It depends upon the perspective one analyzes him from. As per the scriptures God or bhagavan is someone who fulfills six qualities (complete splendor, virtue, glory, opulence, knowledge, dispassion) combinedly known as bhaga:
aiśvaryasya samagrasya dharmasya yaśasariśrayaḥ
jñānavairāgyayoścaiva ṣaṇṇāṃ bhaga itīraṇā [VP - 6.5.74]
Complete splendor, virtue, glory, opulence, knowledge, dispassion - these six are known as bhaga.
So from scriptural point of view he may not be God, but scriptures also say that guru is God Himself. We all know this from gurur brahma gurur vishnu.. And as per the scriptures, the devotion, behavior and respect towards guru should be exactly similar as one would respect, treat and behave towards God:
yasya deve parā bhaktiḥ yathā deve tathā gurau [Sve. Up. - 6.26]
- One who has utmost devotion for God and as for God so also for the guru.
So even though one may not be God as per the first definition of bhagavan above, he is certainly God for his followers and disciples.
And the scriptures also state that God realized souls who know Brahman become Brahman:
brahman vid brahmaiva bhavati [Mundaka Up. - 3.2.9]
mayātma-bhūyāya ca kalpate vai [SB - 11.29.34]
जानत तुम्हि तुम्हि होइ जाइ [RCM]
Knower of Brahman becomes Brahman himself.
So by this definition, if someone is a God realized soul, then he is a God. But the Godly powers and opulence may not be there as it is only a definition basing upon the Godly bliss he experiences. (bhogamatra samlingyacha [BrSu - 4.4.21])
Sai Baba is a Siddha. Siddhas are personalities who generally posses mystic powers. But after that, if he is the guru of someone or God realized himself (which he certainly is) then he can be considered as God by some. At least, people who are benefited and helped by him from troubles will certainly consider and respect him as God. But others may say he is not a God just like you have cited that the Sankaracharya of some monastery has said.
In another answer Pradip has beautifully pointed out that one's duty and course of action is also determined by one's conscience. Hence, people will undoubtedly have differing views regarding this and will give different remarks.
PS: I have only shared things as per the scripture. My personal view is complicated to share. For me everything and everyone is God.