The Virginian-Pilot
                             THE VIRGINIAN-PILOT 
              Copyright (c) 1996, Landmark Communications, Inc.

DATE: Wednesday, July 17, 1996              TAG: 9607170330
SECTION: LOCAL                   PAGE: B1   EDITION: FINAL 
SOURCE: BY ALETA PAYNE, STAFF WRITER 
DATELINE: VIRGINIA BEACH                    LENGTH:   74 lines

SCHOOLS TURN BUDGET CRISIS AROUND 1995-96 BUDGET IS BALANCED, SAY ADMINISTRATORS TO BEACH BOARD.

The school division will break even for the 1995-96 fiscal year, a dramatic turnaround from the previous year's $12.1 million deficit, administrators told the board Tuesday afternoon.

It was good news for the school division, which was rocked by the 1994-95 fallout and unsure whether it would break even last fiscal year. The current fiscal year, 1996-97, began July 1.

After months of trimming and reductions, unaudited figures show the books will balance, Superintendent Timothy R. Jenney said.

The board that heard the news was almost entirely different than the one that agreed last fall to a tough spending plan developed by Associate Superintendent Donald A. Peccia and then-interim Superintendent James L. Pughsley.

After discovering the deficit in the $340 million 1994-95 budget, administrators reviewed the 1995-96 spending plan and discovered more massive problems.

The entire division was put on alert, and spending restrictions were mandated. Fluctuations in revenue left the financial picture uncertain. In recent weeks, however, administrators had become cautiously optimistic that the numbers were turning their way.

On Tuesday, they announced an influx of state money in the last two weeks of more than $4.1 million, with another $1.6 million expected. That may not leave much of a surplus, officials said, but it will avoid another crisis like 1994-95.

Although the numbers are unaudited, school officials, for the first time, seemed confident.

``Obviously, I'm extremely pleased and proud of the staff and the efforts they've put forth to bring the budget in at an appropriate level,'' said Jenney, who joined the district in February. ``It's been a long, trying year. This is a very positive sign for the year to come in all programs, not the least of which is the fiscal year.''

The bulk of the school board that was in place during the worst of the cost-cutting resigned before the efforts paid off. Five stepped down rather than face malfeasance charges stemming from the previous year's shortfall. All denied wrongdoing but said they wanted the division to move forward.

Two other board members had resigned prior to that, and two chose not to seek election. Only Tim Jackson and Donald F. Bennis remain.

June T. Kernutt, who chaired the board until May, was delighted with the news.

``I'm extremely pleased to find that our hard work paid off, and I'm very proud of my board that had the courage to make the hard choices,'' she said.

In other action:

The board approved several administrative appointments and changes, including promoting Kellam High School principal Albert J. Williams to the central office, where he will be assistant superintendent for high school education. Williams has been with the division since 1972 and has served as an elementary, middle and high school principal for the Beach schools.

Tallwood High School Principal Bernard Morgan, who had initially accepted the assistant superintendent's job, later asked to stay at that school. The board also approved that request.

And Lindell Wallace, former principal at Portsmouth's Wilson High School, was approved as assistant superintendent for middle school education. Wallace spent 32 years in the Portsmouth schools.

The board asked the superintendent to consider expanding a pre-kindergarten program for at-risk 4-year-olds. The effort, high on several board members' priority lists, was maintained in the current budget, but no spaces were added. While the state supplies most of the money, the schools would have to come up with a portion. If the division could find $900,000, about 500 more students could be served. At present, there is room for nearly 300 students.

Board members briefly discussed a proposed agreement to consolidate some city and school division financial services. They agreed to direct most of their questions on the complex matter through the board's consolidation committee and left open the option of special workshops to further explore the topic.

KEYWORDS: BUDGET VIRGINIA BEACH SCHOOL BOARD by CNB