Prince George's County School Superintendent Iris T. Metts is disputing an audit that suggested the school system could save $125 million over five years, calling it a "myth of massive savings" and suggesting that $11 million is more realistic.

The 1998 audit, conducted by MGT of America Inc. of Tallahassee, Fla., concluded that the school system was losing millions of dollars each year through mismanagement of funds, overstaffed departments and lost or stolen equipment. The audit recommended nearly 300 changes to achieve the savings.

But Metts said that her chief financial officer, Ken Brown, determined that MGT double-counted some cost savings, failed to account for expenses associated with many recommendations and suggested some changes that are impossible to implement.

While Metts said the audit contains many useful recommendations, she hopes "the myth of massive savings will finally be put to rest" by her staff analysis. "The audit report does not represent a realistic blueprint for real savings."

Linda Recio, who conducted the audit for MGT, defended her firm's assessment of the school system, noting that it "was done by a team of 20 experts in their fields. We stand by our recommendations."

The audit has been used by some state and county officials to suggest that the school system should not be given additional funding until it demonstrates better management of its resources. Metts's analysis of the audit could help her make a case for more school funding from the state.

"I think we'll have an easier time this spring," Del. Rushern L. Baker III (D-Prince George's) said. Metts "is someone the General Assembly will trust."

Last spring, while Jerome Clark was superintendent, state Del. Howard P. Rawlings (D-Baltimore), chairman of the House Appropriations Committee, withheld $8 million from Prince George's schools, citing waste and mismanagement alleged in the MGT audit. That money was released last month, when a state-appointed panel overseeing school improvement efforts reported that the system was being reformed under Metts's leadership.

Last summer, County Executive Wayne K. Curry (D) declined to give the school system $17 million to raise teacher salaries, saying he could not be sure that the system would spend the money wisely.

County Board of Education Chairman Alvin Thornton (Suitland) said yesterday that Metts's findings support what he and Clark told Rawlings and other lawmakers last spring when they argued that the system needs more money.

"The thing that is most troubling to me was the assumption that there was massive waste," Thornton said.

The 130,000-student school system has an $876 million operating budget, about $200 million less than Montgomery County schools. Yet the audit "gave the impression that the school system had more resources than it could ever dream of having," Thornton said.

Baker said that he believes many state lawmakers will be more receptive to Metts than Clark because she has produced more evidence to back up her claims that the audit is inaccurate.

"She can point to facts and figures and say, 'Hey, this is why we don't agree [with the audit].' That's something they couldn't do last year," Baker said.

Artis Hampshire-Cowan, chairman of a panel appointed by the legislature to oversee Prince George's school reform efforts, said she will reserve judgment on Metts's findings until an accounting firm hired by the panel--KPMG Peat Marwick--completes a third-party analysis.

"I've told [Metts] that it's important for her credibility that whatever the findings are of her people, we had to verify it independently," Hampshire-Cowan said.

Brown said there are several problems with the MGT report, perhaps the most significant being a typographic error that led auditors to overestimate cost savings by $6.6 million. In that case, auditors said on one page of their report that the system could save $185,500 a year by consolidating its printing needs. But on the next page, they mistakenly added another zero, increasing the savings to $1,855,000, then multiplying it over four years.

"We may have had a typo, I'd have to check," Recio said, adding that the school system has not contacted her firm about any errors it may have found.

The auditors also said the system would save several million dollars if it bought new computers to cut down on paperwork. But, Brown said, they did not include the expense of buying the new technology and training staff.

A recommendation that the system would save money by consolidating its 14 bus lots to three is impractical, Brown said, because the lots are too far from some bus routes.