A Washington State Auditor Office Fraud Investigation Report, released Monday, May 19, detailed the background and results of the investigation. The report also described the weaknesses in internal controls at the District and made recommendations, one of which was for the District to seek recovery and expenses related to the investigation from the individuals involved.
“It is disappointing that any employee steals public funds,” District Superintendent Nick Brossoit said in a statement. “We have taken action to address the theft, and put in system safeguards to prevent this from happening going forward. We will be seeking repayment to the district from the former employees.”
District spokesperson DJ Jakala did not have specific details on the process through which the District will attempt to recover the misappropriated funds and expenses.
The investigation started after the District’s Human Resources Department was notified by an employee that he witnessed custodial staff members claiming overtime for work not performed. The investigation was initiated in October 2013.
The two custodians were interviewed and they said that they had submitted payroll slips for overtime that was not earned or submitted overtime slips for work that was performed during regular hours. One employee said she had been doing this since starting with the District in 1998. As a result, both custodians’ employment was terminated.
The District determined that the amount of misappropriation was:
-A staff custodian was paid approximately $10,439.79 in unearned overtime from 2008-2013. The review only went back to 2008 because the District changed payroll systems and it was not possible to run detailed payroll reports prior to 2008.
-A lead custodian was paid $546 in unearned overtime during July and August 2013.
The report stated that internal controls at the District were not adequate to safeguard public resources. The report noted that:
-Custodial staff were not required to use a punch clock or other timekeeping system to monitor their regular hours.
-Staff only needed to submit overtime slips for time performed beyond their regular 40-hour week.
-Supervisors did not ensure overtime slips were for work performed beyond an employee’s regular 40-hour work week.
As a result of the investigation, the District adopted the following procedures in December 2013:
-Staff are now required to use an electronic timekeeping system to clock in and out during their regular shift, and if they are working for special events.
-Supervisors compare overtime slips to time submitted through the timekeeping system to ensure overtime was earned.
-Principals are requested to remain aware of when custodians are working at their buildings.
The report also recommended that the District also seek $2,717 from the custodians and/or from its insurance bonding company for related investigation costs. The case is being referred to the Snohomish County Prosecuting Attorney’s Office for any further action it determines is necessary.
The District notified the State Auditor’s Office regarding the potential loss of public fund, as required by state law. The District has an annual budget of about $238 million with roughly $166 million in payroll expenses. In 2013, the District employed approximately 1,183 certificated staff and 682 classified staff.