Two former St. Paul school employees file lawsuit, alleging they were fired for raising financial concerns

Two former St. Paul Public Schools employees are filing a lawsuit against the district, claiming they were fired after raising concerns about how district leaders were handling finances.

Marie Schrul worked for the district for more than 20 years, eventually as chief financial officer. Curtis Mahanay worked for six years as business systems support manager. Both were let go in 2022.

The 54-page lawsuit being filed in Ramsey County District Court alleges both were fired after objecting to what they call a budgetary “shell game” by district leaders, including former Superintendent Joe Gothard, who left the district earlier this year for a job leading public schools in Madison, Wis.

“Mahanay and Schrul understood that the district’s shell game was illegal. They objected and made clear that the district’s plans violated the law,” the lawsuit states. “As members of the district’s finance team, they refused to be part of it and wouldn’t allow the district to carry out its plans. Instead of taking their complaints seriously, the district fired Schrul and Mahanay for their whistleblowing.”

Among its claims of financial improprieties, the lawsuit alleges that district officials violated rules for spending federal COVID relief money, including using it to cover budget deficits.

“The district transferred massive amounts of general fund expenses to COVID funds — functionally adding the COVID funds to the district’s bottom line, and making it incredibly difficult to track how the COVID funds are spent,” including whether they were spent as intended by the federal government, the lawsuit states.

The lawsuit also claims St. Paul Public Schools used COVID relief money to purchase gifts for employees — something “not consistent with the spirit of the funds” — and concealed those purchases with inaccurate invoices.

“Schrul also raised the issue with Superintendent Gothard, advising that COVID funds could only be used for the purposes earmarked by the federal government,” the lawsuit alleges. “Superintendent Gothard responded by suggesting that Schrul get creative with her accounting — to continue the questionable purchases while shifting them to the General Fund.”

The two plaintiffs say district leaders retaliated against them for raising concerns, and then fired them — and they allege that violated state law protecting whistleblowers. They’re seeking compensatory damages from the district and asking for reinstatement to their old jobs — or money in lieu of that — among other measures.

In a statement in response to the lawsuit, the district said it can’t comment on pending litigation. But it did say its fiscal year 2023 budget received a clean report from external auditors just last month. And earlier this month, the district said, “Moody’s awarded the district a Aa2 rating for its ‘solid financial position with an established track record of outperforming budgeted expectations.’”

The district said it posts financial information — including budget reports dating back to 2008 and audited financial statements dating back to 2017 — on its website.

• Edina superintendent picked to head St. Paul schools
• St. Paul schools set to pick next superintendent
• Apprenticeships are a trending alternative to college — but there's a hitch
• U of M students interrupt Board of Regents meeting in protest for divestment