EAST MILLINOCKET, Maine — The Maine Department of Education has for now opted to avoid fining three Katahdin Region towns $110,000 for failing to follow state laws regarding alternative organizational structures, officials said Monday.

Great Northern AOS 66’s repeated failures to submit audits detailing its finances for the last two years, despite assurance from Superintendent Quenten Clark that the school system would comply with state law, prompted a letter Jan. 29 from Acting Department of Education Commissioner James Rier warning that the school system must take corrective action. Rier said the corrective action plans must be made by July 1, 2014, with the corrective action taken by July 1, 2015.

On Monday, Clark dismissed AOS 66 as largely an administrative designation, the lack of which would not materially impact relations between East Millinocket, Medway and Woodville. He said chances of AOS 66 drawing a fine were “miniscule” given that other towns statewide were disbanding AOS and regional school units.

Department of Education Spokeswoman Samantha Warren said the letter comes in part because state education leaders’ patience is exhausted. They have sent notices informing the school system of its noncompliance since 2012, she said.

“Inaction is no longer an acceptable action. In order to honor not just state law but the will of their voters and play by the same rules as the other dozen or so AOS in Maine, [AOS 66 leaders] need to make a decision about how they want to organize moving forward,” Warren said in a statement. “They can either follow through as they told the state and these three communities they would back in 2011 and start functioning as an AOS, or they can take steps toward dissolution and legally operate as three separate fiscal agents as they do now.

“The impacts on the general public are that the people voted [in all three communities] to enter into the AOS, and their will is not being upheld. Additionally, the state could, but has so far chosen not to, assess them the $110,000 penalty, which would come from their tax dollars, for not operating as an AOS,” Warren added. “Furthermore, because this matter has been unsettled since 2011, the board and superintendent have spent extensive time discussing this matter and not others which may have a greater impact on schools and students and be of more importance for the public.”

Much of the problem, Clark told the East Millinocket Board of Selectmen last week, is that state AOS law requires separate accounting software for the AOS than is already used by East Millinocket, Medway and Woodville, the three communities the AOS serves.

That software costs about $20,000, he said Monday. Another $10,000 annually would go toward AOS maintenance costs, he said.

Across the state, communities such as Belfast, Ellsworth, Freeport and Madison are considering or actually breaking up consolidation efforts such as AOS or regional school units in favor of more individual designations, Clark said.

“It has just gone completely the other way. School districts are breaking up in a terrific pace all over the state,” Clark said Monday. “The AOS is becoming a liability.”

East Millinocket residents voted 93-11 and Medway residents 72-2 in favor of the AOS on June 23, 2011. Woodville residents voted 18-0 on June 28, 2011 to form the AOS, officials have said.

Originally established and emphasized by Gov. John Baldacci’s administration, the AOS and RSU school government structures were meant to cut education expenses by forcing smaller schools to consolidate, an effort steadily resisted in the Katahdin region.

School officials said at the time of the AOS 66 votes that consolidating East Millinocket, Medway and Woodville schools as an AOS would help guarantee the continued life of Schenck High School, which serves the three towns.

The school systems, Clark said, still face the peril of rising costs, declining school-age and general populations and possibly less school aid from the state. But unless consolidation closes school buildings and forces substantial layoffs among school workers, which leaders across northern Maine seem reluctant to do, its chances of saving more money in the Katahdin region are slim, he said.

And the three towns involved don’t seem to want to consolidate with Millinocket or other regional school systems, such as RSU 67 of Lincoln, Clark said.

East Millinocket, Medway and Woodville “have had so much taken away from them against their will that [school buildings] is the one thing they can control, and this is the one thing that they don’t want to give up. The time may be coming when they need to [consolidate], but it is not here yet.”

Clark said he plans to discuss Rier’s letter with East Millinocket school board members when they meet at 6 p.m. Monday, Feb. 10.