MILLINOCKET, Maine — School officials said Tuesday that they are relying upon projected revenues from their China programs to keep town schools going next year.

Superintendent Kenneth Smith and Millinocket School Committee Chairman Kevin Gregory spoke of the China student enrollment programs’ importance after the school committee voted 3-1 to approve the system’s proposed $6.63 million budget for the 2013-14 fiscal year, which begins July 1. Member Matthew Farrington opposed and member Arnold Hopkins was absent.

The budget is actually $2,247 less than the 2012-13 budget but represents a $70,000 increase, from $3.2 million to $3.27 million, in local appropriation town taxpayers would pay, officials said.

The Town Council and voters must approve the budget before it is final. The proposed increase would likely raise the town’s mill rate from 26.4 mills to about 26.8.

On Tuesday, when asked about the sustainability of education in Millinocket given continuing declines in the Katahdin region’s population, local economy, state revenue-sharing and education funding, Gregory answered, “a lot depends on the international program.”

“If we can grow that international program, we will survive. If we don’t, we won’t. It’s that simple,” Gregory said. “The school system won’t survive unless we can bring more kids in.”

The proposed budget, about $337,000, is the first that incorporates projected revenues arising from Smith’s forays into China. Without those, plus some other lesser moneys due from summer instruction programs, staff cuts would make the school system all but untenable, Smith said.

That message follows Town Manager Peggy Daigle’s warning to the council and school board on Monday that the town faces a potential cash-flow shortage of $3 million to $4.5 million that might shut down town government over the summer unless tax delinquents start paying up. The town will issue tax bills next month, about three months early, that are due in August.

Town finances are among the reasons why board members think the council will likely cut some of the school budget, but the board majority said they were comfortable that they had done the best they could.

The board tried to avoid cutting educational programs, but at the end of the process conceded that students’ education had been adversely affected by about five position cuts or attritions over the last few years.

Many cuts were made to keep spending down next year including relocating the alternative education program for grades 9-12, saving about $73,000; three full or part time custodial positions that drew about $83,000; and about $51,000 for a special education director’s program that Smith will fill himself, officials said.

Nine accounts that paid for postage, office supplies, field trips and professional training were cut, saving $14,000. The school board had proposed cutting heating-fuel expenses by about $66,780 but restored a little of that, officials said.

The board cut into the support positions rather than cut teachers. Music instrument instruction would have been lost to fifth- and sixth-graders at Granite Street School — a key point in educational development that feeds the highly successful jazz and band programs at Stearns High School — had not music teacher Kris Vigue suggested a scheduling change that saved the class, Granite Street Principal Debbie Levesque said.

“It was great how she thought out of the box. It was not something that we had thought of before,” Levesque said.

Still, a special education teacher’s position and three ed tech positions will be cut or remain unfilled when school resumes in September, Smith said.

The cuts come despite the school system’s population holding at about 535 students, Smith said.

For government and schools to remain solvent, the economy or population they serve must grow at a rate that outpaces inflation and fixed costs — which hasn’t happened in the Katahdin region in many years. In that context, the China program revenues are the only ones that school officials believe likely to grow over the next year.

Smith has made several trips to China over the last two years and established connections with three Chinese high schools that will bring Chinese students to Millinocket over the summer for programs and as students at Stearns in September.

Seven Chinese students attended Stearns this year, each paying about $24,000 tuition. The franchising fees earned through the high school curricula licensed in China by Smith total over $100,000 so far, he said.

Millinocket is among several Maine municipalities hoping to offset shrinking school revenues with Chinese students but had recruiting difficulties. An informal poll of state public high schools’ Chinese student enrollments taken in February showed the most students, 12, at Orono High School. Some private schools had close to 100.

Board members said they found the budget process agonizing and expressed pleasure at its ending, at least for now.

“It kills me to have to cut anybody,” said board member Donald Dow, who predicted that councilors would amend the budget several times.