LAUSD TOLLS MIGHT SURPASS $210 MILLION: New Payroll System, Previous Errors Account For Charges

from knbc.com:

December 16, 2007 -- LOS ANGELES -- The state's largest school district might end up spending more than $210 million to roll out a new payroll system, and fix the thousands of errors that have bedeviled the project, it was reported Sunday.

"There's going to be a judgment day when all of this is over," said school board member, Richard Valdovic.

The Los Angeles Daily News said Sunday that the system's original $95 million cost has ballooned to at least $132.5 million, and officials said they don't know what the final cost to the district will be.

At least $6 million in overpayments to teachers, police officers and other district employees may have to be forgiven, because of the accounting nightmare that has developed. Some employees face paying income tax on supposed overpayments, but have no accurate accounting on what their actual pay should have been.

The latest computer expert hired by the district to sort out the payroll system fiasco, Tony Tortorice, says the giant district underestimated how much it would cost to switch over from an antiquated and unproductive pay system.

Tortorice told the board last week that a large organization should expect to spend at least one percent of its payroll implementing and ironing out a new payroll system. He noted that errors have dropped from 5.9 percent of the district's employees in October to 1.3 percent this month.

But LAUSD may have overpaid its employees by as much as $53 million during a five-month period of upheaval that saw some people put into financial duress due to underpayments, and others with overpayments that they could not calculate.

About 60 percent of the people who were overpaid have agreed to reimburse the district a total of $14 million, the Daily News reported. About $15 million in claims are currently outstanding, officials said.

As much as $6 million can never be recovered, district officials said, because the amount of each overpayment was less than $250 and the district would have to spend more than that to calculate the correct figure and recover the overpayment.

When the first payroll checks under the new system were sent out last summer, some teachers received nearly no money at all. The district set up an emergency loan program for them, but teachers reported they had to take a day off of school to go to district headquarters to process the emergency payments.

The third phase of the new accounting system, involving all purchase orders and bill payments by LAUSD, is yet to be implemented.