In a 43-page report returned earlier this week, the office of State Auditor Mike Harmon returned a scathing reprimand of the Kentucky Community Technical College System — one that brought about five critical findings and two major observations.
The short of it:
— The KCTCS system office and its unrestricted carry-forward balance is not being accurately, or transparently, being reported to its board.
— All 16 community colleges in the network were overcharged in a total tune of $24 million, and KCTCS retained the proceeds from these overcharges as part of the system office’s unrestricted carry-forward balance.
— System office fund balances do not agree to fund balance amounts reported to individual community colleges.
— KCTCS did not use its accounting system to track accumulated spending, and furthermore didn’t maintain all relevant procurement and bid documentation.
— KCTCS failed to collect feedback from companies involved in TRAINS projects, and more than $10,000 in duplicate payments were identified.
— There were misunderstandings regarding workforce training funding, which led to concerns about transfers into the KCTCS general fund.
— And KCTCS nepotism disclosures were not completed, as required by policy.
In an open letter to the public, Harmon said his office has provided KCTCS with “numerous recommendations” to address these issues immediate, as the system serves thousands of students across the Commonwealth. He said it is his hope that KCTCS can use this report to address “necessary issues,” and “continue to be a leader in post-secondary education for all of Kentucky.”
Among some of the top recommendations include:
KCTCS returning all excess funds collected by the System Office, as a result of its billing practices over the period of FY 2018 through FY 2023, back to the colleges.
And KCTCS considering the institution a cost recovery methodology, which would allow actual costs to be recovered throughout the year in real-time, reducing reliance on budget estimates or prior year actuals.
In a comparison of the FY 2023 KCTCS fund balance spreadsheet to the Hopkinsville Community College budget letter, there was a mitigating difference of nearly $700,000.
And the differences in such for FY 2022, FY 2021 and the 2020 carry-forward are just as similar — each nearing $700,000.
According to the audit report, KCTCS’s failure to reconcile the beginning balances to the accounting system “led to speculative reporting of carry-forward balances to individual community technical colleges” and related entities.
These funds were retained as part of the system office carry-forward, and were not returned to the individual community colleges themselves, and it’s been recommended that KCTCS further reconcile these balance amount to ensure the annual letters remain accurate.
