Before the state took over the Harrisburg School District in 2019, administrators did not track vacation or sick leave for employees.
However, the administration continued to allow managers and administrative staff to carry over “unused” days off, and paid employees for some of that free time at the end of each year.
The district also did not have proper control over overtime, which resulted in facilities and regulators working an average of 450 hours of overtime per pay period, according to school district audits.
But under new leadership, new computer software, and new procedures, the district has now taken control of these payroll issues and more, auditor General Eugene DePasquale said in a news conference Thursday, updating his school district exam.
"Controlling costs is an essential part of ensuring that money is concentrated where it needs to be, in the classroom," he said.
His most recent audit found that the district's new leadership had considered almost all of the recommendations from previous audits that highlighted weak internal controls, wasted money and posed risk of fraud. He said changes the new leadership likely made would save millions of dollars.
DePasquale launched a "real-time" audit of the district just before the State Department of Education received him in June 2019. His update on Thursday was his final report as he will be stepping down next week.
Previously, the district allowed managers and administrators to transfer up to 40 unused days off per year and be paid up to 10 days over this. Under new agreements negotiated with Act 93 union on these workers, this was carried over to 30 days and paid for up to 5 days.
The auditor's office wanted to zero payments for unused free time as this acts as an incentive for improper use of free time and creates an increased risk of fraud if employees rarely view other employees of their records and activities as part of completing them.
However, district officials said zeroing such payments could amount to a wage cut for employees who are already underpaid relative to the surrounding districts because no increases have been made for years. District officials also argued that other districts had similar agreements in their Law 93 contracts to pay for unused time off for five days per year.
According to DePasquale, one of the main problems with audits was that the district previously used three different software systems to process salary data and none of them could be integrated.
This meant that employees had to manually compare employees' time and attendance sheets with their vacation records to ensure there were no gaps or errors. With around 900 employees, however, this process was inefficient and can overlook gaps or errors, according to the audit.
Under a new timekeeping system purchased by the district, it can be integrated with the software that tracks time off.
"We expect that this process will be automated and a report will be generated to identify any gaps or errors in the data that employees can use to fix and correct the errors so that the payrolls are correct," says it in the exam.
Despite recent actions by the district, the district has not produced routine payroll reports that the company administrator, recipient, and school board can use to monitor overtime and other fluctuations in payroll costs. But district officials said they are developing these reports.
In addition to the new software, the district developed a "Business Process Guide" and conducted training on new procedures, including:
All employees, including management, must use the timing system to get on and off every day.All clients and line managers must prepare timing system reports to identify and correct timing errors before data is approved every two weeks.Required management must pre-approve employees' overtime before working overtime.
"The district's new leadership has worked diligently to clean up so many aspects of the district's finances and operations," said DePasquale. "While there is still much work to be done, I am confident that these important changes will benefit Harrisburg students and taxpayers."
Some of the report's recommendations may sound mundane, DePasquale said, but "Failure to track these things will result in misspayments and overpayments that take money straight out of the classroom."
The changes made by new district leaders will "help keep wage bills under control and ensure employees get what they earned, not a dollar less, not a dollar more," DePasquale said.
A copy of the full audit can be found below.
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