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Bradenton, Florida -- The Manatee County School District's financial problems continue with more bad news from the state.

According to Superintendent Rick Mills, a state audit shows the district has to repay $7 million in misused funds leaving the district with a $1 million balance.

Mills says this leaves the district with a $9 million shortfall for the next school year.

Mills says the news is "painful and disappointing" after the district's "monumental" recovery erasing a $8.5 million deficit last year and ending this school year with a $8.2 million balance.

SEE ALSO:Manatee School District CFO resigns

"I want to say all employees we will prevail over this challenge," says Mills. "I am proud to be superintendent of the Manatee School District. I have faith in our county and employees. We will be a great school district and together we will restore this school district to greatness."

Mills says the district's financial failure dates back to 2005 to 2012 under previous leadership. A state audit shows the district misappropriated $38 million and overspent $13 million. This is the first year in three years the district will end with a positive balance, but the $1 million surplus is 9.3 million below the state required reserves. The district has not met the 3% reserves in six years.

The school board will begin looking at the new budget next week.

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