Of the problems that beset Xavier De La Torre in his brief tenure as Santa Clara County Office of Education superintendent, the yearlong unraveling of the payroll department may have been his undoing.

As detailed by current and former employees, who feared to be identified by name, and in documents, Chief Business Officer Micaela Ochoa approved cost-cutting measures that trimmed the department from seven to four and then just two people, despite a warning from the retiring payroll supervisor about problems even one cut would create. For a while, the remaining employees were forbidden from putting in overtime.

With inexperienced staff from another department filling in for overwhelmed payroll employees, the office issued so many error-filled paychecks that its internal auditor called in outside investigators, who documented numerous mistakes and warned of potential breached security, liability and penalties.

"The payroll department was overpaying employees from July," said one supervisor in another department.

The snafu also affected retirees. "They forgot to take out my state disability," said one former employee, who still fears retribution from the office.

The office is still mopping up, trying to trace incorrect paychecks and W-2 forms. But the payroll staff now has been instructed to stop sending letters alerting former employees of mistakes It is not clear whether it will seek to recoup overpayments.


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When the board sent its own investigator to question De La Torre, he claimed ignorance and walked out after five minutes. This month, De La Torre said that Ochoa had ensured that the staff reductions would not affect payroll -- although that clearly was not the case.

Finally, a memo from concerned employees to the education office's internal and external auditors triggered an independent study. That $23,000 report, which the office kept secret but delivered to the board in late December, found over- and under-paid employees, incorrect retirement checks, untimely payments, overpaid vacation and errors in medical benefits.

The report by accountants Frank, Rimerman and Co. of San Jose also found that shared passwords and login names compromised personnel and payroll data, and that enabling fill-in workers to both create employee accounts and pay employees raised security concerns. The study warned of possible IRS fines and liabilities, and fraud through unauthorized changes to personnel and payroll records.

The County Office now is seeking bids for a full-fledged audit. It called in retirees to sort out errors and swore them to secrecy. It boosted staffing back to 2012 levels. The cost of the repair work hasn't been determined.

Contact Sharon Noguchi at 408-271-3775. Follow her at Twitter.com/NoguchiOnK12.