The State Auditor’s Office Tuesday issued the unflattering results of an audit .pdf that found the Seattle School District overpaid employees, mismanaged funds, and failed to enforce its own rules, among other problems.

The audit, which considered data from September 2008 to August 2009, found that the board and district officials were “not as familiar with state and federal law on school district operations and the use of grant funds as the public would expect.” Thus, the district is at greater risk of losing federal funds and non-compliance with laws and regulations, the audit found.

The report should come as a wake-up call for the district—which is underfunded and over budget—and district Superintendent Maria Goodloe-Johnson, who has faced criticism in recent months for what critics say is her incompetence in handling the district. The school board voted 5-2 to extend Goodloe-Johnson's contract by another year last night.

District spokesperson Patti Spencer says that Goodloe-Johnson and the board recognized the problem. “We are committed to solve it,” she says, adding that the district has already taken steps to address some of the issues raised in the audit.

The audit found that the Seattle School District, which has 45,000 students, did not comply with state law on recording meeting minutes and making them publicly available. For example, the transcript of a public meeting was missing, but Spncer calls that "an anomaly.”

The district did not report loss of public funds to the State Auditor’s Office, the audit found, and used $1.8 million in restricted capital project funds for training instead of actual construction costs. The state auditor ruled the latter to be against state law.

The district also overpaid employees by $334,000 due to complications arising during a payroll system conversion. “Of course employees should not be overpaid,” Spencer says. The district has been able to recover $71,000 (21 percent) of the overpayment and has payment plans in place to get back another $146,000. Some of the money was paid to individuals who no longer work for the district.