A Washington state audit found that the Seattle School District paid $280,000 for services it didn't receive and $1.5 million in spending for services that did not benefit the district or that could have been done by district employees, The Seattle Times reported Wednesday.
The audit has been turned over to Seattle police and King County prosecutors. The school board has hired a private attorney to investigate.
"This is an extraordinarily serious event," School Board President Steve Sundquist said Tuesday. "From my perspective, it is unacceptable and it will be damaging to public confidence."
The district's internal auditor resigned in December as the district prepared to fire him in connection with the special state audit, and another district manager reportedly has disappeared as investigators have sought to question him, the Times reported.
Seattle School District Superintendent Maria Goodloe-Johnson said the district requested the audit and that a number of corrective measures have been taken.
The board plans to meet Tuesday in private executive session to review the private attorney's report and the auditor's findings before considering its next step.
Staffers who worked in the small-business program told state auditors that work was awarded to some vendors to win support from prominent members of the community. The auditor concluded the district lost at least $280,000 for services it didn't receive and that provided no public benefit.
The auditor also questioned an additional $1.5 million in a variety of payments to outside organizations and individuals for services that included $75,000 in training materials copied from other sources and a $25,000 database that didn't work.
This special audit follows two others over the past year that also have been critical of how well the district oversees public funds.