The South Whidbey School District has fired a long-time employee after an internal audit discovered an oversight that will cost the district $102,223.

A check of records has shown that, during the past three years, the normal district employee contributions for retirement, medical and other benefits were not being made by payroll specialist Cheri Cramer.

Cramer, a 16-year school district veteran, was terminated last week by District Superintendent Fred McCarthy.

“The appropriate action was taken, as difficult as it was to administer,” he said. “Because of the nature of the trust required in that position, she had to be let go.”

McCarthy emphasized that no crime had been committed.

Before taking over the job as payroll specialist in 2005, Cramer had served as secretary and paraeducator at various sites, including Bayview School, and the intermediate and middle schools.

McCarthy said Cramer was given intensive training her first year by an outside financial mentor at great cost to the district. The mentor was available for questions about the job at any time since.

But then something went terribly wrong.

“Beginning in 2006, regular communications sent to her by the state were not acted upon, nor were they correctly filed,” McCarthy explained. “Monthly requests for data were apparently ignored.”

The state’s audit mechanism failed to pick up on the situation and there were no complaints or questions from district workers, which would be the only way officials would have been alerted to the problem, McCarthy said.

The unanswered correspondence was found by an experienced school finance expert brought in to examine the problem, but the paperwork was not found in the district’s official files.

The district will immediately pay back the money to the state, further drawing down the district’s fund balance by more than $100,000.

“The district isn’t bonded, so there is no insurance to cover this situation,” McCarthy said. “However, there will be no negative impact to staff or programs. We will try and recover the money through greater cost efficiencies.”

McCarthy also said that Cramer had no plausible answer as to why the notices were disregarded.

“Cheri said she had done the best she could do,” McCarthy said. “All of us are deeply saddened by this occurrence, but this is a serious matter requiring significant corrective action.”

Cramer, whose name was released only after a request for public disclosure was filed by the Record, was unavailable for comment.

McCarthy said this was a case where the standard practices in the payroll department were clearly violated.

“The administration and school board will now implement checks and balances, including regular monthly board-level oversight, to ensure this doesn’t happen again,” McCarthy said.

He added that a new benefits checklist for every employee will be started that must be checked off by the payroll specialist. The district has begun a replacement search for a person with extensive payroll experience.

“We’ve also notified the state auditor so that other districts can be warned of the possibility it could happen elsewhere,” McCarthy said.