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The $200 million school budget mystery

Even Sherlock Holmes may have to scratch his head over this one: How did the LA Unified School District lay off thousands of employees and still pay $200 million more than what was in its budget for salaries?

That's puzzling auditors in the district's Office of Inspector General after a December audit on "position control" turned up salary irregularities and funding mysteries. 

According to the LA Times, the district was only supposed to spend $4.7 billion to pay for 76,860 full-time positions. This was after they eliminated 2,000 teachers and hundreds of other employees through layoffs. Yet, instead of saving money, the district somehow ended up paying out $4.9 billion, which equals an increase of $200 million in salaries.

Auditors discovered this strange fact, almost by accident, last month while trying to track down where the money originated in the payroll system. They ended up finding salary "irregularities" linked to roughly 3,000 positions. Some of the money couldn't be tracked at all.

Inspector General Jerry Thornton made clear that his auditors didn't see any fraud, nor were they accusing anyone of criminal wrongdoing, the Times story said. However, it was clear that the district's payroll system was "broken."

We really don't have adequate position control and we don't know where our funding comes from for all these positions, LAUSD Inspector General Jerry Thornton said.

This comes after the district's budget officials in June found 900 unfunded positions accounting for $30 million that wasn't even in the budget, the Times story reported.  

LAUSD Superintendent Ramon C. Cortines told the Times his staff was trying to figure out how much of the payroll snafu was linked to accounting woes or something "more serious."

On a micro level, the Inspector General recently found payroll problems at one elementary school in the district, O'Melveny, in San Fernando. The audit report, released Dec. 15, found discrepancies between the hours recorded on time cards and the hours recorded in the payroll system; that payroll was not consistently approved by supervisors; and that most of the overtime records were not supported by "overtime authorization forms," among other problems.

The audit, which was performed at the request of the principal, concluded: "The conditions described above at the school along with their underlying causes increase the likelihood that the actual payroll may not represent actual time worked causing lost funds from overpayments and misallocations of fund sources. Due to the conditions described above, we have identified potential cost savings and benefits of $9,107."

The district's payroll system has been plagued with other problems. More than 35,000 district employees were overpaid by nearly $60 million in 2007 because of errors made by its payroll computer system, Business Tools for Schools. Last month, school officials announced that most of the employees have repaid the excess money or arranged payment plans. At the time, the district said about 2,400 former and current employees still owed an average amount of under $5,000.

Filed under: K–12, Daily Report


Comments are closed for this story.
Anonymous's picture
The Superintendent is the person totally responsible for everything that takes place in the District. It is long past time for him to go. The downtown administrators need to go too with their positions not to be filled. Their salaries plus funding for their offices and programs must go right to the schools.
Anonymous's picture
Lots of good people work downtown for LAUSD. Unfortunately, the Superintendent is making them all look bad. Cortines should man up and resign: The buck stops with him -- all 200 million of them.
Anonymous's picture
Why does this article only mention the people who were OVERPAID? I was one of thousands who were severely UNDERPAID during LAUSD's Payroll Debacle!
tufty's picture
This reminds me of the infestation commonly known as "ghost workers" in corrupt developing nations. For the auditors to say it was discovered by accident is even more alarming. There is obviously a problem with good accounting practice and proper procedures.

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