San Diego Unified will repay its own federally funded education programs nearly $700,000 by billing less money from those programs for overhead during this and the next two school years, Chief Financial Officer James Masias said Tuesday. The repayments are part of a settlement with the U.S. Department of Education after the school district was found to have inappropriately charged federal funds earmarked for child nutrition, disadvantaged students and other purposes more than $3 million in costs for its last “golden handshake,” a bonus to encourage veteran employees to leave in 2003.

“We needed to get prior approval (from the federal government) for it to be a valid charge,” said Gamy Rayburn, who oversees budgeting in the school district. “That is what we failed to do.”

Charging the federal government for less money means that San Diego Unified has less revenue that it would usually expect flowing into its coffers to pay for overhead on those programs. The lost funds add up to nearly $229,000 this school year, more than $240,000 next year and $235,000 the year after.

The timing is not so great: San Diego Unified is now facing an estimated deficit of nearly $147 million thanks to a combination of rising costs and state cuts, and that could deepen if the state budget gets worse. A small number of its potential cuts, such as eliminating athletics for high school freshman or the Junior Reserve Officers Training Corps, would each save less money than is being lost this year to the repayments. (You might remember that Audit Committee Chairman Dan McAllister was not pleased about the wrongful charges that led to the settlement.)


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