SALEM, Mass. (AP) – An audit has determined that the Salem school department’s budget deficit is nearly $1 million higher than previously believed.

The shortfall, now projected at $5.7 million dollars, forced the city to lay off more than 30 school workers last month. But the Legislature intervened to save the jobs of two dozen teachers and library aides.

Mayor Kim Driscoll said officials expected the deficit to grow and had already factored the bigger number into their planning.

The audit blamed the crisis on manipulation of financial reports by former school business manager Bruce Guy.

It also said former Superintendent Larry Callahan failed to act on concerns expressed by other school employees.

Callahan denied that, saying if he’d been aware of any concerns, he would have done something.

AP-ES-02-26-08 0911EST

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