Hargens: Outside firm made $40 million mistake in JCPS salary study
Information gathered by the outside firm hired by JCPS to conduct a comprehensive salary study was seriously flawed and resulted in a $40 million error, Superintendent Donna Hargens told the school board Tuesday.
LOUISVILLE, Ky. (WDRB) -- Information gathered by the outside firm hired by JCPS to conduct a comprehensive salary study was seriously flawed and resulted in a $40 million error, Superintendent Donna Hargens told the school board on Tuesday night.
Hargens said the district recently learned that during Management Advisory Group International (MAG)'s salary study of JCPS, "it grossly overestimated, by tens of millions of dollars, the salaries our district paid compared to benchmark districts and industry salaries for non-teacher positions."
"To say that this district is outraged is an understatement," Hargens said. "This study caused employees to feel unvalued and underappreciated. It also caused significant stress between employees at different levels."
The review, which cost the district $192,000, was conducted by Virginia-based firm following the 2014 audit of JCPS by Kentucky Auditor Adam Edelen. Details were released in April 2016, with the firm finding that JCPS was paying its employees between $105-119 million more than comparable districts.
Of that, about $52 million was attributed to "premium" salaries for certified administrators and classified staff, or non-teaching positions.
Hargens told board members that as the district began working on future compensation structures, it requested data from MAG to confirm its findings and replicate market comparisons.
"When that data was provided, JCPS discovered an error in MAG’s calculations and contacted the company," she said. "Instead of a cost of $52 million annually, the actual cost is closer to $10 to $14 million."
Hargens told board members that MAG "takes responsibility for this error."
In its letter to JCPS, MAG’s attorney said in January, JCPS chief financial officer Cordelia Hardin "noticed that the calculation for some of the jobs in her department were not consistent with what she knew them to be."
"She asked for MAG to check the calculations, which MAG did immediately," the attorney's letter states, according to Hargens. "MAG provided a revised Excel report on February 3, 2017, that created a substantial decrease in the difference in the amount of salary over the proposed range maximum, reducing the amount of salary over the range maximum from approximately $50 million to approximately $14 million."
A copy of the attorney's letter to JCPS was not available Tuesday, as members of the media were told to file an open records request for it.
Hargens said a "$40 million mistake by MAG is unacceptable."
"MAG owes the district, its employees, this board and this community an apology," Hargens said.
When asked if the district would recover the cost it paid to the firm, JCPS spokeswoman Allison Martin said, "We are exploring our legal options regarding MAG."
JCPS school board chairman Chris Brady said he was "truly upset" adding that "it caused real damage to the district."
Indeed, JCPS employees were outraged and thousands staged several walk-ins at nearly all of the district's schools last spring as a result of the study and other issues.
Brent McKim, president of the Jefferson County Teachers Association, said Tuesday he was unaware of the district's findings involving MAG until the meeting, but that he was among many who questioned the salary study when it was released.
"What's surprising is they make an error this big and take this long to find it," he said. "This has disrupted many people's lives and caused a great deal of stress."
Brady said he was "almost not surprised" by the discovery because the numbers provided by MAG "didn't seem right."
However, Brady said Tuesday he wasn't sure if the district would attempt to recover its expense of hiring MAG.
"We are exploring our options, but sometimes those options might cost more than its worth to seek some type of restitution," he said.
Reporter Antoinette Konz covers K-12 education for WDRB News. She can be reached at 502-585-0838 or @tkonz on Twitter.
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