Kentucky auditor says Louisville's sewer district has a "culture of wasteful spending"; MSD defends its finances

LOUISVILLE, Ky. (Oct. 29) — Kentucky Auditor Allison Ball released a special examination of the Louisville Metropolitan Sewer District on Wednesday that she said shows a "culture of wasteful spending" at the agency, which serves Louisville and Jefferson County.

The report runs more than 100 pages and covers mostly 2022 through 2024, with some findings reaching into 2025, WDRB+WAVE reported. The examination began in May 2025.

Ball said her office did not find fraud or criminal activity. "But we did find a lot of wasteful expenditures," she told WDRB+WAVE.

Among the spending the auditor singled out, according to WDRB+WAVE and Kentucky Today, were more than $6 million in employee bonuses for work the report said should count as regular job duties, and more than $430,000 in vehicle stipends for senior executives between fiscal years 2022 and 2025. Executive Director Tony Parrott's salary was about $346,000 in 2025, with the chance to earn up to 22% more in annual incentive pay. Smaller items included an $809 "Most Admired CEO" photo plaque bought on an employee credit card and $80,000 to sponsor restrooms at a nonprofit.

The report also found that MSD raised rates 6.9% in seven of the past 10 years without calculating how much rates would need to rise to cover costs without more borrowing. The district carries about $3.2 billion in total liabilities, Kentucky Today reported. Federally required sewer work under consent decrees with the U.S. Environmental Protection Agency made up 51% of its capital budget in fiscal 2025.

Ball said MSD can make its debt payments for now but is at risk of its debt eventually outpacing its assets. She recommended cutting unnecessary spending, reviewing bonuses and executive perks, and stronger oversight by the MSD board.

MSD defended its finances, pointing to a recent credit rating upgrade and saying the examination had no findings on its debt and financial management practices that require corrective action, WDRB+WAVE reported. A spokesperson said a $500,000 contribution to the Louisville Water Foundation flagged in the report pays for programs that help customers who struggle with their bills.

Under state law, MSD has 60 days from the final report to tell the auditor and lawmakers which recommendations it has put in place and why it has not adopted any others. The findings land less than two months after MSD's latest rate increase took effect Sept. 1.