Lexington, KY - An examination of the Fayette County Public Schools by the state auditor’s office has found “chronic mismanagement” of the budget and finances for the school system that has contributed to the district’s financial instability, but no evidence of criminal activity.
"This examination found that unfortunately it wasn’t always about kids,” said state Auditor Adam Edelen. “Sometimes it was about turf battles, and mismanagement of the finances of the state’s second largest school district, with an annual budget of more than $400 million, is obviously troubling. But even more so is that there exists a culture within certain levels of management that does not reflect the district’s purported values, and I think we all know our children deserve better.”
The examination, which was launched in the spring, centered on public allegations made at that time that a perceived $20 million discrepancy in an earlier budget had contributed to the district’s current fiscal shortfall. While the examination found no evidence of missing money or criminal wrongdoing, Edelen indicated that the error did affect the current budget.
“Simply put, a flawed budget process resulted in faulty budget assumptions in the 2011-2012 budget. The net result is that three fiscal years later, students and teachers are feeling the impact,” Edelen said.
In a response to the report, FCPS Superintendent Tom Shelton said it reinforced the administration’s belief that an overhaul is needed for the operations of its budget and finance departments, but he took issue with some of the examination’s findings, alleging that some of the state’s assertions were based on “faulty calculations, factual errors, and false assumptions.”
“We vehemently disagree that the deficiencies in our system put the district’s financial situation in jeopardy or impacted our ability to provide an excellent education for the students of our community,” Shelton said.
Among the report’s findings, Edelen noted inequalities in the pay increases and perks provided to administrative and teaching staff members, excessive travel and training by the district’s department of financial services, and violations of board policies and the district’s procurement process.
While the average teacher pay increase over a four-year period was 9.88 percent, salary increases for high-ranking administrators rose by an average of 24.7 percent over the same time, according to the report. The examination also found that the Department of Financial Services spent more than $115,212 for travel, training and reference books over a four-year period.
Auditors also found a lack of transparency in the alteration of the district’s salary schedules, noting that significant changes to administrative pay for the 2013-2014 school year were not highlighted by management when schedules were presented for board approval as they had been in years past.
The report indicated that a “toxic” working relationship between the district’s budget director Julane Mullins and director of financial services Rodney Jackson led to mistrust, antagonism and ineffective communications.
Edelen also took note of the Mary K. Stoner Trust Fund, a fund of $1.1 million bequeathed to the district by a former FCPS teacher for “enhancement and enrichment of the educational program,” that was used to grant loans to administrators for travel and training. According to the report, auditors were told that it would be problematic to promote the availability of the funds to teachers and others. The Department of Financial Services, which holds three of five seats on the trust fund committee, benefitted disproportionately from the fund, the report stated. Shelton indicated at a press conference that he would need to look into the terms of the trust more closely, but he suggested the possible transfer of the administration of that fund to an outside group.