Audit Shows Major Money Problems at Fayette County Schools

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(Fayette County, TN) A state audit released on Wednesday shows extreme mismanagement of funds at Fayette County Schools.

Read the audit of Fayette County government here:

Details of school finances begin on page 167.

The audit covers the 2011-2012 fiscal year, during which Dr. Cedrick Gray was the director of schools. He resigned last year.

The state comptroller's office cites overspending of the budget, unauthorized salary supplements, and failure to put contracts out for bid. Some of those contracts totaled hundreds of thousands of dollars.

In addition, the fund balance decreased from $1.4 million to under $300,000 during this time.

The system exceeded its general purpose school fund by $1.2 million, while it exceeded the federal projects fund by $300,000.

$864,000 of the overspending is attributed to salaries exceeding the budget.

The audit details how certain principals and central office staff received salary supplements via line items that were unrelated to payroll.

It also described how five employees ended up making more than the director of schools, and how at least eight employees ended up with major pay increases from the previous year. The increases ranged from 17 percent to 65 percent.

The state comptroller's office told News Channel 3 the record-keeping was so bad that they were not able to determine whether federal grant money was used for the appropriate programs. As a result, there is about $3.7 million in questionable federal grant spending.

In response to these findings, Dr. Cedrick Gray told the auditors that many of the issues were due to "inexperience of the staff" and "a new reconciliation process in the accounting software."

Gray also told auditors staff had to work with an inadequate budget, and that the board did not provide directives on where money for new purchases was to come from.

He wrote, "At no time was it the intention of this administration to defraud, usurp, or mislead the school board, County Commissioners, or the good people of Fayette County."

Since Gray's resignation, the board appointed James Teague as the new director of schools. They also have a new finance staff in place.

Teague told News Channel 3 that they are already working on improvements to the system so that none of the mistakes from this audit will be made again.

Board Chairman Ronnie McCarty said that some of the mistakes were the responsibility of the board, while in other cases, the board did not know what was going on. The audit does state that some of the transactions took place without board approval.

James Garrett, a new board member said there are positive things happening in the school system.

"Our high school was one of the top three most improved in the state. However, looking back, we feel there was lack of financial controls. And that's the thing you see recurring throughout the audit," Garrett said.

Now, James Teague and the new finance department staff are being held responsible for the bookkeeping. Garrett said the board has already started getting monthly finance reports and are implementing policies to run a tighter ship.

Parent Tracy Wade said she's "extremely frustrated" at the school system. Even before the audit came out, she was concerned over cuts to teacher jobs.

Upon hearing the audit details, Wade said, "I'm appalled at the findings in the audit report. And as a result of those findings, our children are the ones that have to pay."