Fayette Schools budget director stands by her allegation of $20 million budgeting error

vhoneycutt@herald-leader.comMay 31, 2014 

Fayette County Public Schools Budget Director Julane Mullins says she stands by the allegations made in an email she sent last week to the school board that will result in a special examination by the state auditor.

Mullins, in her first interview with the media since she sent the email May 26, told the Herald-Leader "I know in my heart that it was the right thing to do."

Mullins continues to work in the budget director's job that she has had for 10 years. She has worked in the district's budget office for 16 years. After sending Monday's email, she said "the stress was unreal" in her return to work. But Mullins said she received support last week from employees in the district "who also know things." That helped her get through the workweek, she said. "I ... stand behind what I said to the board and I hope in the upcoming weeks we can just let the audit progress and the story will tell itself."

Mullins' email, which became public Tuesday, created a media firestorm and caused the district to issue statements, hold a news conference and discuss the issues at a school board meeting last Wednesday. The email contained several allegations, including that the district's current $20 million shortfall was caused by irregular accounting but worsened with "numerous acts of mismanagement."

Superintendent Tom Shelton and the district's finance director Rodney Jackson have responded strongly to Mullins' email, saying they did nothing wrong or against district policy. Both Shelton and Jackson have denied doing anything that has caused the district's recent budget cuts as Mullins alleged.

Mullins said in the email to the board that a late journal entry caused the working budget for 2012-13 to be approved by the board with numbers that were inflated by $20 million.

Jackson said the entry in question was made timely, not late. The district's outside auditor also said that there were no improprieties. When Shelton learned that Mullins had sent her allegations to Kentucky Auditor Adam Edelen, Shelton also asked Edelen to investigate to assure the public.

On Saturday, Shelton reiterated that he and others "look forward to having the state auditor's office come in beginning on Wednesday of this week to review this situation."

"We remain confident that the allegations are the result of misunderstandings and miscommunication," Shelton told the Herald-Leader. "We expect this external review will suggest ways we can improve, while also confirming that there has been no wrongdoing."

Jackson, who attended last Wednesday's board meeting to defend himself, said the entry did not affect the fund balance of Fayette County Public Schools either before or after the transaction. In accounting, a journal entry occurs when an expense or revenue is moved from one place to the other, Mullins said.

The district ended up making $17.5 million in cuts in its tentative 2014-2015 budget which the board approved last week. But earlier this year Shelton had suggested that a $20 million cut was needed.

Shelton said the district was able to avoid cutting more because "budgets are forecasts, based on estimates, not exact figures."

"Throughout the discussion of our budget, we have shared the need to reduce our expenses for the upcoming year by 5 percent," he said. "This is not a situation where we are missing money. We just need to bring our spending in line with our expenses. The $20 million figure was a target, not an absolute."

Shelton said the budget approved by the school board last Wednesday includes "an adequate adjustment to provide financial stability."

Shelton said last week that the proposal to cut $20 million from the budget and the $20 million journal entry that Mullins questioned were not related.

Shelton has said that the cuts were necessary because the school district has lost significant state and federal funding. When federal grants have been cut, the district has picked up the cost of those positions and programs, he said.

An explanation for the need for the cuts on the district website says that while other school districts had widespread layoffs, Fayette County was able to give employee raises to attract strong candidates to work with students. In 2010, the school board did not take the allowable 4 percent increase in revenue from local property taxes and the compounding impact of that decision equated to the loss of roughly $21 million, the explanation said. The district's spending exceeds its revenues, Shelton has said.

On Friday, Mullins said, "I stand by my allegations. And at the same time everything that we've put out there about decreased revenue and picking up expenses in the general fund from grants that had left and mid-year budget reductions from the state and federal level, all of that is real and all of that has added to our situation. But having that revenue inflated is what started it. These other things have compounded it.

"It just added to our problems."

Mullins said she has never suggested that money was missing; just that a late journal entry led to problems.

"That's where the problems began, when you are ...thinking that you have more money than you really do."

Mullins said that since making the allegations, she has spoken to her boss, chief operating officer Mary Wright.

"She has treated me with the utmost respect," Mullins said. "She and I talked about being able to continue working together and get through this and I agree one-thousand percent. So hopefully she and I can continue working together in the same manner that we have in the past."

Valarie Honeycutt-Spears: (859) 231-3409. Twitter: @vhspears

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