Kentucky State Auditor Adam Edelen has released a special examination into the former superintendent of the Dayton Independent Schools, finding he received nearly $224,000 in benefits and payments over an eight-year period that were not authorized by the school board.
The report has been referred to the FBI, Kentucky Teachers' Retirement System, Kentucky Department of Revenue and Kentucky State Committee for School District Audits.
"That amounts to $240 per student in a district in which almost 90 percent of students receive free or reduced lunch," Auditor Edelen said. "That's an unconscionable abuse of scarce resources in a working class community."
Auditors found former superintendent Gary Rye did not inform the Board of benefits for himself and intimidated staff members, who were responsible for issuing checks, if they questioned him.
"The notion that you're stealing from any kid much less poor kids is deeply offensive to me," Auditor Adam Edelen said Thursday. "While this may not be the biggest amount of abuse that we have ever uncovered as your state auditor, it's the one that's most personally offensive."
"I think about kids not being able to go to sporting events because they didn't have the money, or technology that didn't go into the classroom, or teachers' salaries that weren't as high as other salaries because of one person's personal greed," retired educator and former district superintendent Jack Moreland shared. "That is just heart-wrenching."
The Auditor's office launched the examination last fall after the new superintendent, Jay Brewer, raised concerns about certain activities of the former superintendent, who retired at the end of fiscal year 2012.
The report includes 12 findings related to payments and benefits to Rye, credit card expenditures, assistant superintendent leave, and board oversight.
During the time Rye received the unauthorized benefits and payments, the district began to struggle financially as funding decreased and expenses increased. Additionally, the District was struggling academically, culminating in a December 2011 assessment by the Kentucky Department of Education that led to state management of the District's middle school and high school.
"Although the students of the Dayton School District continue to be served, the District would have liked to have been able to purchase advanced technology and other instructional resources to further benefit the students," Brewer said. "Now it is time to look forward and concentrate on the continued education of the Dayton Schools' students."
Auditors found Rye was reimbursed $146,276 for his personal retirement contributions and service credit purchases– benefits not included in his contract.
He was paid $47,429 for sick and annual leave days that he should not have received. Some of the leave accumulated was not approved by the board; some leave was taken but not deducted from his leave balance.
The assistant superintendent accumulated 16 more annual leave days than was allowable, representing an additional benefit of $6,368.
Auditors also found rampant travel expense abuses. Rye used a district gas credit card for his personal vehicle, which was not a benefit authorized by the board, and accumulated a total of $21,464 in fuel purchases. He double-and even triple-dipped – using the district credit cards to pay for gas and expenses, submitting mileage and other expenses for reimbursement and in some instances, receiving additional reimbursement from the Kentucky Association of School Administrators when he served on the group's board of directors. In total, he was reimbursed roughly $8,502 for expenses he did not incur, that were duplicated, or were for apparent non-existent meetings.
"Ripping off the district and KASA is heinous enough, but he really outdid himself when he restricted the athletic teams from traveling long distances for games in order to save money," Auditor Edelen said.
"The story here today is sad for the kids of Dayton and the opportunities that they've lost out on and will never get back," current superintendent Jay Brewer said.
Brewer says the money highlighted by the auditor would be enough to raise all teachers salaries in the district by four percent.
While Rye failed to disclose financial activity to the Board, auditors found the Board did not consistently perform his annual evaluations and continued to extend his contract without reviewing it or the cost of the benefits provided.
"The board didn't consistently perform his evaluations and they continued to extend the contract without properly reviewing it," Edelen explained.
"Number one we weren't looking for it," board member Rosann Sharon offered. "You don't expect your CEO to be doing something like that."
Sharon says he board has since reviewed its policies and procedure and is implementing changes like a board committee that meets regularly with the superintendent to review expenditures.
"It's not an indictment of the district, it's not an indictment of the board of education," emphasized Moreland.
"These are good hardworking people who only want one thing and that's what's in the best interest of the kids."
FOX19 was unable to reach Rye for comment. The auditor says he reached out to Rye multiple times to tell his side of the story and says the former superintendent repeatedly denied the offer.
The school district is now going after Rye, the independent district auditor, and the insurance company that insured the board against employee theft to try and recoup lost money.
To view the full report, click here.
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