Kentucky Auditor Probes Spending By State Ed. Dept.
Kentucky's state auditor is undertaking an investigation into how the department of education spends state and federal money in the wake of the recent indictment of a former top agency official on charges of embezzling more than half a million dollars.
Edward B. Hatchett Jr., Kentucky's auditor of public accounts, said his probe would focus on the eight cooperatives that help districts purchase supplies and provide professional development at discounts made possible by buying in larger groups. Meanwhile, Kevin M. Noland, the state's interim education commissioner, has announced that his department will hire an independent auditor to review the books of the department and the eight cooperatives.
Randy Kimbrough, a former deputy commissioner of the Kentucky Department of Education, is charged with stealing state and federal money intended for an eastern Kentucky cooperative. Ms. Kimbrough is alleged to have billed the cooperative for work done by bogus consultants and then deposited the money into her personal bank accounts.
In addition to examining the accounts of all the state's education cooperatives, the state auditor's office will pay particular attention to an arrangement involving a cooperative other than the one through which Ms. Kimbrough is alleged to have defrauded the state. That other cooperative, the Ohio Valley Education Cooperative, has a $7.9 million contract with the state education department to pay department employees more than the maximum state salary.
The arrangement is legal, Mr. Hatchett said, but it raises questions about whether the local school officials who govern the cooperatives should be providing a conduit for paying state officials.
Mr. Hatchett launched his inquiry after his office found irregularities in $500,000 in spending in the Kentucky Education Development Cooperative in Ashland. His office traced the improper spending to Ms. Kimbrough, who oversaw state and federal grants to the cooperative. The education department distributes federal and state professional-development grants through the eight cooperatives.
During the investigation, Ms. Kimbrough, 61, resigned from her post as deputy commissioner overseeing the state department's bureau of management of support services.
State education officials are trying to determine how Ms. Kimbrough transferred money from the cooperative's accounts into her own, said Lisa Y. Gross, a spokeswoman for the department. On Jan. 19, a federal grand jury indicted Ms. Kimbrough on 10 counts of embezzlement and theft. The indictment alleges the former deputy commissioner used the money to purchase two cars, set up a $100,000 certificate of deposit, and pay off personal loans totaling more than $30,000.
If convicted, she will face up to five years in prison and could be required to pay back the missing money, according to Joseph L. Famularo, the U.S. attorney for the eastern district of Kentucky.
Ms. Kimbrough's attorney did not return calls seeking comment last week.
Contract Raising Eyebrows
Mr. Hatchett said his office launched his investigation after receiving a tip. Because the alleged embezzlement happened in the past year, the private companies that audit the cooperative had not reviewed the organization's books yet.
The contract between the Ohio Valley cooperative and the state, meanwhile, is raising concerns in the auditor's office.
"It's an absolute conflict of interest," said Mr. Hatchett, a Democrat who was elected to his second four-year term last year. "These department of education administrators are called upon every day to evaluate the performance of school districts and their administrators. They're being called upon to evaluate the people who pay their salaries."
But Ms. Gross defended the arrangement. The legislature sanctioned it in the early 1990s, she said, as a way to lure applicants who would be deterred because their salaries otherwise would be capped at $97,000.
The department currently pays 89 of its 650 employees through its contract with the Ohio Valley cooperative—known as OVEC. While the state officials are paid by OVEC, their employment status is decided by state officials, not the board that governs the cooperative, she added.
"They are answerable to people here in the department, not to people in the cooperatives," Ms. Gross said.
Vol. 19, Issue 21, Page 16