SAN JOSE -- Even in tight budget years, the Alum Rock Union School District paid many of its teachers and administrators more than required by its contracts and rules, a practice that in 10 years has cost more than $1 million.

The district granted raises -- originally designed to award longtime district educators -- to shorter-term and sometimes new employees. The practice, which appears to date back at least 17 years, was questioned in a report released last month by the Santa Clara County Civil Grand Jury.

School officials defended the raises for managers as necessary to attract and retain talented employees in a district beset by high turnover. They also said the practice was written into union-bargained contracts for support staff and that administrators had discretion to award those raises to managers as well.

The teachers union maintains that the raises for its members were established as district policy -- even though they were not specified in the teacher collective bargaining agreement -- via a 2005 arbitration of a grievance.

At issue is the practice of counting employees' years of employment elsewhere toward the "longevity increments," now set at $2,364, that bump up an employee's salary at 15, 20 and 25 years of service.

Regardless of whether the raises had become customary, the grand jury recommended that Alum Rock bring pay practices in line with union contracts and define how to award managers for longevity. The original idea, jury foreman Stephen P. McPherson said, "you stay with us, you get extra money."

Raises like Alum Rock's, if they are not included in a collective bargaining agreement, will not be calculated into an employee's pension, said Ricardo Duran of the State Teachers Retirement System.

Alum Rock Superintendent Stephen Fiss said that for managers, the district retains the right to grant credit for outside experience but that the adjustment must be approved by the board and made public. That apparently did not always happen in Alum Rock.

Teachers union President Jocelyn Merz criticized the jury's report: "They totally missed the boat." The Alum Rock Educators Association had requested the investigation and had hoped the jury would zero in on administrators.

Instead, the terse report also highlighted the off-contract raises for teachers -- which alone totaled $1.08 million in the 10 years ending in June 2012.

The contract between the district and the teachers union, covering 661 teachers plus psychologists, nurses and speech therapists, offers salary bumps intended to encourage veteran teachers to stick with Alum Rock, which serves some of the poorest and toughest to teach children in the county.

In May 2004, the school board tried to clarify the practice for management and issued a policy designating the raises for those who had been employed with the district for 15, then 20 and 25, consecutive years would receive an annual salary bump of $2,130.

That policy, then-assistant superintendent Micaela Ochoa wrote, "will provide longevity increments that reward staff for the commitment" to the district.

But officials awarded managers longevity raises, sometimes even to employees upon hire. Ricardo Balderas was hired as a principal in 2003 with two longevity increments. In July 2006, Robert Mayfield, human resources director at the time, received three longevity increments, together worth about $7,000.

And in July 2011, Irma Manzo, wife of the then-Superintendent Jose Manzo, received three longevity bonuses that bumped her salary to $109,333. Jose Manzo said that as superintendent, he was not involved in salary-setting, including the decision on his wife's bonuses. Instead, he said, administrative discretion in raises was Alum Rock practice.

"It had been in place for many, many years," said Manzo, who was superintendent from December 2008 until last July. He noted that administrators joining the district can receive a maximum of four years of credit for previous experience, while teachers can receive 10 years. Longevity increments help reward administrators whose salary otherwise might stay static for 10 years.

It's not clear when and why Alum Rock began counting teachers' out-of-district experience toward longevity increments.

But after teacher Evelia Rojas Gonzales filed a grievance over being denied the longevity raise, the district in March 2005 signed a settlement that appeared to cement that practice for all teacher union members. Still, the provision never made it into the union contract, and Manzo said on Tuesday that he was unaware of it.

In contrast, in San Jose Unified, for example, the school district can't pay managers more than what's set on the salary schedule, Superintendent Vincent Matthews said.

At Alum Rock, however, overpayment continued, the grand jury wrote, "despite several generations of negotiated (collective bargaining agreements) including 1998, 2005 and 2008 reaffirming the in-district requirements for 'longevity points.'"

Contact Sharon Noguchi at 408-271-3775. Follow her at Twitter.com/noguchionk12.