The Ashland Independent School District overspent on meals, improperly paid for lodging, and overpaid Superintendent Steve Gilmore, the Kentucky auditor’s office found in a report issued recently.
The questionable spending resulted mainly from lack of control and oversight, according to the report from state auditor Adam H. Edelen.
In an interview Friday, Gilmore and board attorney Mitch Hall disputed many of the findings, but said the district agrees with Edelen’s call for more stringent controls and detailed documentation of spending.
The review did not allege or find wrongdoing and all incidents conformed to board policy, Gilmore said.
The district’s responses to the findings, which are included in the report, indicate that the district was reimbursed for the questioned spending and that it is changing some policies and procedures to ensure compliance with state regulations.
The board already had made some of the recommended policy changes before the district knew the review was forthcoming, he said.
State auditors reviewed Gilmore’s contracts and spending records as well as the districts policies and procedures and interviewed employees and administrators.
Auditors told Gilmore the review was triggered by an anonymous letter complaining about the district’s financial policies and activities, Gilmore said. Auditors declined to show him the complaint or provide him with any details about it, he said.
The review, which was not a full financial audit, resulted in four findings and made recommendations for strengthening financial controls and oversight.
Among the findings: “Egregious spending” on meals, including one restaurant tab for $993.54 from the upscale Louisville eatery Jeff Ruby’s. Records of that expenditure didn’t include itemized receipts or the number of people in the dining party, but the district’s response indicated that there were 11 people and that all of them had reimbursed the district.
Other hefty restaurant bills included $484.55 for Gilmore and board members at Porcini in Louisville and $109.95 for appetizers at the Galt House in Louisville for the board and superintendent.
Among questionable expenditures during a 2010 National School Boards Association conference in Chicago were meals and parking claimed without receipts and a pub receipt for $46.95 in alcohol purchases.
The district received reimbursement for the alcohol purchases and for meals consumed by spouses and others who were not district personnel, according to Gilmore.
District policy allows $30 per day for meals of staff or board members, and $50 per day in larger metro areas including Lexington and Louisville. The amounts won’t realistically cover the cost even of modest restaurant dining, Gilmore said.
Gilmore said Ashland board members, who are entitled to payment of $75 per meeting, including special meetings, do not accept the payments so they are entitled to eat well during out-of-town travel for the district. “They take no remuneration,” he said. “I’m not going to ask anybody to eat a sandwich and a bowl of soup.”
The report said district finance officer Timothy Walters had twice paid for lodging during a conference trip at a rental property in which he held a financial interest, resulting in the appearance of a conflict of interest.
Gilmore said on both occasions Walters had been unable to get a room in the conference hotel, and that the fee for use of the property, a condominium, was less than the cost of lodging at nearby hotels, so the district saved money.
However, the appearance of conflict is significant enough that the district will prohibit the practice in the future, he said.
Gilmore disputed the report’s contention that he had been paid more than the board had approved during two years. The report said Gilmore had been overpaid by $1,050 in the year ending in June 2010 and by $2,880 in the year ending in June 2011.
However, the board had approved the additional amounts, Gilmore said. While the approvals were recorded in board minutes, the district will file written amendments for any future raises or other changes in the superintendent’s contract, he said.
The report took issue with the district’s handling of painting bids, saying that it had broken large projects into smaller ones to avoid the requirement of soliciting bids. Under the Kentucky Model Procurement Code, which the district has adopted, bids are required for projects over $20,000.
The district made several payments for painting that in the aggregate exceeded $20,000, which gave the appearance of splitting the purchases to circumvent the policy, according to the report.
The district didn’t intend to do so, but misunderstood the requirements, according to the district’s written response. The district pledged to closely follow the policy in the future.
Gilmore said he is concerned because the review had been linked to reviews in several other districts, including Mason County and the Dayton Independent district.
In those two districts, auditors found serious irregularities, some of which it referred to the IRS for further investigation.
The association with the Mason and Dayton reviews is unfair, Gilmore said.
At 25 pages, the Ashland report is dwarfed by the 176-page report Edelen issued on the investigation into the Mason County district, where auditors uncovered close to $200,000 in questionable spending on upscale meals and hotels with no clear business purpose.
MIKE JAMES can be reached at firstname.lastname@example.org or (606) 326-2652.