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Originally published May 26, 2010 at 7:57 PM | Page modified June 2, 2010 at 10:02 AM

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Corrected version

Seattle Public Schools overpaid employees $335,000, audit says

If Seattle Public Schools didn't have enough financial problems already, the Washington State Auditor's Office has reported a few of the district's own making.

Seattle Times education reporter

If Seattle Public Schools didn't have enough financial problems already, it now has a few of its own making.

The latest audit of the state's largest school district says the district overpaid employees by at least $335,000 in the 2008-09 school year, made several mistakes in its financial statements, and continues to claim more Native American students than it can document.

District officials called the errors unacceptable and pledged to fix them, while at the same time saying that it brought most of them to the auditor's attention and that they are a very small part of the district's budget.

The overpayment of salaries, for example, represents a small fraction of 1 percent of the district's $558 million budget, said Duggan Harman, the district's executive director of finance.

Harman also said none of the problems will add to the $27 million in expenses that the district already is planning to cut from its budget for the 2010-11 school year.

But the Washington State Auditor's Office says it's not convinced that all overpayments have been identified, and it plans to release a report on that issue later this year.

The office says that Seattle Public Schools' problems are common among school districts in this state, but it also said that the district has pledged to fix some of them before but has not yet done so.

Seattle school officials "still have a lot of issues that they need to attend to," said Mindy Chambers, Auditor's Office spokeswoman.

On the district's financial statements, for example, the Auditor's Office said the Seattle district "relies on our audit to identify errors in the financial statements and notes, rather than dedicating the necessary staff time, training and other resources to ensure annual financial reports are accurate and complete."

Highlights of the audit:

• The district received $233,792 from the federal government to meet the academic needs of Native American students for 1,123 students. But the Auditor's Office said the district could provide documentation only for 377 eligible students. The district also failed to apply on time for the grant for the upcoming school year, and so did not get it. But the district has pledged to make up for that loss out of its general fund.

• The Auditor's Office plans to continue its investigation into overpayment of district employees and will issue a special report later this year. The district says it is confident that the $335,000 already reported won't grow significantly. It says it already has recovered $71,000 and expects to recover at least an additional $145,609. Some of the overpaid employees already have left the school district, which will make recovery more difficult.

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• The district made several mistakes in its financial statements for 2008-09, by misclassifying expenses or recording them in the wrong place.

• The audit reported that district staff members "did not have adequate knowledge of and experience with prescribed financial reporting requirements," and that its controls over its payroll information "are insufficient to detect and correct errors in a timely manner."

Linda Shaw: 206-464-2359 or lshaw@seattletimes.com

A previous version of this article, originally published May 26, misspelled the name of Duggan Harman. The article was corrected June 2, 2010.

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