Audit finds nearly $200,000 in questionable expenses in Mason schools

lblackford@herald-leader.comOctober 24, 2012 

State Auditor Adam Edelen spoke on Monday, April 30, 2012 at the Auditor of Public Accounts office in Frankfort, Ky. Photo by David Perry | Staff

HERALD-LEADER

An audit of the Mason County school district found nearly $200,000 in questionable expenditures since 2008, according to a report released Wednesday by State Auditor Adam Edelen.

A review of finances in the school district, which has fewer than 3,000 students, found excessive spending, extra benefits for the school superintendent and lack of proper board oversight.

Investigators documented that Superintendent Tim Moore, six district employees and five board members spent nearly $200,000 that appeared excessive, lacked supporting documentation, had no clear business purpose or did not go through the district's approval process.

That spending included meals at upscale steakhouses by the board and administrators, and expensive hotel stays, including many at the Marriott in Covington, just an hour from Maysville.

In addition, Moore was documented to have used $21,000 in gas from the district's tanks that was not included as part of his contract. His most recent contract pays him $141,261 a year, according to the auditor's office.

The audit was first requested by the state legislature's Office of Education Accountability. The audit's findings will be turned over to the Internal Revenue Service, Edelen said, because some employees may have received unreported benefits.

"In a district that receives nearly half of its revenue from the commonwealth, all taxpayers — not just those in Mason County — ought to be alarmed," Edelen said. "Parents today are forced to spend money not just on pencils and notebooks but paper towels and other janitorial supplies. The findings in this report are shameful."

The audit's findings include:

■ Excess spending on meals for in-state and out-of-state trips, including numerous meals at Ruth's Chris and Jeff Ruby's steakhouses in Louisville. In 2008, the district picked up a $1,607 bill at Malone's in Lexington for 28 people. The report noted that current and former board members said providing nice meals during travel was a way to compensate for their small salaries.

■ Sloppy paperwork, including $44,237 in expenses with no business purpose, most of which was charged to the superintendent's credit card. These included numerous meals and hotel stays. A total of $111,191 in expenses had no supporting documentation, almost 500 transactions in all. Those included room service and minibar charges by board members and staff, according to the report.

■ Mileage discrepancies for Moore, who overstated mileage or received mileage reimbursement for duplicate or conflicting trips. Roundtrips to Louisville and Hazard were "regularly overstated" by 50 to 75 miles.

■ Benefits provided to Moore in excess of his employment contract, including the $21,000 in gas and payments for retirement benefits and unused sick leave. Moore told investigators he thought the fuel could be used for all business travel, but the policy was not documented.

■ Repeated extensions of Moore's contract without documenting contract provisions or referencing the original contract.

■ Lack of oversight by the board, which did not require enough information to determine how much travel was being done by Moore and his staff.

An attorney for the school district said Wednesday that the audit's findings are being taken "very seriously" and that the district has already made several changes, including more detailed procedures for travel, spending and per diem reimbursements, and elimination of the district credit card that was in Moore's name.

Michael Owsley, the Bowling Green education attorney representing the board, said Moore and school board members reviewed the entire report and "agree that it raises valid questions about the district's record-keeping practices."

Edelen said his office agrees that Mason County has done well academically, including high test scores and low tax rates. In 2009, Moore was named state Superintendent of the Year.

"The success of this superintendent has been an element of the lack of oversight of the board," Edelen said. "We don't dispute he's doing a good job, but doing a good job does not absolve you of responsibility to the taxpayers."

Edelen said he was particularly offended by the fact that Moore asked for reimbursement for small things, like snacks at gas stations.

The Mason County audit is the third one of a local school district announced by Edelen's office in the past two months. The auditor's office also found that Breathitt County's school board lacked proper oversight of its superintendent, leading to wasteful spending and loss of instructional days for students. In September, investigators found that the food services department in the Kenton County school district had spent nearly $120,000 on travel, including $40,000 for 46 employees to attend a conference in Las Vegas.

Edelen said Wednesday that he has formed a partnership with the Office of Education Accountability, and plans on doing more comprehensive investigations of school districts across the state, based on tips and complaints.

"Everyone who pays taxes is a shareholder in our public schools," Edelen said. "We have to make sure we have lean and effective administrations for the benefit of kids in the classroom."

In addition, the state education department will be conducting several management audits of school districts in coming months due to concerns about financial management and related issues, Education Commissioner Terry Holliday said Wednesday.

Linda Blackford: (859) 231-1359. Twitter: @lbblackford

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