AUDIT REVEALS SCHOOL PROBLEMS; EMPLOYEE TRANSFERS, LAX FUND CONTROL NOTED.

Byline: Terri Hardy Daily News Staff Writer

A state audit released Tuesday found that Los Angeles schools do not consistently transfer employees when they are accused of abusing students, a practice that officials say could endanger students.

The audit also found lax controls over how schools spend millions of dollars in petty cash, leading the report to conclude: ``Neither the district nor the taxpayer can be sure that the schools are spending public funds appropriately.''

The audit was launched in order to investigate allegations that the Los Angeles Unified School District has retaliated against employee whistle-blowers by accusing them of child abuse. The audit also reviewed accusations that schools misuse millions in their checking accounts.

Investigators said they found no evidence of retaliation, but they did find instances where administrators failed to follow the LAUSD policy when dealing with employees accused of child abuse.

At a news conference Tuesday, LAUSD general counsel Rich Mason concluded that the audit ``completely exonerated'' the district on the whistle-blower charge.

``They were unable to determine in a single instance that the district retaliated against any whistle-blower,'' Mason said.

State Auditor Kurt R. Sjoberg disagreed.

``We found cases where treatment of employees was not consistent - and harassment may have been the reason,'' Sjoberg said. ``We just weren't able to develop the final evidence.''

The audit found instances when whistle-blower employees were accused of child abuse and transferred by the district without corroborating evidence and consultation with district attorneys and police. Auditors said they could not prove retaliation in those instances, but the district's failure to adhere to 

its own policies left it vulnerable to accusations of retaliation.

The audit also found at least one administrator who violated the LAUSD's policy by conducting an investigation. Such practices leave the district open to lawsuits and could damage any criminal investigation, the audit said.

Although auditors said the district told them that they always temporarily reassign teachers accused of child abuse, it did not do so in 16 of 23 cases of child sexual abuse, the report states.

Mason said the auditors incorrectly understood the district's policy, which calls for the reassignment of teachers on a case-by-case basis.

In one case highlighted by auditors, a teacher was not reassigned after accused in February of inappropriately touching male students. Mason said the administrator had determined that the allegation was ``patently unfounded.''

But the audit found that the district reassigned the teacher in May after a second allegation, and Mason said that instructor will be dismissed.

Sjoberg noted that while the audit's purpose was to examine district practices, not child safety, it was clear in the case where the complaint was ignored that the students' safety was probably jeopardized.

``If they had reassigned this person, the second case would not have occurred,'' Sjoberg said.

Mason said the district will investigate how it handled that case as well as two others mentioned in the audit.

The audit revealed another systematic problem involving the poor accounting and monitoring of petty cash accounts totaling as much as $7 million. The audit singled out five schools, one of which spent nearly $400,000 in a year.

Auditors found instances where payments were made without receipts or with photocopies of receipts. Accounts were not reconciled and audits were only conducted every 10 to 15 years.