A Fulton Independent School District official confirmed Thursday that the system has asked the FBI to look into $1.1 million dollars in unaccounted for district funds discovered last year.
Jeff Rogers, the superintendent for the small system in far western Kentucky, said that the district is cooperating with multiple investigations into the matter by the FBI, the Kentucky Department of Education and a pair of insurance companies.
“We started noticing a great deal of accounting anomalies that caused a lot of concern,” he said. “As we started to look through things, we quickly realized that these things were beyond our scope. At that point in time, I took it to local law enforcement … [who have] since turned it over to the FBI.”
Rogers said the investigation centers on two former district employees who retired from the school system.
The district became aware of the missing funds after an independent audit in 2023 found that inadequate financial controls were in place and that there was a large discrepancy between the beginning balance of the 2023-2024 budget and the actual amount of available funds.
Rogers – who was hired as superintendent in May after serving a year as a principal at Fulton High School – said district financial documents indicated it would have a $1.5 million carryover. In reality, it was less than a half a million dollars.
That shortfall led district officials to freeze spending and cut expenditures.
“We were in a situation where, if we did not do something, we were not going to be able to make it through the calendar year in terms of meeting payroll,” Rogers said. “We've looked for different ways to cut. Anything that would not impact students or student learning, we've really just kind of tightened the belt on.”
The district, Rogers said, was able to generate “significant savings” through these spending cuts. It also received aid from the state of Kentucky, which allowed the district to dip into a contingency fund typically reserved for construction projects.
Moving forward, Rogers anticipates a “reduction of force” after the school year. Though no jobs have been eliminated, Rogers said “difficult decisions” may have to be made in the upcoming months. He said it’s possible that insurance claims surrounding the funds could help recoup as much as half of the district’s lost dollars.
“We're going to be doing some restructuring to help mitigate against as many people as possible having to be let go,” he said. “We feel confident that, at the end of the day, they're going to be able to pay out on those claims … and, with those things combined, we should be able to continue moving forward as a district.”
The superintendent said the unaccounted for “amplifies” funding issues that were already at play in the district, which he said is “overstaffed.”
“There are probably a lot of different reasons [why we’re overstaffed], and some of them probably aren't very good,” Rogers said. “There were an inordinate amount of salaries in our district that were paid for with … temporary aid from the federal government. As that funding has dried up, those positions are going to go away.”
Since receiving the audit’s findings, the Fulton Independent School District has worked with the Kentucky Board of Education to implement a “corrective action plan” to safeguard against future financial concerns. Rogers said that plan included bringing the district into compliance with model procurement law – the statutes that dictate how a government entity makes bids and purchases – and putting new purchase order procedures into effect.
He also said new checks and balances were being put into place to better manage the district’s finances.
“It slows us down. It’s arduous, and it's frustrating for all of our people, but it's the right thing to do to protect those funds that we're stewards of,” he said. “There were a couple of individuals that made some decisions that caused us to be in the situation and we're gonna come out of it. We're gonna recover from it, and we're going to continue to educate our kiddos and look for better ways to do that better every day.”
When reached for comment, FBI spokesperson Timothy Beam said pursuant to Department of Justice policy, that the agency could neither confirm or deny its participation in the investigation.
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