Parents are angry and Roseville City School District officials have plans to sue after St. John's School trustees announced the small private school is broke and will close at the end of the month.
The 32-year-old Episcopal school is more than a half million dollars in debt, including owing more than $170,000 to the Roseville school district for leasing the Barbara Chilton Middle School campus.
"The board tried to find a way forward, but they couldn't come up with a plan that worked," said the Rev. Cliff Haggenjos, rector of St. John's Episcopal Church and a nonvoting member of the school board. "The decision had to be made to close the school."
He said much of the school's financial trouble can be attributed to the lack of a permanent campus, which eroded enrollment this school year.
But some are blaming the money woes on the Rev. Paul Hancock, a headmaster with a murky financial past who left the campus in November.
They say he mismanaged funds at the school, including borrowing $220,000 to pay architects to draw up plans for a new school when there wasn't enough money to complete it. He also hired so many teachers that one classroom had only four students.
Hancock did not return calls from The Bee, but emailed a prepared statement last week. He said St. John's School had struggled financially since at least the 2007-08 school year when declining enrollment and non-payment of tuition from some families caused a budget shortfall. He said the school never recovered financially, despite subsequent years of enrollment increases.
He could have laid off teachers at the beginning of this school year, but didn't want to cause "more panic, additional withdrawals and an even worse financial situation," he wrote. "I have thought about it a lot but, even with hindsight, I do not know what could have been done differently."
Parents said they didn't learn of the money problems until around Thanksgiving last year, shortly after Hancock resigned and trustees began laying off staff to shore up the school's finances.
A letter from the school board said the resignation was "a joint decision" and told parents there was "no evidence of embezzlement, abuse or anything of the sort by Father Paul."
"When the board was completely aware of the issues facing St. John's, it took immediate and decisive action," the letter stated.
Haggenjos confirmed that the headmaster's resignation was connected to the school's financial problems.
Hancock was at the helm of the preschool through eighth-grade school for six years, as it grew to more than 200 students and moved from Main Street to the Chilton campus, 4501 Bob Doyle Drive in Roseville, four years ago.
He was hired despite having left a previous job under a cloud of suspicion. He had resigned as the headmaster of the Episcopal High School in Baton Rouge, La., in September 2004 after a routine audit found he had taken "salary advances" amounting to almost $102,000, according to news accounts. The advances were paid out in a manner to avoid detection, said the Baton Rouge Advocate.
Baton Rouge school officials came to a settlement with Hancock and claimed complete financial recovery, which involved money from multiple sources, according to news reports.
It is not clear how much Hancock was ordered to repay the school, or if the school's bonding company covered some of the losses. However, the Episcopal High School of Baton Rouge was listed as one of Hancock's creditors for $14,800 when he filed for relief from $349,089 of debt in bankruptcy court in September 2005, according to public documents.
Officials at St. John's School were aware of the issues raised in Baton Rouge when they hired Hancock, said Haggenjos, who wasn't the rector at the time.
Hancock was earning a base salary of $130,000 a year plus enrollment bonuses and $40,000 in benefits including health, life and pension - when he left St. John's School, said Holly Rocha, the school's interim headmistress.
Parents pay between $5,000 and $7,500 in annual tuition, depending on the grade level of their student.
Some parents said they feel duped. "When Father Paul (Hancock) spoke last year he never told anybody there were financial problems," said parent Loriann Chaussee.
She said families were led to believe the school was doing well financially and would be moving to a new campus in April.
Families have been on a emotional roller-coaster ride since the money problems were announced, with a succession of developments, including a plan to build a new school behind the church with help from a local company.
But, by the evening of April 23, everything had fallen apart and the school board held a meeting to announce St. John's School would close and wasn't likely to meet payroll.
The last eighth-grade class will graduate May 24.
Now parents are scurrying to find schools for their kids, while the 20 remaining staff members are jockeying for jobs in a tight market. Chaussee found a charter school in Rocklin for her son Luke, now in second grade.
Some parents said the church and diocese should bail the school out or at least pay its bills, but church officials say the school is a separate corporation and that they are not liable for its debt.
But there is some overlap. The school founded by the Episcopal Church of Roseville in 1989 shared the Barbara Chilton campus with St. John's Church for two years before the church moved to its new campus at 2351 Pleasant Grove Blvd.
The school owns land behind the church on which officials had planned to build a school when finances were available. The church rector also holds a permanent seat on the school's board of trustees, although he has no vote.
"It's weird. You have a religious church tied to a school, then it is not," Chaussee said.
The diocese holds a lien on the school property behind the church the result of the $220,000 loan. The diocese also gave the school a $50,000 emergency loan, said Keri Lopez, director of communications for the diocese.
Last week, the church parish agreed to help the school pay the balance of the teachers' salaries.
But this doesn't cover the debt to Roseville City School District, which is out $170,000 for a two-year lease, as well as the cost of utilities and other expenses, according to a statement released by the school district.
It says both St. John's School and St. John's Church are signatory to the agreement. "At this point the district has no choice but to initiate legal action," according to the district's statement.
Haggenjos said the church is "trying to do the right thing here and work a resolution with various folks." He said bankruptcy is being considered. "It is awkward, I will say that."
Meanwhile, Hancock is earning a small stipend by spending his Sundays celebrating the Eucharist at Grace Episcopal Church in Wheatland, Haggenjos said. He said Hancock already was performing this service while working as St. John's headmaster.
"He is not responsible for anything else other than that," Haggenjos said.