THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 3, 1995 TAG: 9512030049
SECTION: FRONT PAGE: A8 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB AND TOM HOLDEN, STAFF WRITERS
DATELINE: VIRGINIA BEACH LENGTH: Medium: 66 lines
A special grand jury will be sworn in Monday morning to begin examining how the school system's finances ended up in such a mess.
The panel of seven to 11 citizens will meet behind closed doors for as long as six months, trying to figure out how the schools' financial management system collapsed last year, allowing the district to run a $12.1 million deficit.
It will be the first special grand jury in a decade in the city.
The group cannot issue indictments. But if it concludes that someone violated the law, it can suggest that the commonwealth's attorney seek a regular grand jury. It is illegal in Virginia for public bodies to overspend their budgets.
Although the special grand jury's work is secret, Commonwealth's Attorney Robert J. Humphreys said he hopes the panel will agree to make a final report public, ``at least those portions which relate to who, what, why, and how can we not let this happen again.''
Humphreys asked that the special grand jury be convened to help answer some of the questions that an audit of last year's books did not.
The audit, released last month, showed a financial system without checks and balances, where mathematical errors were frequent and budgets were ignored.
It did not explain how the system ended up in such shape, something many people hope the special grand jury will do.
Humphreys said he will release the names of the jurors on Monday, after they are sworn to secrecy by the judge, who will also choose the jury's foreman.
None of the jurors will be allowed to talk about the case publicly, and they can discuss it among themselves only in the jury room, Humphreys said. Witnesses can discuss their testimony publicly.
Unlike a regular jury, the special grand jury will be able to question witnesses directly. Jurors will decide how often they meet and whom they will call. They have full subpoena powers within the state.
Humphreys and his staff will serve as a ``support arm'' for the jurors, Humphreys said, summarizing documents, questioning witnesses and suggesting new areas to investigate.
Humphreys said he is working full-time on the school case with an assistant commonwealth's attorney, an investigator and two legal assistants.
The jury also has the power to hire outside experts, such as accountants, to help explain the district's financial system, and to pay the expenses of witnesses, such as former School Superintendent Sidney L. Faucette, who was in charge of the system when the deficits occurred and who may have to fly in from out of state.
Among the questions to be answered in the budget crisis are:
What role did Faucette play in the unraveling budget process?
Why did a December 1994 report by former internal auditor Kevin A. Jones that found millions of dollars in miscalculations, overexpenditures and other common mistakes not reach the full School Board?
As the budget director, did Mordecai L. Smith act alone or was he encouraged to make changes in the budget that resulted in shortfalls?
Is there evidence of any illegal activity beyond the district spending more money than it had?
When did the financial problems actually begin?
KEYWORDS: VIRGINIA BEACH SCHOOLS BUDGET by CNB