Plante Moran was hired to help the district understand how the crisis developed and how to prevent it from happening again.
The JCPS Audit and Risk Management Advisory Committee now has a clearer picture of what may have contributed to the district’s $188 million budget shortfall.
LOUISVILLE, Ky. (WAVE) — On Wednesday afternoon, members of the Jefferson County Public Schools’ Audit and Risk Management Advisory Committee, along with community members, gained new insight into how the district fell into a $188 million deficit.
Audit firm Plante Moran outlined 13 areas where the district needs improvement to avoid another financial crisis.
Plante Moran representatives said several recurring themes surfaced during the audit, especially the absence of clearly defined and consistently followed financial oversight guidelines within Jefferson County Public Schools (JCPS).
The firm identified eight high-priority areas and placed five additional concerns in a moderate-priority category.
According to Plante Moran, JCPS must address the following key issues to prevent future budget problems:
The district has not created a comprehensive governance framework that clearly defines all budget roles, decision-making authority and responsibilities.
The budget development process is not formally aligned with the district’s long-range strategic goals.
The Board has had limited visibility into mid-year financial performance because monthly reporting was discontinued and key financial information has been presented inconsistently.
The district has not established a formal cross-functional process to review and approve organizational chart changes and lacks a consistent job classification system.
Return-on-investment (ROI) and data-driven evaluations are not consistently built into budget development, approval and funding renewal decisions.
Although the district recently introduced a multi-year financial forecasting model to support long-term planning and project fund balances, multi-year forecasting has not been formally integrated into the budget development process.
The district has allowed new or expanded mid-year budget requests without requiring them to fit within existing appropriations or be backed by sustainable funding sources, leading to a pattern of additive funding requests.
The Audit and Risk Management Advisory Committee (AMRAC) has historically not followed the communication and reporting processes required by its Charter, limiting its role in governance and financial oversight.
“We have a lot of work to do,” JCPS Board of Education member Taylor Everett said. “The main thing is the systems in place that have been in place for years have not stopped the budget to get to the point where it’s at.”
Everett said board members struggle to vote on financial matters when the information presented is difficult to understand.
“The reports to the public and us just need to be easy for us to understand as a board so we can make the right votes and recommendations,” he said. “When you saw it on there, where we stopped getting the monthly budget to actual reports, it’s really hard to vote on a board and understand what the impact of certain purchases mean when we don’t know the total number.”
Plante Moran also suggested steps the district can take to correct the issues. Superintendent Dr. Brian Yearwood said district leaders are actively working to determine how to implement the firm’s recommendations.
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