The Department of Education is working to collect nearly $100,000 it mistakenly paid to more than 200 substitute teachers over a year ago.
Most of the overpayments were the result of the teachers being paid twice — in August 2014 and again that September. In all, 223 substitutes were overpaid a total of $94,940.46, the department said.
The error was brought to the DOE’s attention in 2014 after three substitutes questioned their paychecks, but officials say it took about a year to determine and verify what happened because of the department’s manual payroll process. The department plans to recoup the money by garnishing future paychecks.
“We were able to determine that an entire batch was processed twice, and that’s what we’re going after here,” Amy Kunz, the DOE’s chief financial officer and senior assistant superintendent, said in an interview. “It was supermanual for us to go through to determine what was actually double paid.”
Kunz said the DOE — the state’s largest department, with a nearly $1 billion payroll and 22,000 salaried employees — last year implemented new controls to prevent duplicate payroll entries.
Hawaii law allows the state to recover salary overpayments within two years.
Affected substitute teachers say they were recently notified about the error and the plans to recover the funds. A few substitutes declined to comment publicly about the incident for fear of retaliation because substitutes aren’t protected by a union, but some said privately that the garnishment will be a financial hardship.
The DOE had approximately 4,800 substitute teachers on its payroll last school year. Substitutes are paid a daily rate, ranging from $139.53 to $164.09, depending on a teacher’s credentials.
Salary overpayments were cited as a problem in a 2014 internal audit that concluded “the DOE’s controls related to payroll are functioning at a marginal level.”
“The payroll process is very manual,” the audit report said, noting that 5-by-8-inch index cards are used as “payroll master cards” for each employee.
“Although payroll is paid by exception (an employee is paid automatically unless there is a change), there are still inefficiencies and errors due to the large number of employees and transactions in the DOE,” the report said, adding that errors resulting from manual processes could lead to incorrect pay rates, unauthorized claims for overtime and overpayments.
Kunz acknowledged the department still uses the index cards to log all payroll actions, but added, “We are going through the process of removing our reliance on the index cards.”
The DOE was to benefit from a planned overhaul of the state’s outdated computer systems that would have helped automate and integrate many of the department’s functions, including payroll. But that initiative, known as the Statewide Unified Resource Framework, or SURF, has stalled.
“Even though the (project) is on hold, we are trying to do things to make things more efficient with the tools that we currently have today,” Kunz said. “It will happen someday, so anything we can do to our processes now to try to simplify and look at things differently and more efficiently will only help us when we are on an automated and fully integrated solution.”
The $95,000 from the substitute teachers incident adds to approximately $200,300 in outstanding salary overpayments the DOE is working to recover, according to a report by the Department of Accounting and General Services, which processes payroll for state employees.
Kunz said the DOE’s overpayments typically stem from a collective bargaining practice that front-loads leave benefits, including sick leave and vacation, at the start of the year for employees.
“We definitely continue to have challenges around several of our union contracts. They’re given their leave, they can take their entire leave and then come back, and if they quit, they didn’t necessarily earn all their leave,” she said. “That is the majority of our overpayments. So unless there’s some kind of collective bargaining changes … that’s one of our biggest challenges on why this happens.”
The Department of Accounting and General Services has guidelines for departments to recover overpayments. For example, overpayments of up to $1,000 have to be recovered within six pay periods, with at least $100 recovered per pay period. For higher amounts, up to one-quarter of an employee’s total compensation can be garnished per pay period.
“Basically, a deduction is made per pay period until the entire amount is recovered,” DAGS spokeswoman Cathy Chin said in an email. “The amount withheld each pay period is deposited into a trust account. Once the entire amount is recovered, the department issues a check from the trust fund and submits the check and necessary forms to record the recovery.”
But that recovery method only works for employees who are still on the state’s payroll. Some overpayment cases are referred to the state attorney general, while other amounts are eventually written off if the debt can’t be collected.
