This story was updated at 10 p.m. to reflect the DeSoto school board discussions.

DeSoto school officials are facing tough choices as they consider shutting down a campus, eliminating positions and scrapping academic programs to deal with a nearly $23 million budget shortfall.

Knowing exactly how much DeSoto ISD is short is difficult — the district's new leadership is continuing to untangle financial problems left from the previous administration. Sloppy bookkeeping led to millions in obligations not being budgeted, forcing the district to deplete its savings to cover costs, district officials say.

"Nobody wants to be in this situation," Board President Carl Sherman told those who attended a crowded school board meeting Monday night. He said the district is working to discover exactly what happened and be as transparent as possible.

At the meeting, trustees got their first in-depth look at what the cuts might include, such as temporarily closing an elementary school. New Superintendent D'Andre Weaver said this is the start of a two-year process to dig the district out of its financial hole and replenish savings.

Officials haven't identified which of the district's seven elementary schools might close. Nor are officials saying how many jobs need to be cut, saying only that attrition will be used as much as possible.

DeSoto ISD had 1,185 employees in the 2017-18 school year. About 70 percent were teachers, according to the Texas Education Agency. The district has 9,300 students.

Weaver, who came to the district in September, has said the leadership now in place is working to get a handle on the district’s finances, rebuild its credibility and improve its academics.

“We are not taking this moment lightly at all. ... It starts right now in getting our house in order,” he said.

Trustees were particularly worried about increasing student-to-teacher ratios as they look to cut positions. DeSoto was one of only two North Texas school districts to receive a "D" grade on state academic accountability ratings released this summer.

DeSoto's elementary and middle schools have an average ratio of about 15 students to each teacher in core classes and slightly higher in electives. High school has an average ratio of 22-to-1 in core classes.

The state has a class-size cap in kindergarten through fourth grade of 22-to-1, but districts can ask for a waiver for financial hardships.

In core classes, DeSoto is looking to have a 24-to-1 ratio in elementary; 28-to-1 in middle school; and 33-to-1 in high school. They asked administrators to consider bringing down the ratios in some of the areas where students struggle most on state tests, such as in English.

"If we overload those core classes, we're not going to be able to dig ourselves out of this hole," trustee Karen Daniel said.

Weaver said no one wants to increase class sizes, but this is a temporary move needed to stabilize DeSoto.

As the meeting went late into Monday night, trustees were expected to approve on their consent agenda a plan to move money around to cover an $8.4 million bond payment that was due this past summer. It was only recently that officials realized that the funds had to be transferred out of the main budget to cover the payment.

Superintendent D'Andre Weaver took over the district in September. (Ashley Landis / Staff Photographer)

Covering that bill will not only wipe out the district's fund balance but leave it millions short. A school district's fund balance is critical, serving like a savings account for emergency items, but it's also routinely used to cover payroll until state funding arrives.

Meanwhile, a number of moves are being considered to free up cash, such as delaying this summer's $4 million bond payment to 2030 and borrowing $14.7 million in a type of short-term loan.

Previous administrators seemed to lose track of spending and made many decisions without informing the board, said Deborah Cabrera, a longtime school finance officer in the area who came out of retirement to help DeSoto ISD.

"Nobody — that I can tell — was looking at the general ledger. Nobody was monitoring the budget," which meant spending wasn't being reconciled with what DeSoto actually had on hand, she said before the meeting.

For now, the operating budget will end about $5 million short this year. And after starting with $13.2 million in the fund balance, those reserves will be $3 million short. Typically, districts aim to have enough in their fund balances to cover two to three months of operations.

Next year's finances look bleak as well.

DeSoto ISD officials have repeatedly dipped into the fund balance in recent months as they scrambled to cover unexpected bills or projects, Cabrera said.

That included about $1 million for a loan repayment, summer school and teacher bonuses that weren't budgeted. And then there was $2.6 million due for the new Katherine Johnson Technology Magnet Academy, which opened in August.

Previous leaders also expected to gain hundreds of students this year, but instead DeSoto ISD enrollment dropped by nearly 200 students. That meant not getting $3 million in expected state funding, which is largely based on attendance.

David Harris took over as superintendent in April 2012, amid high hopes that he could bring stability to DeSoto ISD. He resigned six years later with the district's finances in disarray. (File photo)

All this was discovered after trustees had already decided to dip into savings for $600,000 in raises and $1.8 million in technology upgrades.

Sherman, the board president, said trustees had thought they were getting regular financial updates under the previous administration but only recently learned they weren't being told everything.

"It was simply a bad actor or actors who were complicit and then moving funds without board approval, without reporting it to the board, and then carrying on as if it was business as usual," Sherman said.

Former Superintendent David Harris could not be reached for comment. He resigned last year after being placed on administrative leave as trustees launched a review into his work.

Cabrera said the $8.4 million misstep on bond payments stems from the 2015 tax swap.

DeSoto voters approved allowing the district to raise its maintenance and operating tax rate, which pays for everyday operations, from $1.04 to $1.17. DeSoto ISD then dropped its debt service tax rate, which pays for capital projects like new schools, 14 cents. For DeSoto taxpayers, that swap meant the total tax rate overall went down one penny.

The district received more money in tax revenue and state funding because of that tax ratification election, or TRE, and could use those funds for both routine operations and long-term debt.

DeSoto ISD officials were supposed to earmark money raised from the TRE each year for debt payments. But that didn't happen, and DeSoto leaders kept spending. So when a debt payment came due in August, only the interest had been paid.

Earlier this academic year, the district had to delay workers' November paychecks because it was short on funds.

Meanwhile, various investigations are under way into the previous administration, though current DeSoto ISD officials declined to give details. They have noted that information has been given to the Texas Education Agency and to the Texas attorney general's office, which also has a criminal justice department.