Escambia County School hit with payroll system security breach

Published 9:48 am Wednesday, April 6, 2016

The Escambia County School System is one of three in the state hit with a payroll accounting system security breach that allowed fraudulent tax returns to be filed in employee names.

The systems, which include Alexander and Dothan city, use Innovak – a Spartanburg, S.C.-based provider platform for financials. Ongoing investigations at those systems revealed that employee personal data was taken from a source “upstream” of its computer system or a source totally outside of it, such as individual financial institutions.

EC Superintendent John Knott said Wednesday he was notified over spring break about the possible situation. In the beginning, it did not appear the local system was involved in the breach; however, cases are beginning to appear.

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“As of Tuesday, 12 cases were confirmed, but when we say that, it doesn’t mean that all of those were victims of tax fraud that came from a breach of secure information,” Knott said. “One way we feel like there is a problem is when employees get notice that a return was filed in their name. We know of a couple of employees that got that notice. To say that ever single person who got a notice is a victim, it’s too early.”

The system, which operates 12 schools and one science center, issues some 900 checks each month, Knott said.

“What we are doing now is being proactive,” he said. “We’re very troubled and concerned with this. When we got the information, we immediately cut off access to employee portals. The only time that information goes anywhere is when the info is uploaded to the IRS.”

On Monday, Knott issued a memo to employees outlining the situation. He said staff believing they are a victim should report it to one’s respective school resource officer, who is also a Escambia County Sheriff’s deputy.

“This way the staff member doesn’t have to leave school if they need a police report,” he said. “Those inside a city limit may contact their respective police department.”

Knott said agents with the Federal Bureau of Investigation and the IRS cyber crime unit have been assigned to the case.

Knott said the system’s health insurance provider, Blue Cross and Blue Shield of Alabama, offers free identity protection service and of which employees have been encouraged to register.

In Alex City, some 52 employees have been reported as victims, while an estimated 40 employees were impacted at Dothan City Schools.

Knott said he expects Escambia County’s number to rise.

“We’re a much larger system than the others, but as of right now, we’ll have to wait and see,” Knott said.