Lancaster school district attorneys are still deciding whether to forward evidence about Superintendent Larry Lewis' handling of school funds to the Dallas County district attorney's office.

School trustees on Monday took the first steps in firing Dr. Lewis after an outside investigator reported that Dr. Lewis used district funds to give employees interest-free loans, authorized payroll advances to himself and other employees and handed out cash prizes to employees.

"We haven't finished our evaluations as to whether these are criminal offenses," said school board attorney Don Henslee. "We do have some employee interviews to do over the next few weeks, and we've received the official report of the investigation, which we're reviewing. "

Jamille Bradfield, the district attorney's spokeswoman, declined Tuesday afternoon to say whether the office would look into the situation.

The Lancaster Independent School District board hired attorney Harold Jones in July to look into allegations raised by board President Carolyn Morris, who accused Dr. Lewis of withholding information from the board and tampering with trustees' mail.

Dr. Lewis denies any wrongdoing.

According to the report, Dr. Lewis used district money in August to award five employees $1,000 each in prize money. Mr. Jones called the action an illegal expenditure of public funds that could be deemed criminal theft under state law.

The inquiry also outlines 14 interest-free loans made to employees from January to September, ranging from $500 to $4,622, and authorized by Dr. Lewis, according to the report.

Dr. Lewis has denied authorizing any loans.

In addition, the investigation found that Dr. Lewis advanced paychecks to some central administrators and in 2007 paid himself in advance four times for a total of $20,552. Dr. Lewis' annual salary is $197,600.

The report said Dr. Lewis also failed to inform the board about 18 new hires at the middle and high schools not accounted for in this year's budget.

The report characterized the combined $815,000 in salaries for the 18 employees as contributing to "a far greater budget shortfall." District officials recently said last year's budget ended with a $3 million deficit.

Dr. Lewis should receive the district's notice of intent to terminate his contract this week, Mr. Henslee said. He can choose to accept his termination or he can appeal. He has 15 days after receiving the termination notice to request a hearing, which would be conducted by a hearing officer appointed by the state's education commissioner. The officer then has 60 days to hear the case and issue a ruling.

Dr. Lewis' attorney, Neal Adams, said he is waiting to receive the notice before deciding on the next move, but he said Dr. Lewis probably will request the hearing.

He would not discuss the allegations or Dr. Lewis' response.

"I will let the record ultimately decide that," he said.

Associate Superintendent Eugene Young is acting superintendent, but Mr. Henslee said he expects trustees to appoint an interim superintendent at the Dec. 1 board meeting.