The San Francisco Police Department is investigating alleged fraud stemming from the public school district’s flawed payroll system.
The SFPD says it is investigating “a series of suspicious activities” involving pilfered school funds between March 2024 and January 2025.
In an audit released last week, the San Francisco Unified School District disclosed that “someone within the district” intercepted four automatic bank deposits issued through the payroll system. The perpetrator exploited a loophole: No approval was required to change the routing of automatic deposits, and four checks were diverted to the person’s bank account.
“There was an incident of a fraudulent transaction related to payroll deposits,” Christy White, the auditor, said at the March 11 Board of Education meeting. “The district has plugged that hole and done an investigation.”
The report stated that the district is now requiring payroll staff to authorize account number updates if an employee wants to change bank information.
What’s our new mayor up to?
Get the inside scoop on City Hall and local politics in our twice weekly Power Play newsletter.
In a statement, officials confirmed that in spring 2024, the district “was the victim of a cyber security incident,” which led to the fraud that affected six employees. Since then, the district has taken action to stop the hack.
It remains unclear how much money was taken or who was involved. The SFPD said no arrests have been made.
The Board of Education is committed to providing strong oversight of SFUSD, President Phil Kim said.
“When issues or discrepancies are found, we expect that they will be addressed quickly,” Kim said. “Our move toward new fiscal and operational systems is doing exactly what they are intended to do — to improve our position control and secure our internal systems.”
SFUSD is transitioning from payroll system EMPower — which caused major disruptions in 2022 and 2023, when teachers weren’t paid correctly — to one called Frontline, according to Kim.
Meanwhile, the teachers union said it has recently experienced problems with payments from the district. Frank Lara, executive vice president of the United Educators of San Francisco, said the union is waiting for approximately $160,000 in membership fees that the district should have directed to its bank account.
SFUSD Superintendent Maria Su is believed to have discussed the delay with union leadership Tuesday and said it is unrelated to the payroll fraud.
The auditor’s report said the district plans to establish an internal oversight process with dedicated staff. Su will present a comprehensive plan in April to restructure the central office and strengthen business operations.