The head of the D.C. Department of Corrections ousted his three top deputies yesterday and will remove the agency's chief financial officer today, blaming them for mismanagement that has led to a $25 million deficit in the city's prison budget.

Odie Washington, who took over the agency in March, removed Adrienne Poteat, Mark Levitt and Michelle Elzie from their posts yesterday. Poteat was the deputy director for institutions, overseeing the D.C. jail and the District's Lorton Correctional Complex in southern Fairfax County. Levitt was deputy director for administration, and Elzie was deputy director of management reform.

All three are tenured civil servants and will be reassigned within the District government, Washington said.

Poteat and Elzie, both 25-year veterans of the department and former wardens, will be reassigned to District-run prisons, Washington said. Levitt, who was hired by the department in 1991, will be reassigned to the Office of Labor Relations and Collective Bargaining in the District's personnel department. All three are on paid administrative leave until Aug. 2, Washington said.

Stephanie Mitchell, the chief financial officer for corrections, is also a tenured civil servant and likely will move to a post with the District's chief financial officer, Washington said. Mitchell has been with D.C. government for 23 years.

"There was long-term mismanagement of this agency . . . and it's time to get new management in place to stop these systemic problems," Washington said yesterday. "We've just got so many problems."

Washington said that more than $14 million in overtime costs and about $5 million in unfunded pay increases for corrections employees account for much of the deficit.

"The new director was not fully aware that there just wasn't money to address these kinds of problems," Francis Smith, executive director of the D.C. financial control board, said of Washington.

Washington said the overtime costs largely were the result of poor planning. The District's minimum-security prison at Lorton was scheduled to close last year under a federal mandate, and its inmates were to be shipped to federal prisons.

But because the District and the federal government classify certain types of inmates differently, federal prisons wouldn't accept some city inmates in particular facilities. D.C. officials had no backup plans to send those minimum-security inmates to private prisons, and so the nearly 260 inmates remain at Lorton--even though no money was budgeted to keep that facility open this year.

Workers from other D.C. corrections facilities are staffing the prison in their spare time and are being paid overtime--1 1/2 times their regular salary--to keep it running. That will cost the agency about $7 million this fiscal year, Washington said. He added that it likely will be several months before all the inmates can be placed elsewhere.

Meanwhile, the District's Occoquan facility, which shut down in April, also stayed open beyond its scheduled closure date, Washington said, adding to overtime costs.

"Once the decision was made to close the facilities, the money was eliminated," he said. "But because of the increase in [inmate] population, we had to keep it open.

"Where the mismanagement comes in is how we control overtime," Washington said, adding that there were additional unnecessary overtime costs in other areas.

Washington has created a task force to analyze overtime spending and approval patterns in the corrections department.

Overtime in the department has been a constant problem, officials acknowledge. The Washington Post reported two years ago that the agency spends more in overtime than any other city agency. Hundreds of corrections employees racked up tens of thousands of dollars in overtime, which doubled and even tripled their base pay. Several workers were paid more than $100,000 a year, including overtime. The department didn't monitor the overtime to determine whether the hours were actually worked.

In 1997, then-Mayor Marion Barry ordered overtime cut, but costs continued to escalate.

"They did a good job, and then it reverted back to the old ways," said Abdusalam Omer, chief of staff for Mayor Anthony A. Williams (D).

Last year, the financial control board approved using management reform money to increase workers' pay to help retain corrections officers until the scheduled shutdown of the full Lorton complex by 2001. The shortfall arose this year, when the District did not budget for the higher salaries.

"We gave them the money, the problem is that nobody funded it for the next year," Smith said. "Our responsibility was to fund it through the end of fiscal year '98."

Omer blamed corrections officials for doling out raises without confirming that the money was available.

"There's no excuse that a pay raise should go ahead if there's no funding for it," he said.

Omer said that the agency's fiscal woes are serious and that the mayor supports Washington's decision to "do whatever it takes to run that operation," including removing top administrators.

"If he determines a change in the management of the agency is needed, then that's the right call," Omer said. "I have no evidence there is corruption, but it's definitely management out of control."

Washington announced last week that all non-uniformed employees, including administrators, must take eight days without pay to help close the budget gap. The agency also will cut back on purchases and trim overtime. But those actions are unlikely to fix the problem, officials predicted.

"This disaster has a lot of parents," Smith said. "We have learned from this situation that we're going to have to closely monitor everything and make sure that their activities are budgeted so they're not overspending. I think some of it just crept up."