L.A. Unified settles dispute over payroll system

The district said the company it had hired, Deloitte Consulting, agreed to pay $8.25 million and forgive $7 million to $10 million in unpaid invoices, for a total settlement that was roughly half the amount the district said it spent to fix the rogue system. In addition to those costs, the district sustained many millions of dollars in other losses related to the payroll problems.

The meltdown inconvenienced and infuriated L.A. Unified employees, bogged down new Supt. David L. Brewer and -- fairly or not -- contributed to the district's reputation for managerial blundering.

"This brings closure to an unfortunate chapter in our history," said the district's chief operating officer, David Holmquist, who said L.A. Unified now has "a world-class payroll system in place" and has reduced its paycheck problems to a minimum. Holmquist and the district's chief counsel, Roberta Fesler, praised the settlement as the best possible under the circumstances.

Others criticized it, however. A.J. Duffy, president of United Teachers Los Angeles, called it "outrageous," and said the district should have gotten at least $20 million to $30 million from Deloitte, a subsidiary of Deloitte & Touche USA.

"This is what we've come to expect from Supt. Brewer," Duffy said, "shortchanging members and employees and having no sense of responsibility for the harm that Deloitte . . . has done to his employees."

David Tokofsky, a former school board member who voted for the initial contract with Deloitte but later was critical of the company, also said the firm had gotten off cheap. "I guess this is one major company the federal government doesn't have to bail out, because the district just did," he said.

Brewer, who was at his home in Virginia for Thanksgiving, did not return a call seeking a response to Duffy's criticism.

But Fesler said that, under contract law, the district could not have sought damages for the suffering of its employees, and calculated that the most it could have gotten in a lawsuit would have been $30 million. Considering the substantial attorneys fees and other employee costs involved in such litigation, she said, the district figured it was better to reach a settlement.