A D.C. school payroll technician and the school system's controller have been removed from their jobs after a routine audit found the technician improperly wrote two checks totaling about $17,500 to herself from an emergency fund, officials said.

Nadine M. Thomas, 32, the payroll technician, and Controller LaShahn Gaines, 29, were placed on administrative leave last week, and others are under investigation by the D.C. inspector general and the U.S. attorney for payroll office discrepancies, according to the office of the D.C. chief financial officer.

City officials said Gaines, to whom Thomas reported, is not a suspect in the probe but was placed on administrative leave for failure to exercise proper oversight in the office.

Thomas, whose salary is $27,809 a year, has told officials that others in the department helped her in the scheme, according to sources close to the investigation. Officials have confiscated Thomas's computer records as possible evidence.

The investigation comes at a time when a new District government payroll system has left thousands of teachers and other employees with missing or inaccurate paychecks. The problems have led to employee protests and raised concerns by School Superintendent Arlene Ackerman that new teachers--all of whom have received incorrect paychecks for the past six weeks--may quit out of frustration.

The city's chief financial officer discovered the questionable checks during an audit of the "imprest fund," an account controlled by Gaines and used in emergencies to pay school system employees. There is currently about $200,000 in the account, but it has had as much as $2 million in it, officials said.

A source close to the investigation said Thomas was hired by the D.C. government in 1997 and moved to payroll last spring before a required criminal background check was completed. Recently, the source said, information on her background came back that alarmed her supervisors and was referred to school security for investigation.

According to school officials and others familiar with the investigation, Thomas wrote checks to herself and then cashed them with the help of friends. Officials also are investigating whether she may have written other checks to herself and friends.

To approve the checks, sources said, Thomas used the signature stamps of people authorized to make disbursements from the fund. Those so authorized were Gaines, the deputy controller and the assistant to the controller, officials said.

"The matter has been referred for investigation, and we can't give any further comment until the investigation and any other actions have been concluded," said Lucy Murray, spokeswoman for city Chief Financial Officer Valerie Holt.

Thomas could not be reached for comment yesterday. Gaines did not return a telephone call.

Additional staff has been sent to the school system's payroll office to make up for the loss of two employees at such a crucial time, Murray said.

Both women have been placed on administrative leave with pay, an action required to trigger the investigation, officials said. The leave is to last for up to three weeks. In Thomas's case, Donald Rickford, chief financial officer for the school system, recommended that she be fired.

School board member William Lockridge (Ward 8), chairman of the panel's budget and finance committee, said the payroll office allegations could not have come at a worse time.

"It definitely looks bad, especially when some teachers and other employees are not getting their full salaries or, in some instances, not getting paid at all," he said. "There's a level of frustration. People want to put the blame on school system employees, and you're arguing, 'It's not their fault.' Then something like this comes up. You have egg on your face."

Lockridge said that the imprest fund, which has been temporarily closed, needs to have "more checks and balances" and better training for the staff.

"I'm glad they're investigating," said D.C. Council member Kevin P. Chavous (D-Ward 7), chairman of the panel's Education Committee. "If it's discovered that the allegations are true, that person needs to be prosecuted to fullest extent possible. I'm very concerned about people who steal from the government. . . . Now the emphasis has to be on making sure that we don't put ourselves in a position where someone has that kind of access without the proper safeguards."

Gaines, a former auditor for KPMG Peat Marwick, was hired as controller in March 1997 by Abdusalam Omer, then chief financial officer for the schools and now chief of staff for Mayor Anthony A. Williams (D). Gaines's salary is $88,037 a year.

Although the schools payroll department cuts checks for its employees, it is not under Ackerman's control. That power was taken away from the superintendent in 1996 by the D.C. financial control board. Now, the school system's chief financial officer, Rickford, reports to the city's chief financial officer. Ackerman has complained repeatedly that she is blamed for problems over which she has no control.

Staff researchers Margot Williams and Bobbye Pratt contributed to this report.