Missouri school district grapples with $22 million loss over two years after budget errors

A Missouri school district could face state regulatory action according to new budget documents released by the board prior to an emergency meeting on Monday night to craft a solution to the budget crisis.

In July, the St. Joseph School District (SJSD) announced its newly approved budget was filled with errors. The mistakes, administrators admitted, could cause the elimination of hundreds of jobs. 

A deficit that was hidden because of the errors is now eating into the district’s required reserves, risking the solvency of the schools, reported the Heartlander in August. 

At the time of the announcement, the district was still sorting out why the budget under retiring Superintendent Gabe Edgar and Assistant Superintendent of Business and Operations Robert Sigrist contained so many glaring miscalculations. 

So far, there’s no indication the errors were intentional. 

The new budget documents show a fiscal year 2024 loss of $11.9 million and estimate an $11 million loss for 2025. 

The shortfalls, even after proposed budget and job cuts, will keep the district underneath its required 20% reserve at least through 2030, according to the documents. 

The board is considering two different reorganization plans that will see school closures and the elimination of between 450 and 550 employees, with the brunt of the cuts falling on the teachers. 

Teachers could see job losses of between 261-308 positions, while other staff could see cuts between 153-212 jobs, according to the plan. An estimated 13-15 administrative positions could also be cut. 

Even with the cuts, the reserve fund will fall below 10% for at least six years. Projections from the documents show that in 2030 the reserve will still be just below 20%. 

While the guideline reserve funding of 20%, adopted from the Missouri Department of Elementary and Secondary Education (DESE), isn’t a legal requirement, financial difficulties could trigger regulatory oversight by several state agencies. 

Under Missouri law (§161.520), the financial pressures could cause DESE to declare the district under “financial stress” if certain conditions such as declining tax revenues apply. If DESE makes such a declaration, the district would have 60 days to file a corrective plan or face a state takeover.  

Complicating a financial fix is student enrollment that has fallen below 10,000 for the first time, according to the impact analysis provided by the district. 

But even without action by DESE, the Missouri State Auditor could investigate how the budgeting errors were made in the first place. 

A 7% error in a budget for a government unit, such as a school district, is likely considered material under Generally Accepted Accounting Practices, because of the impact it has on the community.  

People will demand answers as to how it happened, just as they did with a larger Missouri school district last year.  

In 2024, the State Auditor took action against St. Louis Public Schools (SLPS) after it announced a $35 million budget deficit on a $442 million budget, a deficit of around 7.9%.  

“It is certainly fair to say the board had a hand in the mismanagement that occurred in the district,” the state auditor told Bond Buyer about the financial condition at SLPS. “The board was lax in its oversight duties and its duties to provide long-term financial planning for the district.” 

SJSD has a long history of financial mismanagement, poor oversight and insider money scandals. 

The district was recently fined by the Missouri Ethics Commission for illegal electioneering following two other reported incidents of electioneering since 2009.  

In 2015, an investigation revealed the superintendent in the district was paying large “stipends” and other unapproved bonuses to himself and to employees of the district. 

The resulting deterioration of the financial condition of the district necessitated staffing cuts in 2018, which the current superintendent is comparing to today’s crisis, the Heartlander reported.  

In April, local voters rejected a proposition for $157 million to build a new high school and the board indicated it would simply come back and ask for $80 million in 2026 instead.