College District’s Misdirected Tax Payments Could Cost Up to $65,000

Ventura County taxpayers will have to pay up to $65,000 to the Internal Revenue Service because of a bookkeeping error made last spring by the Ventura County Community College District, officials said Thursday.

An unidentified employee in the district’s payroll department mistakenly sent federal withholding taxes to the California Franchise Tax Board and state withholding taxes to the IRS, said Gregory Kampf, president of the district Board of Trustees.

The checks were also made out for the wrong amounts, Kampf said.

By the time the error was corrected and the federal taxes made their way to the proper office, the IRS had assessed $65,000 in penalties and interest against the district, Kampf said. District officials became aware of the problem within the last two weeks, he said.

The district has already paid $25,000 of the amount and is negotiating to have the remaining amount reduced or erased, Kampf said.

But the money “comes directly out of the district coffers, out of the general reserve, which is already thin,” Kampf said.

The general reserve contains about $1 million--only 1.75% of the district’s $63-million annual operating budget instead of the 3% reserve fund recommended by the state Department of Education, Kampf said.

“Anything that cuts into that now is going to be felt severely,” Kampf said. “If there’s any miscalculation of actual expenses over what’s budgeted, your margin of error’s very narrow. Too many of these kinds of things occur, and it really jeopardizes the overall budget, plus you don’t like to waste $25,000. Whatever we pay on a penalty has no benefit to students, so it’s an absolute waste of tax dollars.”

The money ordinarily is earmarked for financial emergencies--such as repairs or low enrollment, Kampf said.

“We had it in mind for operating contingencies, extra enrollment that needed to be funded or something breaking down on one of the campuses,” said Trustee Timothy Hirschberg. “It’s something that never should have happened. It’s something I think should have been caught before it snowballed into a potentially $25,000-plus liability.”

Hirschberg said the trustees are investigating whether the proper checks and balances in the payroll department that could have prevented the error were operating.

The problem was not lack of money but mishandling, said Chancellor Barbara Derryberry.

“The dollars were here, but the filings were late,” Derryberry said. “My understanding is we’re now current on everything, that everything has been cleaned up. . . . I think it’s one of those unfortunate things that occur when you have employees taking care of matters.”

She said the district has 2,000 full- and part-time employees.

“It’s an unfortunate situation, but we’ve made every effort to take definitive measures to correct it,” she said.

All three officials declined to discuss whether the responsible payroll employee would be disciplined.