Hamilton County officials raced to fix $3.8 million error that left 3,700 teachers without paychecks

Hamilton County officials raced to fix $3.8 million error that left 3,700 teachers without paychecks

July 20th, 2013 by Kevin Hardy and Judy Walton in Local Regional News

Christie Jordan, Hamilton County Schools director of accounting and budgeting

Photo by Alex Washburn/Times Free Press.

Hamilton County officials and the county's banker scrambled Friday to fix a $3.8 million oopsy that left some 3,700 school teachers, aides and assistant principals without paychecks.

Somehow, somewhere, a button didn't get pushed and direct deposits didn't show up Friday in the accounts of about half of the school district's employees. But school officials and the county trustee said they were focused on fixing the problem rather than laying blame.

"We're not putting the blame down anywhere," said Board of Education Chairman Mike Evatt. "It was just a three-way communication breakdown."

Still, all three parties said they would make it right and that teachers would not be held responsible for any fees incurred for overdrafting their accounts.

"We're sorry for all the inconvenience people have suffered," said Christie Jordan, the school system's director of accounting and budgeting.

"We're still addressing who will address the fees, but the employees will not be responsible for the fees" if checks or automatic bill payments are refused for insufficient funds, Jordan said. "First Tennessee has already told us there will be no fees. If another bank has a fee, we're working to address that and we'll have that Monday morning."

The mishap affected only employees who don't work year round, like classroom teachers and assistant principals -- about 3,700 of the total 6,000 school employees.

Schools Superintendent Rick Smith did not respond to several requests for comment Friday.

It's not clear how the glitch happened.

Officials said the biweekly $4.7 million payroll is sent to the county's banker, First Tennessee, in four files and the school system gets a confirmation when the files arrive. As part of the process, the trustee's office must verify that the county has enough money to cover the payout, and release the funds to the bank.

First Tennessee sends the payroll into the Federal Reserve system and school employees accounts are credited at their bank or credit union.

Jordan said three smaller tape files went through just fine, but for some reason the largest, the $3.8 million salary file, apparently wasn't processed, so there were no deposits.

Trustee Bill Hullander said he has confirmations from the bank dated Wednesday that all four files had gone through.

But Bobby Lusk, senior vice president at First Tennessee, said the bank got a request this morning to expedite processing on a payroll file. He could offer no specifics about the file, but said the glitch wasn't on First Tennessee's side.

Jordan said the school system kept workers informed about the problem Friday and said most already have their money or will have it by 8 a.m. today. Some who use small banks or credit unions not in the Federal Reserve system might not get their money until Monday.

Hullander and Jordan both said they are working on ways to make sure such a slip-up never happens again and plan to meet again next week.

Assistant County Auditor Lee Brouner worked with Hullander on Friday to resolve the glitch.

"There were plenty of controls in place," Brouner said. "This was basically a fluke-type situation, a one-time combination of a lot of things happening that caused this one check run not to be cleared."

Contact staff writer Judy Walton at jwalton@timesfreepress.com or423-757-6416.