An investigation by the Kentucky Office of Education Accountability has determined that Fayette County Public Schools officials for years did not follow a state regulation on how surplus money should be distributed to help schools.
District officials could not provide proof that for nine years they had made a key calculation to determine if there was surplus money to give to school councils, according to an Aug. 24 OEA memo.
Under the regulation, one determination on how to spend the surplus money can be made by considering the achievement of certain subgroups of students. The achievement gap between poor, minority and disabled students and other students has been a problem in Fayette County.
Under the Kentucky Open Records Act, the Herald-Leader obtained an Aug. 24 OEA memo to Fayette Superintendent Manny Caulk that described the findings of an investigation.
NAACP officials said last spring that they had complained to the OEA that the school district had improperly allocated funds among schools.
The money in question is referred to as Section 7 because the district's general fund is governed by a state administrative regulation with various sections. After the school board has made allocations for district-wide expenditures, for supplies and equipment, and for Central Office under other sections of the administrative regulation, the board reviews the budget to see whether there is any money left over for schools to spend on particular needs of students.
Under the regulation, Section 7 money may be distributed to school decision-making councils based on average daily attendance, on pupil needs identified by school councils, and on student needs identified by the school board from achievement data of various groups of students.
The district did not officially determine if there were surplus funds, but it designated money as Section 7 anyway, the report said.
Surplus funds should have been distributed to the individual school councils, the memo said. But instead money was spent district-wide for items such as half-day kindergarten, academic deans and overtime for custodians, district administrators told OEA investigators.
Kyna Koch, acting senior administrative services director, said Monday in response to the findings that since the release of the state auditor's special examination last fall, district officials have been scrutinizing district finance and budgeting procedures.
"We determined that district practices for allocating Section 7 allocations had not been in compliance with state budgeting guidelines for several years. The Office of Education Accountability reached a similar conclusion in the course of its investigation, and it is encouraging that the agency recognized the significant steps taken to correct the issue under the leadership of Acting Superintendent Marlene Helm," Koch said.
The memo noted that district officials have taken some measures to correct the issue, including providing training to district personnel and the school board.
The appropriate calculation was made for the 2015-16 school year, said district spokeswoman Lisa Deffendall.
Koch said a staffing task force has been created to redesign the way school councils get allocations each year.
Koch said as part of Caulk's entry plan, "our new superintendent has called for reviews of all aspects of district operations, including budgeting and staffing, and we expect to see continued improvements under his leadership."
Office of Education Accountability officials said in the memo that Fayette County had to provide proof that they are fixing the problem.
District officials had to provide OEA with copies of the calculations required by the regulation each of the next four years.
The district also had to provide OEA with copies of school board minutes and revised board policies for the period of 2015-16 through 2019-21 in which the board makes its determination as to how the funds will be distributed to school councils.