about $106,000 in the schools’ operating budget that could instead be used to offset cuts. In this scenario, if the town were not to receive the expected ECS funding and the school could not reimburse the town through other means, it may be possible to use the capital reserve funds for that purpose.

While school board members said they appreciated the money, but questioned what it could cover and when they would actually be able to use the money, especially because the capital reserve is only for one-time capital projects and can’t be used for operating expenses.

During the budget season, the Town Council cut the schools’ request by about $1 million because members worried the state would give the town less money than expected. New Milford had just closed a $2.2 million shortfall the previous year due to state cuts.

The Board of Finance added about $400,000 back into the school’s $64 million budget though before sending it on to referendum in May where it passed on the first try.

This left a difference of about $600,000 between the school board’s approved budget and the figure voters adopted. The school board was expected to make those cuts last Tuesday, but held off until they knew if the Town Council could give the district more money now that New Milford received $433,000 more from the state than expected.

Monday’s vote came after about a dozen people asked for more money for the schools, building on last Tuesday’s school board meeting where dozens spoke against proposed cuts to the band program and the talented and gifted program. The crowd filled the town meeting room and spilled out into the hallway on Monday, many of whom were connected to music program.

Several speakers acknowledged that the Town Council doesn’t have the authority to make the actual cuts or add programs back in the schools, but said the overall cut forces the school board’s hand.

“Cuts hurt our children, they hurt our schools and they hurt our town,” one parent said.

The school board will meet Tuesday night to decide on the $600,000 in cuts. The meeting will be held at 7:30 p.m. in Sarah Noble Intermediate School.