Improper Spending and Crumbling Infrastructure Lead to Spiraling Debt Burdening Ratepayers
FRANKFORT, KY (October 28, 2026) – Today, Auditor Ball released a Special Examination of the Louisville Metropolitan Sewer District (MSD), which details a culture of wasteful spending and a system of aging infrastructure.
The examination found that MSD faces significant long-term challenges, with approximately $3.2 billion in total liabilities and additional capital projects expected to burden ratepayers. MSD’s financial challenges are driven in part by consent decrees with the U.S. Environmental Protection Agency (EPA). These consent decree projects accounted for 51% of MSD’s Fiscal Year (FY) 2025 capital budget. And the expected 2026 debt service payments related to aging infrastructure represent approximately 37.5% of FY 2025 operating revenues, a number that will only continue to rise without substantial changes to MSD’s debt and financial management practices.
While these consent decrees and debt service payments continue driving rate increases, MSD’s poor day-to-day fiscal management is compounding the problem. Notable questionable expenditures include:
- The Executive Director’s salary was $346,000 in 2025, plus an additional 22% of that figure in incentive pay annually;
- Senior staff receive increases in pay that grossly outpace increases for other staff;
- MSD paid over $6 million in bonuses to employees for completing tasks that should be considered part of their regular job duties;
- From FYs 2022-2025, vehicle stipends for senior executive staff cost MSD more than $430,000, amounting to roughly $14,000 to $16,000 per year for each executive;
- MSD’s system for procurement via credit cards lacks appropriate oversight, and safeguards against unnecessary spending are ineffective or rarely followed. MSD has 142 purchase cards individually assigned to employees, representing 18% of its employees. Procurement card purchases included an $809 “Most Admired CEO” photo plaque with rush shipping.
- MSD also utilizes sole source procurements, which skip competitive bidding. In one instance, an awarded grass cutting contract was originally renewed for $684,140 without justification, a cost increase of 46.4%. Further, MSD has a program that encourages companies bidding on MSD procurements to donate to non-profit organizations as part of the bid, likely increasing contract costs as companies may roll these costs into their bids.
- MSD frequently contributes public dollars to non-profits; a combined $500,000 to the Louisville Water Foundation (where some MSD executive staff members serve as directors), and $80,000 to sponsor restrooms at a different non-profit;
- MSD operates the nation's only wastewater utility honor guard, spending thousands of dollars on uniforms and engraved shovels;
- Travel justification and paperwork are often lacking; around $1,000 was spent for an expense described as “Disney Yacht.” A former board member was reimbursed over $4,000 for a trip to Sonoma, California to watch staff receive an award at a ceremony.
“Our examination confirmed that Louisville Metro Sewer District’s financial burden on ratepayers is significant and also made worse by MSD’s own poor fiscal management,” Auditor Ball said. “Greater accountability and efficiency will be essential to ensure that MSD’s financial state improves in coming years, especially as EPA consent decrees and aging infrastructure make up a large portion of MSD’s annual budget. Ratepayers deserve transparency and assurance that their money is being used to maintain the system they rely on, rather than to fund a culture of wasteful spending.”
View report here.
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