SJSD projects FY27 deficit amid state funding formula gap
ST. JOSEPH, Mo. (KQTV) -- St. Joseph School District administrators are a bit more optimistic with the fiscal year 2026 budget, but next year's budget shortfall will potentially hit the district's reserves harder.
The district's ending budget for the 2026 fiscal year is projected to have the reserve ratio at 10.24%, which is a bit higher than district leaders expected.
"We will be less than 1% variance, so we may be at 10.6% instead of 10.24%, but that variance will be less than 1%," SJSD Assistant Superintendent of Business and Operations Robert Hedgecorth said. "I'm confident of that."
During Monday night's Board of Education meeting, Hedgecorth said the reserve ratio was a bit better than expected, but the bigger concern is the FY2027 budget.
"If the state had fully funded the formula, I would not be presenting a budget deficit," Hedgecorth said during the meeting. "I'd be presenting a small budget surplus."
According to the 2026-27 budget proposal, the district will face a $3,602,442 deficit next year. Hedgecorth cited that state lawmakers are choosing not to fully fund the state formula led to the district's deficit.
The district is projecting to receive $54,417,623 from state funding, but that is almost $6 million ($60,352,879) less than what was budgeted for the 2025-26 year.
The state funding formula was passed in 2005 and has not been updated since.
During the recent legislative session, the state lawmakers passed the $50.7 billion budget that included more than $4.2 billion for the K-12 public school foundation formula. The funding, though, falls short of fully funding the formula by approximately $190 million.
State representatives, like Rep. Dirk Deaton (R-District 159) and Rep. Ed Lewis (R-District 6), said the funding public education is receiving is at record highs.
However, Hedgecorth said that while it is true that the amount of money going to public education is going up, that doesn't mean the funding formula is being met.
"When they say they have the highest amount they've ever funded education, well, that's also because, you know, $10 was worth a lot more 15 years ago than it is today," Hedgecorth said. "So of course you're always going to have an increase as years go on."
The shortfall in state funding potentially puts the district's reserve ratio at around 8.35%, but right now, that is just the projection. Hedgecorth said he will have a better picture of the budget later on in the year once the amount of local funding coming in is clear.
Despite the funding gaps for next year, Hedgecorth is optimistic about the slight surplus the district has for FY26.
The district will have to wait and see what the state does when it comes to funding, but there is a big issue facing the district, and others across Missouri, in August.
Missouri voters will decide on Amendment 5, which would eliminate the state income tax.
"For the state's general revenue, one of the biggest things that they fund is public education," Hedgecorth said. "And so if the state income tax measure is passed and they're able to reduce that down, I see us copying what Kansas did many years ago with the Kansas Experiment, and it's going to be detrimental to public schools in my opinion."
The Missouri August primary elections are on Tuesday, Aug. 4; the last day to register to vote is Wednesday, July 8.
