Fayette School Board gets an earful at first public meeting since auditor's report

As people at a school board meeting on Monday spoke out about a state auditor's finding of chronic mismanagement of finances in Fayette County Public Schools, Superintendent Tom Shelton said he was assuming direct supervision of the budget and finance departments.

Monday night's session was the first regular school board meeting since Kentucky Auditor Adam Edelen released findings last Wednesday that previous budgets were inaccurate, unbalanced and contained errors that contributed to the need for cuts in the 2014-15 budget. Edelen's special examination of district finances said district staff had given the board insufficient information.

"As a school board you have been duped in so many ways," James Hurley told board members in encouraging them to exercise proper oversight.

Two parents of students in the district — Todd Wright and John Daugherty — questioned the information included in monthly financial statements.

Daugherty said his concern was that financial statements provided to the board were not accurate and do not provide the board enough information "to exercise its oversight responsibility."

Board member Amanda Ferguson said the concerns addressed by citizens who spoke at the board meeting, "echoed what I've been hearing for six days."

Ferguson and board member Doug Barnett have said they had concerns about Shelton's ability to lead given the auditors findings. Board members John Price, Melissa Bacon and Daryl Love have said they think Shelton should continue to lead.

The report blamed the district's financial issues in part on a poor working relationship between Financial Services Director Rodney Jackson and Budget Director Julane Mullins, who made the allegations that led to the auditor's nearly four-month investigation.

Shelton said Monday that Mullins and Jackson would now report directly to him "so I can have direct involvement as we move forward to deal with the issues."

Previously, the two had reported to the district's chief operating officer, Mary Wright.

Edelen found no missing money or criminal wrongdoing but weaknesses in budget and financial-management processes were among 10 key findings.

Mullins, in allegations sent to the board and the state auditor in May, said the district's current $20 million shortfall was caused by irregular accounting but worsened with "numerous acts of mismanagement."

Shelton has said he would address every single issue raised in the report, even though he had questioned the accuracy and fairness of some of Edelen's findings. He said the district's response would be "swift" and would result in an overhaul of the district's budget and finance system. Board members were given what Shelton described as improved financial statements at Monday's meeting.

Shelton said he was discussing the possibility of an organization called Bluegrass Community Foundation managing trusts now controlled by the district. Edelen's report raised concerns over whether a trust left to the district in 1961 by a former teacher — called the Stoner Trust — was being used in accordance with its charter.

In addition to requesting that Edelen investigate, Mullins and Shelton asked the state Office of Education Accountability to review Mullins' allegations.

Karen Timmel-Hatzell, the acting director of OEA had said her office, which looks at violations of laws affecting schools, was waiting until Edelen finished his investigation to act. On Monday she told the Herald-Leader that her staff was still reviewing Edelen's report.

Also on Monday, the board approved an approximately $421 million general fund working budget.

In May, after months of contentious debate, board members approved cuts to the 2014-15 budget that totaled $17.5 million instead of the $19.1 million that Shelton had proposed earlier.

When the board approved the tentative budget in May, Shelton made a proposal to cut 50.5 full-time positions at Central Office and 60 certified and 30 classified positions at the school level. He also made a proposal to cut 97 special education aides and add seven special education teachers.

Spokeswoman Lisa Deffendall said that since staffing numbers are based on the actual students who are enrolled, district officials did not have current numbers on the actual number of positions that had been reduced readily available.

But she said that all positions reduced in the budget were covered by attrition.

This story was originally published September 22, 2014 at 10:39 PM with the headline "Fayette School Board gets an earful at first public meeting since auditor's report."