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More potential for problems with L.A. Unified's payroll system, grand jury says

June 30, 2010 |  2:27 pm

The payroll system used by the nation's second-largest school district remains at risk of collapse because of a lack of follow through after an earlier, much-publicized payroll debacle, a grand jury has concluded.

The L.A. County Grand Jury annual report, released Wednesday, took aim at the malfunctioning payment system launched in January 2007 in the Los Angeles Unified School District. Thousands of employees were overpaid, underpaid or not paid at all. The underpayments and other glitches caused distress for thousands; the district has attempted to recoup nearly $60 million from about 35,000 employees. Early this year, the district was still in pursuit of more than $9 million.

The grand jury investigation traveled well-worn ground in examining what went wrong, noting inadequate employee training and the lack of a sufficient trial run to work out glitches.

But it also made new findings about future hazards. The report noted that three internal district audits in the wake of the crisis listed 47 recommendations -- most of which officials accepted as correct. Yet no formal follow-up has occurred to make sure that employees acted successfully on these recommendations.

In addition, district technical staff said tight finances and a reluctance to integrate more new technology have delayed the introduction of the final portion of the payroll system.

The district's own technical staff indicated that on "a scale of one to ten with … ten being a disaster, LAUSD is currently at eight on the scale of exposure," according to the report.

The risks of a system collapse could result in an inability to replenish stock in the food warehouse or to receive, process and deliver supplies to schools. In addition, the district could lose crucial financial data or forfeit funding for failing to file mandated reports.

Completing the payroll system could take up to 36 months and cost $25 million to $30 million, and "personnel required to perform this task are not currently available," the report concluded. The lack of qualified expertise is a result of layoffs and the severing of ties with payroll consultants.

A spokesperson for the school district said officials would have no immediate comment because key senior staff were either on vacation or were forced to take a furlough day as part of ongoing budget cuts.

-- Howard Blume

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