Fayette County board hears interim CFO say financial records are misstated; board acknowledges inaccurate reports and names finance officer

FAYETTE COUNTY, Ky.

Interim Chief Financial Officer Kina Co told the Fayette County Board of Education on April 27 that a nine-month deep dive into district accounting revealed long-running problems, including instances where internal controls were bypassed, transactions were misclassified and deadlines for federal reimbursements were missed.

"I do not have confidence in the monthly financial reports given to the superintendent and the board tonight," Co said in presenting her findings, saying that the district's electronic financial records only go back to 2008 and that several processes have been operating outside of standard state and federal accounting practices.

The board unanimously (5-0) moved to acknowledge receipt of the monthly treasurer's reports for February and March 2026 as inaccurate, then voted 5-0 to elect Co as the district finance officer and treasurer and to approve a $1.5 million surety bond for the treasurer.

Why it matters: Co told the board the problems are both systemic and granular, and that correcting them will affect the budget the district presents to the board. She said the district is working with the external auditors, the board's financial adviser and bond counsel and that the external audit firm agreed the district needs to restate fiscal year 2025 financials.

What Co reported: Her presentation said multiple transactions lacked required segregation of duties, an instructional account had paid a six-figure contract for non-instructional services without board approval, and deadlines for federal reimbursement claims had been missed, costing recoverable revenue. Based on initial work with the external auditors, she said the district will have to restate FY25 and is exploring short-term borrowing (a tax revenue anticipation note) to address cash-flow timing.

Board response and next steps: Board members pressed for details about restatement timing, audit scope and plans for restoring fund balance. Board member Monica Mundy and others asked for a clear corrective-action plan, better reporting and changes in procedures to prevent recurrence. Co said she expects to bring an updated financial report in May and a tentative budget by the board's May deadline, and that further entries and adjustments will continue as staff close the year.

Community reaction: More than a dozen public commenters criticized the board and district leadership. A student from Paul Lawrence Dunbar High School, Javis Carabalo, described recurring building problems at his school, including smoke incidents where smoke detectors did not trigger alarms, and urged the board to act. Community speakers and staff repeatedly called for forensic review, changes in auditors after the current five-year contract, and stronger governance and accountability measures.

Selected quotes and context: Co told the board, "These reports...must be shared with the board due to board policy. Later in the meeting, the board will be asked to vote to acknowledge that they have received the financial reports. This should not be considered an endorsement or or an approval of them, only a receipt." Student speaker Javis Carabalo said of Dunbar High School facilities, "We are being asked to believe that we are a priority even though the physical evidence surrounding us says otherwise."

Formal actions recorded: The board voted to (1) acknowledge receipt of the treasurer's reports described in the packet as inaccurate for February and March 2026, (2) elect interim CFO Kina Co as district finance officer and treasurer, and (3) approve a $1.5 million surety bond for the treasurer. Board members also approved routine minutes and consent items earlier in the evening.

What comes next: District staff said they will continue working with auditors and advisers, finalize entries to allow restatement where appropriate, and return to the board with a tentative budget in May and corrected reports as work proceeds. The district said it will prioritize protecting school-level funds; the initial reductions Co outlined were focused on district-level contract days and certain calendars rather than classroom teacher or paraeducator days.