An audit by the California state controller revealed that the Los Angeles Unified School District owes the state $45 million, which will be repaid from future funds.
The oversight occurred when consultants hired by the district to assess the costs of the state-mandated Pupil Promotion and Retention Program claimed costs they should not have.
The error will not impact next year’s budget, according to a statement from the district.
“The audit findings will have no impact on the budget this fiscal year because the district will not have to repay the funds right away,” according to the statement.
Under the state-mandated program, a school district must offer summer school and supplemental instruction during the school year to help students pass their grade-level requirements.
When a program is a mandated cost, the state is responsible to pay for that program.
Usually, the district is paid the money necessary to enact the program up front, and only after is an audit made.
“The amount the district over-claimed is one of the largest we have seen, but it is not that unusual,” Garin Casaleggio, a spokesman for the state controller’s office, said.
The audit covered costs claimed for the periods from July 1997 to June 1999 and July 2001 to June 2003.
The district received $46.6 million for the legislatively mandated program, but State Controller John Chiang’s office determined the district should only have received $1.19 million.
The controller’s audit found the district incorrectly claimed payment for operational and oversight costs; costs for teacher salaries; reimbursements for data processing; and costs for substitute teacher billings, excessive hours for pay periods and benefits.
In the same statement, district officials explained they are not disputing the controller’s conclusion, as they acknowledged there were issues with some of the program consultants.
“We had consultants that were very aggressive in what they put in and did not have the appropriate documentation,” Kevin Reed, general counsel for the district, told the Los Angeles Daily News. “The auditors are incredibly aggressive. They look for documentation on things that are inherently incredibly difficult to document.”
Chiang’s office initiated the audit in May 2006 because of the high price the district claimed for the program. Reed told the Los Angeles Times that the findings of the audit are not exclusive to this school district.
“It’s not unique to L.A. Unified that a substantial portion of these claims get challenged,” Reed said.
But the district stated that the requirements for documentation of mandated claims should be better defined.
“There is a need for an agreement between school districts in California and the state controller to establish standardized and consistent expectations for documentation,” the statement read.