LEXINGTON, Ky. (LEX 18) — Fayette County Public Schools is facing a severe financial crisis after a financial officer revealed the district's records have been "fundamentally misstated" for nearly two decades, leading to staff pay cuts and external investigations.
District Financial Officer Kyna Koch, who was elected to the position Monday night after serving as interim, told the board she found problems dating back to 2008. These include issues with internal controls, procurement and contracts, receivables and payables, record keeping, missed deadlines, and miscoded allocations.
The missed deadlines cost the district significant federal reimbursements, according to Koch. She also said money was shifted between accounts to cover expenses at times, and she uncovered a $200,000 contract signed without authorization from the superintendent or the board.
"Overall, I do not have confidence in the information that has been given to the superintendent and the board," Koch said during a media briefing on Tuesday.
Among the issues to be corrected, the district must redo its February and March financial statements. To address the crisis, the district is implementing fixes that will affect staff pay and employment.
"Everyone on a 12-month calendar, myself included, are losing 5 days worth of pay and work," Superintendent Demetrus Liggins said.
Cutting work days for librarians, law enforcement, child nutrition workers, and others is expected to save the district $1.9 million. The district also plans staff reductions, position eliminations, and involuntary transfers, though none will occur among teachers or paraeducators, according to Liggins. The superintendent could not specify how many individuals will be affected.
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In light of the financial news, teachers are questioning why the problems went undetected for years.
"How has it been years and years and it seems like everything is fine?" Erika Pennington, an FCPS teacher and president of the Fayette County Education Association, said after Monday night's school board meeting.
Sara Green, an FCPS teacher with the American Federation of Teachers, said they have been warning about the district's finances for years, but concerns were ignored.
"We've got real people who are going to be hurting. When you are making $40,000 a year and you're not bringing home $200 a month…in this economy…while others won't feel this cut, an injury to one is an injury to all of us," Green said, adding, "How can you sit up there and say you had no idea when it's been building since 2008?"
Other teachers emphasized the need to get back on track with as little impact to students as possible.
"Obviously, the checks and balances we've had in place as a district have not been the most effective ones. In order to find change, it's gonna take time," Tracy Peddicord, an FCPS teacher with the Fayette County Education Association, said.
"Whoever caused the district to be in this position should be held accountable, and now it's time to fix that," Pennington said.
Koch said she will continue investigating, aiming for an accurate April report. In the meantime, she is asking the board to approve a short-term loan to stabilize cash flow.
"While our immediate financial picture is sobering, uncovering the truth is a mandatory first step," Koch said.
In addition to Koch's work, two external investigations are underway. The accounting firm Weaver and Tidwell is conducting a comprehensive review, and the state Auditor of Public Accounts is performing a special examination.
Liggins also confirmed that two FCPS finance employees are on paid leave pending the results of those investigations into the district’s budget problems.
