State audit of Kentucky State finds 'poor' internal controls, wasteful spending
Kentucky State University – a historically Black land-grant university in Frankfort – has dealt with stubborn financial problems for years. Wednesday, State Auditor Mike Harmon made public the latest review of the school’s troubled finances.
It’s not the kind of report card KSU would hope for, but it’s one the current head of the university says is a necessary step toward righting the ship.
Auditor Harmon characterized the issues as severe, as he laid out the major findings. While many of the sought-after records didn’t exist or had to be cobbled together from scattered materials, the report paints a pretty clear picture.
"Our work identifies a poor, sporadically functioning internal control environment, which resulted in a variety of issues, including $3 million in federal funding now being at risk and the wasteful paying of bonuses to the elite KSU executives," the auditor reported.
Harmon said the school lacked a functioning accounting system, discouraged a healthy free flow of information, dealt with massive turnover, and may not have even delivered accurate financial data to its own board.
"To be honest, I've just not seen this level of failure in terms of checks and balances."Interim KSU President Dr. Ronald Johnson
Harmon said his office is making referrals to the U.S. Attorney’s Office for the Eastern District of Kentucky, the Kentucky Attorney General, and the U.S. Departments of Treasury and Education. Harmon recused himself from the special examination due to his current status as a candidate for governor in the Republican primary.
KSU Interim President Dr. Ronald Johnson said, in his four decades of experience in industry, government, and with historically Black Colleges and Universities, KSU’s problems stand out.
"To be honest, I've just not seen this level of failure in terms of checks and balances," he said.
But the grim report comes a year into renewed efforts by the General Assembly and KSU to make major changes. From the government side, $23 million in one-time emergency funds, a new board of regents, a presidential search mechanism, and assistance from the Council on Postsecondary Education. On KSU’s end, Johnson says a new team is at work and has already implemented reforms in nearly a fourth of the areas identified.
"A whole slew of new people in the institution are here and they are joined in, with their sleeves rolled up, to move Kentucky state toward an intended future," Johnson said.
Auditor Harmon cautioned the problems did not develop overnight and won’t be fixed overnight either.