Robbinsdale Area Schools faces a $20 million budget shortfall for next school year and is likely headed into the red — largely due to a budgeting error. That's the message that board members heard Monday and community members heard at a Wednesday town hall hosted by Superintendent Teri Staloch and Kristen Hoheisel, the district's chief financial officer.

The error came from double-counting $20 million in compensatory funding, which is money handed out to schools based on the number of students who qualify for free and reduced lunch. And the district didn't cut as it had planned: Just $3.2 million of the $17.4 million in proposed cuts have actually been made this year.

"Our error led us to overstate our resources," Hoheisel said.

Though the board-approved preliminary budget was accurate, the application of the compensatory funding was doubled. It's likely, Hoheisel said, that the district — which serves about 10,400 students in all of or parts of Robbinsdale, Brooklyn Park, Crystal, Golden Valley, New Hope and Plymouth — will be in statutory operating debt at the end of this school year.

Statutory operating debt is triggered when a Minnesota school district deficit exceeds 2.5% of its annual operating expenses and requires a district to submit a financial plan to the state.

Hoheisel said she started seeing financial red flags at the start of the school year but didn't understand the extent of the problem until recently.

"We didn't have all of the information. We probably still don't," she said, adding that board members and then the public were notified shortly after the issue was discovered.

Repeatedly, parents and Robbinsdale residents, some of them wiping tears, stepped up to the microphone at the Wednesday town hall and asked the school leaders how such a big mistake — representing 10% of the district's $200 million budget — could have happened.

Hoheisel, who started in her role in August, said there's no evidence of fraud or illegal activity and refrained from pointing fingers but said things can get missed when staff turnover is high. She is the district's 10th chief financial officer in as many years, Staloch said. Staloch, who took the district's top leadership role in July, is Robbinsdale's sixth superintendent in a decade.

The Robbinsdale school board has been mired in dysfunction, outlined in a recent 34-page workplace conduct investigation that detailed personal disputes and cross-complaints among at least six of the seven board members. Greta Evans-Becker, the only board member who wasn't named in the complaints, was re-elected earlier this month, along with incumbent Helen Bassett. One new member, Aviva Hillenbrand, will join the board in January.

Multiple community members at Tuesday's town hall commented about the need for a unified and proactive school board as the district makes the tough decisions ahead.

The district's declining enrollment, test scores and financial situation all indicate that Robbinsdale is "not doing it the right way," Hoheisel said. Though immediate cuts are necessary, she said, the district "is in a pivotal moment" and needs to reimagine itself to find a way out of decline.

Staloch agreed and urged families to get involved in a planning process around the district's vision, which may include repurposing or closing school buildings.

"In the short term, we have to do some huge budget reductions," she said. "Long term, we get to build a better future that our kids need, want, and deserve."

Next month, the district will hold its Truth in Taxation meeting, though the presented budget will not reflect the cuts that are now necessary. By statute, staff must present a board-approved budget in that meeting.

In January, the board will adopt the financial audit of 2023-2024 and start developing a list of budget cuts for next school year.