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Amid deficit spending, district taps reserves

Assistant Superintendent Robert Sigrist speaks about St. Joseph School District finances on Friday during an interview at the Noyes Administration Building.
Assistant Superintendent Robert Sigrist speaks about St. Joseph School District finances on Friday during an interview at the Noyes Administration Building.

By Marcus Clem

Tens of millions of dollars are available in reserve for the St. Joseph School District to tap as deficit spending accelerates in the name of giving teachers and staff higher pay.

The district’s cash reserves currently exceed $30 million, a resource that looks to be needed in the months to come. The Board of Education set the minimum full-time teacher salary at $40,000, part of an across-the-board raise of $1,300, on March 18. Costing some $4.9 million, this increase effective July 1 could add to an existing deficit of more than $5 million.

Based on deliberations observed March 18, the school board elected to raise pay now rather than wait for a potential August tax levy increase proposal, citing a need to pay people more and promote staff recruitment and retention. Dozens of teacher roles remained open as of Friday.

“Salaries and benefits aren’t something that generally go downward, because as you increase pay to stay competitive, those numbers generally go up,” Assistant Superintendent Robert Sigrist said. “We’re probably going to have to look at some staffing (costs) to decide what are our wants and needs. We’ve put a lot of supports in place, and we really don’t want to pull some of those, but we have to take a look at that, and the best way to meet the needs of students and staff.”

A new tax levy would raise additional revenue and help winnow the deficit, at the cost of increasing the financial burden on local taxpayers. The State of Missouri has not significantly altered its funding formula in favor of school districts for more than 10 years, so funding capable of closing the gap would probably have to be sourced in St. Joseph.

Sigrist said Friday that he cannot precisely project how long the district will be able to spend more than it is receiving in revenue, because local tax receipts and state funding will fluctuate over time. However, the district’s fund balance remains above the healthy standard of 20%, meaning that cash reserves are greater than 1/5 of expenditures from the previous year, about $156.36 million.

A projection for April puts cash reserves at just over $34.38 million, or 24.01% fund balance. Should the fund balance fall below 20%, as it did during the 2016-17 and 2017-18 school years, that would indicate a need to make significant cuts. The district ultimately closed Lake Contrary and Humboldt elementary schools in 2018 amid a fund balance that bottomed out at 15.90%, or just under $19.68 million. The district is required to maintain it at above 10%.

“It is premature for me to guess as to ‘how long’ (reserves) will last, as we have not completed a budget for (Fiscal Year 2025) at this point, and the reserve will definitely last beyond FY2025,” Sigrist said.

One factor that could put the district on less stable ground is the expiration, starting on July 1 with Fiscal Year 2024, of a special dispensation from the state. The Department of Elementary and Secondary Education, in an effort to help districts recover from the COVID-19 pandemic, has to date permitted them to claim advantageous enrollment figures.

Each student enrolled earns the district $6,375 per year in state revenue, among other monies. Yet, St. Joseph schools have seen enrollment decrease, from more than 10,900 in years past to fewer than 10,500 today. Starting with FY2024 on July 1 of this year, the district will no longer be able to cite its enrollment as 10,768, the level of 2019-20.

Instead, it will have to use a lower figure, which will be determined this fall. The result will be fewer per-student payments from the state, and lower revenue, on a scale that cannot yet be forecast.

Article Topic Follows: Education

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