The discovery of a $13 million payroll “miscalculation” led Hays CISD leaders Monday to table the reimbursement of nearly $100,000 in workers compensation premiums.
The miscalculation, which some district leaders said occurred under a past administration, was caught when Texas Mutual Insurance Company conducted an audit of the district’s payroll in late 2018.
Discussion about the error occurred at the April 15 meeting, a week before President Merideth Keller removed the item from the consent agenda at the April 22 meeting.
Texas Mutual provides workers compensation insurance for Hays CISD. The district’s contract with Texas Mutual allows yearly payroll audits.
Through the audit, district officials found the estimated and actual payroll for Fiscal Year 2017-18 was $13 million off, leading to a workers compensation premium shortage of roughly $61,295. Officials estimated payroll would also be off for FY 2018-19, resulting in an additional deficit of $37,969 in workers comp premiums. In total, the audit calculated the district was $99,264 short in workers compensation premiums.
Linda Hall, Hays CISD director of Human Resources, said an audit of Hays CISD financial statements had not been done for more than a decade under the district’s previous contract, which might have added to the miscalculation.
Hall said construction of new schools and pay raises throughout the district in recent years might not have been calculated in previous payroll estimates, which might have led to the errors.
Future payroll projections will be calculated collaboratively by the Human Resource and Finance Departments, according to the HCISD agenda packet.
Some board members April 15 were stunned about the miscalculation. At the forefront of that concern was Trustee Will McManus, who said he was “blown away” by the numbers.
“I wasn’t here at the time on the board, but that doesn’t just happen,” McManus said. “And I’m really concerned there was intentionality with that … that’s no small miss. That’s a significant sum of money that seemed to be unaccounted for.”
District officials are planning to enact procedures to monitor the accuracy of payroll projections throughout the year in order to avoid future deficits and additional premium expenses, according to documents.
The district’s FY 2020 payroll is estimated to be around $138 million, or 82 percent of its operating budget. Most districts in Texas pay around 80 to 85 percent of its total budget in payroll.
“We’ve raised salaries in the last few years to stay competitive with the districts in the Austin area,” said Tim Savoy, Hays CISD chief communications officer. “Last year, we increased the starting pay for bus drivers because we were short around 50 drivers. All of these things could have factored to the miscalculation.”
Board President Merideth Keller said the miscalculation was a mistake from a previous administration, and no members of that administration are currently employed by the district.
Keller pushed for current staff “who do not make $13 million mistakes” to investigate the matter further to ensure the mistake does not happen in the future.
“The lessons we’ve learned is the importance of auditing, taking contracts back out to bid periodically, which we do for a number of our contracts,” Savoy said.