The management of the Breathitt County school district was in disarray when state education officials interviewed more than 70 people there in early November to figure out what was wrong, according to an audit.
Leaders were divided after years of ineffective hiring practices under former Superintendent Arch Turner and leadership being concentrated "in the hands of a controlling few," the audit said.
Turner had quit quickly in May, when he was jailed in connection with a federal vote-buying conspiracy.
The school board hired an interim superintendent but suspended her five months later and named an "interim substitute" superintendent, according to the audit.
Job vacancies, poor communication and spotty teacher training were hindering efforts to boost student achievement. The school board had no clear picture of the district's finances. No one could locate the school board's policy books for state reviewers.
The state officials also found that the district had falsified its dropout rate, counting some students as being homeschooled when in fact they had dropped out, according to the audit and the Kentucky Department of Education.
The management audit, which came on the heels of a financial audit that found improper spending, was the final straw that led the state school board on Wednesday to approve a management takeover of the Breathitt County district.
It was the first time in 15 years the state board had voted to place a Kentucky school district under state management.
Education Commissioner Terry Holliday, or someone he designates, will make all decisions on spending, administration, personnel and instruction in the district.
State lawmakers made landmark changes in 1990 aimed at improving Kentucky's elementary and high schools.
More than 20 years on, one lesson of the problems in Breathitt County is that schools will not succeed without good leadership, David Karem, chairman of the Kentucky Board of Education, said Friday.
"Unquestionably, it's only as good as its leadership," Karem said of a school district.
There is not yet a state manager in place in Breathitt County, but state officials already are setting up a process for Holliday's office to sign off on purchasing and other decisions, Lisa Gross, spokeswoman for the Education Department, said Friday.
The state also has placed a freeze on hiring and other personnel decisions.
The problems in Breathitt County didn't mean the local board and school employees didn't care about education.
Overwhelmingly, the board and school employees wanted change and appeared to welcome state assistance, reviewers from the Department of Education concluded.
Local people told in "heart-wrenching detail" about how they loved the schools and about their concerns, according to the audit.
"I just think people lose sight of what it's about," the audit quoted one unnamed person.
Another school employee told those doing the audit: "I've attended many graduations and every time I tear up because I think ... we gave them our very best and the very best we had given them was not enough and they deserve better."
Turner, who became superintendent in July 2005, was indicted this year on charges of heading up a conspiracy to buy votes in a 2010 election — in which he was trying to get control of county politics — and of lying to the FBI and encouraging others to cover up the scheme.
He pleaded guilty and was awaiting sentencing in October when state Auditor Adam Edelen released a financial audit that revealed a number of problems from Turner's watch.
Turner doled out a total of more than $193,000 in extra pay over three years to some selected school employees; canceled 10 school days in the 2011-12 school year but paid teachers a total of $526,350 for the missed days; and had the school board make a direct contribution to his pension without having it counted as a taxable benefit, the audit found.
The district also bought scores of tickets and paid for hotel rooms so Turner and others could attend the boys' state basketball tournament, even though Breathitt County was not in it, the audit found.
In April, when Turner was under federal indictment, the school system paid for him and three board members to attend a conference in Boston, Edelen's office found.
The conference lasted for three days, but Turner and two board members were reimbursed for seven days' worth of meals, the audit showed.
Holliday ordered an audit of the district's management in the wake of those financial findings.
A team of reviewers from the state Department of Education found problems in every category they studied, from the central office to the cafeteria.
■ The county didn't have a director of pupil personnel, though state law requires each school district to have such an administrator, who is in charge of managing all aspects of student attendance.
Without that director, Breathitt County students with numerous unexcused absences were allowed to make up work without penalty, the audit said.
■ The district had "inconsistent to unethical" policies for calculating dropouts by using home school as their classification, the audit said.
That meant that instead of listing students as dropouts they were reporting them as being homeschooled, Gross said.
The audit found the district also counted students as being on homebound instruction to avoid counting them as dropouts, Gross said.
■ The school system couldn't post and fill vacant positions.
When staffers from the state Education Department went to Breathitt County in early November for the review, there was a vacancy at the middle school that couldn't be filled because the applications were in an office that had been closed.
The review also found that staffing decisions appeared to be based not on what was most efficient, but on "input from inappropriate sources, such as board members."
It also appeared Turner made hiring decisions he wasn't supposed to.
One of the decisions state lawmakers made in the state's education-reform act was to distance board members and superintendents from many hiring decisions, in order to reduce the influence of politics.
State reviewers also said they found no evidence that staffing or hiring decisions were based on an assessment of the needs in the district or in individual schools, or that student achievement was a factor in hiring and assigning employees, and there was overstaffing in some areas.
■ There was no evident process to promote rigorous, engaging teaching throughout the district, the audit found.
Test scores in Breathitt County elementary schools improved from 2007 to 2010 but dropped off in 2011, significantly in some cases, according to a separate state report.
■ Several employees said there is a problem in how the district's schools are arranged.
The schools are set up with grades kindergarten through 7; grades 8 and 9 at the middle school; and a high school with grades 10 through 12, according to the report.
That alignment was set up to keep open Rousseau Elementary School, which has only 89 students, the report said.
The arrangement has created problems with 9th graders having access to courses for college and career readiness, the management audit said.
Karem said it was frustrating to see the kinds of problems identified in Breathitt County, in part because there is a great deal of assistance available from the state Education Department to help school districts stay on track.
Local school leaders need to take advantage of every resource, from support offered by the state to assistance from local residents and the private sector, he said.
"It escapes any logic that there should ever be any district where we have to come in" and vote on taking over, Karem said.
Bill Estep: (606) 678-4655. Twitter: @billestep1