The Los Angeles Unified School District (LAUSD) has been assessed a considerable fine for not reporting accurate payroll information to the organization that monitors retirement benefits for teachers throughout the state.
The California State Teachers Retirement System, the nation’s third-largest pension fund, received incorrect payroll information from the school district throughout 2007 due to a glitch in the system’s software that enraged educators and their families and forced the district to hire an outside consultant to fix the problem in the system.
“As of October 31st, LAUSD has been fined over $328,000,” Ricardo Duran, a media officer with the pension fund told The Argonaut.
The penalties are assessed in accordance with the California Education Code Section 23006, which states, “If a county superintendent of schools or employing agency, school district or community college district that reports directly to the system, submits monthly reports late or in unacceptable form, the board may assess penalties.”
United Teachers of Los Angeles (UTLA) president A.J. Duffy commented, “I think that it is appropriate to fine a public institution when they violate the Education Code, particularly if it’s for something as critical and egregious as payroll and retirement issues.”
The state will assess the fines to the school district.
The payroll controversy lasted nearly a year, and several teachers were underpaid, not paid at all or in some instances, paid more than what they are actually earning. Those educators are being asked to pay back the district the excess salary that they received.
Representatives of the school district have stated that the system is undergoing changes that will make it much more efficient, and they hope to have all of the kinks out this month.
“Our target date has been to achieve stability in our payroll system by January,” said David Holmquist, the district’s interim chief financial officer in an interview in November.
Officials of United Teachers of Los Angeles, the district’s largest teachers union, have protested that the same system that has inaccurately processed payments for nearly a year cannot be trusted to determine correct data regarding how much money should be returned.
“We don’t know what is correct and what is incorrect, because the data comes from the same system that was inaccurately paying teachers,” said Duffy.
Duran sought to assure the group’s members that their benefits will be accurately disbursed, despite any inaccuracies that are submitted.
“CalSTRS [California State Retirement System] members will collect all the benefits and service credits to which they are entitled,” Duran said. “The correct information will ultimately be submitted by the school district. In the meantime, CalSTRS uses a process that ensures retiring members will begin to receive their initial benefit less than 30 days after retiring.
“CalSTRS has this initial benefit process in place because it often takes time for the school districts to send members last months of service credit and salary information. Over the first few months after retiring, members receive adjustments in their benefit checks as the information is submitted until the final benefit is determined,” said Duran.
The fines continue until accurate patroll data has been submitted. Duran said that the latest figures were submitted in December.
“CalSTRS has received what should be our final report from LAUSD,” said the media officer. “We are currently analyzing it, which should take a few days.”
While the immediate problems associated with not receiving correct paychecks concerns the teachers union, making certain that educators’ retirement benefits and credits is equally as important, says Duffy.
“Teachers get retirement credits for every day that they work, and [retirement credits] go toward a part of the formula of what teachers retirement benefits would be,” the UTLA president explained.
The teachers retirement system has issued letters to its members advising them that the district’s payroll issues may affect the accuracy of their 2006-2007 Retirement Progress Report, which is their annual statement of service credit, compensation and contributions earned.
“Our letter instructs members to call LAUSD for updated status reports of retirement reporting corrections through its customer service line,” Duran explained. “CalSTRS staff is working closely with LAUSD to receive corrected member data.”
District officials have been criticized for hiring a public relations firm during the payroll crisis to burnish its image and adding additional consultants to help them get out “positive news” about the district.
A Daily News article in December put the pricetag for the consultants and the public relations firm, The Rogers Group, at approximately $328,000. Ironically, that is the amount that the district has been fined through October 31st for reporting inaccurate payroll data to the teachers pension fund.
One school district board member, Tamar Galatzan, was quoted in the story as saying, “If the job description of all of the new communications folks is just to find happy news stories and convince the newspapers to print them, then I question if that’s a good use of funds.”
On its Web site, United Teachers of Los Angeles blasted the decision to hire image consultants instead of spending money on a new payroll system.
“The best way to mend the damaged reputation of LAUSD would be to spend more money in the classroom, and either fix the broken payroll system or turn it over to someone who can pay people accurately and on time,” the union wrote.
“The best PR would have been to do things the right way, not to hire more spin doctors,” Duffy added.
Union officials say that they have been receiving fewer phone calls regarding payroll problems.
“Although it’s strictly anecdotal right now, we have seen a dramatic decrease in payroll inaccuracies over the last two months,” said Duffy.
Susan Cox of the district’s media relations office had not returned calls as The Argonaut went to press.