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San Diego Unified must repay nearly $700,000 to federal education programs that federal inspectors concluded was misspent on a “golden handshake” for exiting employees in 2003. Under a settlement between the federal and state departments of education and the school district, the money will be repaid over the next two years, largely into Title 1 programs for disadvantaged students.

The finding comes more than a year after a federal audit found that San Diego Unified improperly charged federal programs such as Title 1 for some of the costs of its last “golden handshake,” a bonus meant to goad employees to leave the school district so that they could be replaced with less experienced, less expensive employees. Investigators found that more than $3.1 million was wrongly charged to federal programs between 2003 and 2006, including about $1.9 million to education programs, without government approval.

The settlement also requires San Diego Unified to certify for this year and the next two years that it is not charging any federal funds for the costs of a golden handshake. The timing is eerie: Employees are currently scrambling to sign up for a new golden handshake that is meant to offset program cuts without resorting to layoffs. The deadline to enroll is this Friday.

I’ve left messages for David Page, the parent who first complained about spending the federal money on the exit bonus, Dan McAllister, chairman of the audit and finance committee at San Diego Unified, and Chief Financial Officer James Masias to discuss the settlement and its impacts. You can read the settlement here.

EMILY ALPERT

Dagny Salas

Dagny Salas was web editor at Voice of San Diego from 2010 to 2013. She was an investigative fellow at VOSD from 2009 to 2010.

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