At a special meeting Wednesday, the Kentucky Board of Education unanimously voted to place the Monticello Independent School District under state management.

The state board had placed the district under state assistance in December, but a deeper look into its finances prompted Education Commissioner Terry Holliday to recommend further action.

According to department staff, the district’s financial situation is so dire that without state management and immediate financial assistance, the district would default on current debt obligations and shut down by month’s end, sending its 750 students and 128 employees home in the middle of the school year.

Monticello Independent is projected to end the current school year with a negative balance in excess of $1 million. The state’s financial analysis cites among the reasons: high staffing levels and overall personnel expenditures that are about 93 percent of the district’s total budget; high transportation costs; and significant capital expenditures including the acquisition and improvements on a soccer field and a baseball/softball field that did not come to the department for approval as required by regulation.

Based on the evidence, in accordance with KRS 158.785 and 703 KAR 3:205, the commissioner determined a pattern of a significant lack of efficiency and effectiveness in the governance or administration of the Monticello Independent School district existed and continues to exist, and that state management is necessary to correct the inefficiencies and ineffectiveness primarily in the district’s governance, finance and personnel operations.

Under state management, the district must develop and implement an improvement plan that assigns local board and individual administrative staff responsibilities and activities, and includes specific objectives and strategies to correct deficiencies within the specified time.

Under KRS 158.785, the district will be designated as “state-managed” for no more than three years or until the Kentucky Board of Education determines that the pattern of ineffectiveness and inefficiency has ended and the deficiencies identified through the management audit have been addressed. The time could be extended if a follow-up management audit indicates a need.

Monticello Independent is required to provide the commissioner with monthly reports indicating the status of improvement activities in the district; he will report on the district’s efforts at Kentucky Board of Education meetings.

The state board placed the Breathitt County School District under state management in December after an audit indicated a significant lack of efficiency and effectiveness in the district’s management and governance and that the district lacked the capacity to fix problems on its own.