Fayette superintendent says he will examine budget, financial documents with 'fine-tooth comb'

This from the Herald-Leader:

Fayette County Public Schools Superintendent Tom Shelton said he is examining budget and financial documents "with a fine-tooth comb."

Shelton said the move was in response to a report released Wednesday that previous working budgets were inaccurate and not balanced.

As the district reacts to state Auditor Adam Edelen's findings that there was "chronic mismanagement," Shelton said he wanted to assure school board members that the working 2014-15 general fund budget of $418 million, which they will be asked to approve Monday, is correct.

Shelton said he, along with Fayette County Education Association officials, would compare individual teachers' salaries with those of administrators in response to findings that there were extreme disparities between the two. And Shelton said his staff would investigate allegations about the financial services division and other problems that surprised him when he saw Edelen's report last week.

In a wide-ranging interview with the Herald-Leader on Thursday, Shelton offered his thoughts on the 64-page report and elaborated on the actions he was taking.

Auditors found no missing funds or criminal wrongdoing, but cited mismanagement.

The report did not identify in some cases which district officials were responsible for the mismanagement. But Shelton took responsibility, saying he was aware of dysfunction regarding the budgeting process and was trying to fix it when allegations surfaced that led to Edelen's examination.

Edelen began investigating in May after the district's budget director, Julane Mullins, made allegations that centered on a $20 million discrepancy in the budget. She sent those concerns to the board and provided Edelen with a copy. Shelton also asked Edelen to investigate.

The district received Edelen's findings last week, and Shelton spent the weekend working on the district's response.

Shelton said he initially was irritated because he thought some findings contained inaccuracies. That was reflected Wednesday in an email to parents.

As the day wore on, Shelton said his position changed. He realized that the most important thing was not debating whether the report contained inaccuracies, but fixing the problems the examination revealed. He said the district would adhere to Edelen's recommendations.

"We've got problems that need to be fixed," he said. "Rather than disputing the auditor's report, I want to spend my time on making changes. ... Whether I agree with every line of it or not is not the relevant factor. ... We've got internal issues that need to be fixed."

Shelton said that he did not know how much the examination would cost the district. He said he asked other school districts that have been through the process, and they've told him it could be $25,000 to $100,000.

Last week, the superintendent received a draft of the report that identified salary disparities between administrators and teachers, excessive travel and training in the financial services department, and violations of the procurement process.

Shelton decided then to bring two consultants into the district. One will help with a budget and finance overhaul. The relationship between Mullins and finance director Rodney Jackson was described in the report as "toxic," and their lack of communication was blamed in part for accounting errors. The other consultant will focus on conflict resolution and team-building on the job.

Shelton said that while he thought the report was unfair, on some points, to Jackson and the department he oversees, Shelton will investigate all of the allegations.

One of the things he has to decide, Shelton said, is whether any employee should be placed on paid leave until the investigation is completed.

As for his ability to move forward with what appears to be a divided school board, Shelton said he was not terribly concerned about that. Two of the board's five members have expressed concerns about his ability to move forward in light of the findings.

"I'll continue to try to reach out and work with them, provide them with the information they need ... deal with them professionally and with courtesy," he said.

Shelton had asked the board to postpone his annual evaluation until the findings were released. He said he expected to talk through any concerns board members might have during the evaluation meetings.

On Wednesday, he said he still could lead the district. Shelton said he would not begin evaluating whether to ask the board to extend his contract until next year. His contract expires in June.

Shelton said he did not think his work during the next 60 days to create a corrective plan of action for the budget and finance system would affect any other major initiatives, such as the district's effort to redraw school attendance boundaries.

Read more here: http://www.kentucky.com/2014/09/18/3436339/fayette-superintendent-says-he.html#storylink=cpy

And this from the Herald-Leader:

It's unclear how much Fayette schools will pay two consultants to help fix district

It's not clear how much Fayette County Public Schools will pay two consultants hired to help the district address issues found in a state audit released Wednesday.

Superintendent Tom Shelton announced Wednesday at a news conference — and in an email to parents — that Kyna Koch, a former associate commissioner at the state department of education and a former commissioner of finance for the city, would assist him in developing a comprehensive action plan. That plan would go to the school board for approval and then be sent to the auditor of public accounts within 60 days.

The special examination released Wednesday requires the district to respond in 60 days. The report found no criminal wrongdoing or missing money, but it showed chronic mismanagement in Kentucky's second-largest school district.

The audit included 10 key findings, including weakness in budget and financial management, administrative and salary increases that outpaced those of other employees, and excessive and unnecessary travel, among other findings. The examination also said that the relationship between financial services director Rodney Jackson and budget director Julane Mullins was "toxic," and that auditors viewed that relationship as the cause of errors.

Shelton also announced that Mike Thompson, an organizational behavior expert, would help mediate problems between the budget and finance departments, a key issue cited in the 64-page report.
But Shelton and district officials could not say Thursday how much it would cost the district to hire the consultants. Contracts have not been signed, even though the consultants' employment was announced Wednesday.

No request for proposals, or RFP — a type of bid process for services — was sent out. An RFP would allow multiple consultants to bid on the project.

Shelton said Thursday that he did not have to solicit other bidders because the district's procurement policy does not require an RFP for professional services.

The procurement policy, which was provided to the Herald-Leader, says the district does not have to go through the bidding process when the district contracts for a licensed professional, such as an attorney or certified public accountant. That does not apply to architects or engineers who provide construction management services.

The district's policy also says the school board has to approve "any proposed contracts for more than $20,000." State law says the board "may require bids for consulting services to be sought." But the superintendent is authorized to approve contracts that don't exceed $20,000, the policy says.

Shelton said he did not know how much Thompson and Koch would be paid but said he did not think the two contracts would exceed $20,000.

Shelton said he was willing to take the contracts for Koch and Thompson to the Fayette County School Board for approval. But he said putting out an RFP or getting board approval would slow the district's response to the audit.

"We'll still be sitting here in 30 to 60 days and will not have taken any action. I'm ready to take action now to fix these things," Shelton said.

He said he did not talk to other consultants before announcing that Koch and Thompson would be hired.

When asked whether those consultants were independent if Shelton was the person who hired them, Shelton said Koch has extensive experience that would help determine whether the district's plan to overhaul the budget and finance system was valid. Shelton said during the Wednesday news conference that Thompson and Koch were highly recommended.

"I couldn't think of anybody better to give me an independent view," he said.

Lisa Deffendall, spokeswoman for Fayette County Public Schools, said Thursday that the money to pay for the consultants would come out of Shelton's budget for special projects. Shelton currently has $750,000 in his budget, which Deffendall said he could use for such things as training, materials, student transportation, special projects at schools or additional staffing. Shelton already has earmarked more than $500,000 of his budget, mostly for staffing at schools.

Read more here: http://www.kentucky.com/2014/09/18/3436269_fayette-schools-will-pay-two-consultants.html?sp=/99/322/&rh=1#storylink=cpy

Read more here: http://www.kentucky.com/2014/09/18/3436269_fayette-schools-will-pay-two-consultants.html?sp=/99/322/&rh=1#storylink=cpy