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The Knox County Commission will ask its internal audit department to look into a $15.4 million school system account that some members say is a "slush fund" that officials dip into whenever a project goes over budget and they want to conceal the true costs.

Money in the "Physical Plant Upgrades" account is supposed to be used to fix problems, like plumbing, damaged roofs, or heating and air conditioning issues, in existing schools and school-owned facilities, officials said. Instead, some county leaders and records obtained by WBIR 10News suggest that the school system diverted some of the money to cover costs for items other than upgrades, or for items connected to new construction.

For example, finance records show that $1.65 million from the PPU account was used several years ago to purchase the property for what is now Northshore Elementary School.

It also appears that about $30,000 from the account was tapped to cover "buildings" expenses. But, a breakdown of those records show that roughly $5,500 in "building" money was spent on a studio piano, a keyboard and some speakers for Northshore Elementary.

In addition, other records shows that almost $2,000 from the PPU account was spent in December 2012 for alarm parts for the new Carter Elementary School, which didn't open until August 2013.

"I think people want to know how their money is being spent, where it is being spent and is it being spent on the proper things," said Knox County Commissioner Jeff Ownby, who spearheaded the initiative to get an audit. "The PPU account has basically turned into a slush fund."

County leaders last year approved almost $14 million in capital projects, which included dollars for land acquisition, security, building a new stadium and roofing replacements, among other projects. Of that only $3 million was tied to the PPU account.

However, accounting records show that all $14 million was eventually assigned to the PPU fund – not just the initial $3 million.

Web Extra: McIntyre on audit-- full interview

Watch the full interview with Superintendent Dr. Jim McIntyre on the topic of a KCS audit of alleged 'slush fund.' 3-17-14

Knox County Schools Superintendent Jim McIntyre said he "looks forward to the conversation and the audit" but is confident that money was spent "appropriately."

"This is the first time I've heard of some of the complaints," he said, denying that the account was a slush fund.

He added that if Ownby had a question then he should have called him.

Ownby, though, said he asked for the information but it took weeks and what little he got was "barely legible."

"Money could be moved around in the dark of night and no one will know," Ownby said. "They can be telling us that 'they're short of funds, short of funds,' and they're not."

Ownby also noted that the commission approved a $15.4 million budget for Northshore Elementary School, which opened last summer. But "they spent $18.3 million and that's not on budget," according to the commissioner.

"If private businesses operated like this their board of directors would be pretty upset," he added.

County Finance Director Chris Caldwell said when accounts are consolidated, then it is harder for officials to track how they money was spent.

He stressed, though, the school system didn't necessarily do anything wrong, but that the money trail tied to projects is tougher to follow when it's put into one account.

The County Commission during Monday's work session unanimously agreed to seek the audit.

The commission during next week's voting session is expected to officially make the request. The audit would take about four to six weeks.

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