The Baltimore school system spent more than $2.8 million on overtime in fiscal 2010, even though it was doubtful that employees worked all of the hours for which they were paid.
Three employees earned a combined $250,000 in salaries while working for both the school system and a state agency during the same hours.
These are among dozens of findings outlined in a preliminary draft of an independent financial audit of the school system. The auditor says that the report is not final and the findings could be changed or resolved, though school officials have acknowledged many of the lapses in responses to the auditor.
The auditors also found financial oversight to be so inadequate that officials paid millions of dollars in contracted work that wasn't verified, lost 1,400 computers and allowed dozens of employees access to adjusting payroll even though it wasn't required for their jobs.
The preliminary report by the Office of Legislative Audits, the state legislature's research arm, was obtained by The Baltimore Sun. The audit primarily reflects fiscal year 2010 and is the first to be completed during the administration of city schools CEO Andrés Alonso. Its release comes as the schools chief has sought additional state funding from the General Assembly while repeatedly defending the cash-strapped system's fiscal responsibility.
Since January, city school officials have come under fire for a series of expenses, including about $65 million paid out as part of liberal accrued-leave policies during Alonso's administration, $500,000 in credit card charges by administrators that included expensive dinners and extensive travel, and the $250,000 renovation of an executive suite that occurred as the school system lobbied state lawmakers for millions to overhaul dilapidated school facilities.
City school officials said in their response that they were developing new policies and system improvements even as the audit was being conducted, particularly regarding payroll — the largest expense that auditors found to be the most vulnerable to problems.
In an interview, school system spokeswoman Edie House-Foster said the school system doesn't have permission to discuss the findings before they are released publicly.
"We see the audit as helping us to get better, and when the [Office of Legislative Audits] releases their findings, we would be happy to talk," she said.
Among the findings outlined in the draft document obtained by The Sun:
•The system could not substantiate the bulk of overtime payments — which totaled $2.8 million during fiscal year 2010 — with any records of hours worked or supervisor approval. Additionally, the system overpaid overtime by $206,000 to some employees, at a rate 9 percent higher than they were entitled to under the union contract.
•The system's payouts of $10 million that fiscal year to employees for unused sick and vacation time when they leave were found to be "excessively generous" and nearly four times higher than in other large school districts. Auditors found that the system paid four employees for 201 more vacation days than they were entitled to under union contracts.
•City school officials could not justify several salary adjustments. In one case, the city school board ordered a demotion and pay cut of $36,000 for an unnamed administrator in 2008 that never occurred, resulting in an overpayment of $100,000 through May 2011. Auditors also found that dozens of teachers and administrators were earning more than their pay grade or retained their higher salaries after being demoted.
•School board oversight was lacking, particularly in its ethics and financial disclosure policies. Auditors found several instances of conflicts of interests. The system paid one employee for both part-time work in the central office and nearly $34,000 as a contractual vendor for instructional services. The employee owned the vendor business — and had the authority to approve purchases in the school system's automated procurement system.
In addition, 105 school system employees had home addresses that matched the addresses of vendors hired for instruction, special education and consulting services. A review of eight procurement payments showed that seven went to vendors who were also system employees.
•The district failed to collect $3.9 million in unpaid bills, including 216 debts totaling $1.5 million that were never referred to a collection agency; 45 of those past-due accounts included $336,000 in bonuses that former employees were supposed to repay because they left the system before earning the payments.
•Oversight of contracts and procurement was lacking. For example, auditors found that the system continued to pay a contract for special education instruction that expired in 2008 and was never renewed by the school board, for a total of $6.9 million through June 2010. The audit doesn't specify whether any work was done after the contract expired.