The party has repaid $388,000 to the public purse and Premier Daniel Andrews has publicly apologised, but those involved are not yet out of the woods.

Chief Commissioner Graham Ashton told parliament's powerful privileges committee on Wednesday police were examining evidence relating to the 2014 scheme, following Ombudsman Deborah Glass' March report.

"As it currently stands it is an assessment," Mr Ashton said of processes to determine if a criminal investigation should go ahead.

"A decision is imminent."

The ombudsman found Labor systematically misused $388,000 in parliamentary allowances to partially fund its winning 2014 election campaign, with public-paid electorate staff directed to promote party candidates.

The matter was first referred to police in 2015 and after assessing evidence and getting legal advice, the force decided in 2016 not to investigate.

But a letter of complaint following Ms Glass' report from upper house Liberal MP Edward O'Donohue prompted a reconsideration and the fraud and extortion squad were called in.

Possible charges to flow from an investigation include making false documents, conspiracy of fraud and a common law charge of mistreating public office, Mr Ashton told the committee.

He also revealed police have only ever talked to one former, unnamed, MP over the scandal.

Ms Glass earlier told the committee decades-old staff pooling arrangements by Victorian Labor made it confusing and difficult to investigate.

She echoed to the committee the findings of her report, including that the scheme was the brainchild of former treasurer John Lenders.

She said Mr Lenders had initially tried to expand Labor's staff pooling arrangements, which existed since the 1990s, with casuals, but was told by parliamentary services he couldn't.

"They found other ways to expand the entitlement," Ms Glass said.

"It was pretty confusing to us ... and we spent a bit of time trying to unpick the pooling arrangement.

"It did muddy the waters."

Ms Glass also said she did not think MPs deliberately rorted the system because those who took part in the well-organised scheme seemed to genuinely think they were contributing to the established pool.

Mr Andrews declined to be interviewed during the ombudsman's probe and directed Ms Glass to Mr Lenders.

Most of the privileges committee hearings will be held behind closed doors, but Ms Glass and Mr Ashton are a mong a handful of public hearings.

The inquiry was sparked by Ms Glass's report into the scandal and is due to hear from Mr Lenders and sitting upper house MPs Nazih Elasmar, Adem Somyurek and Jenny Mikakos when it continues on Thursday.

Australian Associated Press