THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 5, 1995 TAG: 9511050003
SECTION: VIRGINIA BEACH BEACON PAGE: 06 EDITION: FINAL
TYPE: Editorial
SOURCE: Beth Barber
LENGTH: Medium: 80 lines
On May 10, 1995, then-chief financial officer Mort Smith predicted a $2.9 million surplus at the end of the '94-'95 school year.
On May 10, then superintendent Sidney Faucette predicted a surplus of $1.9 million.
On Aug. 11, Smith predicted a surplus of $1.7 million, of which $1.3 million had to be placed in the Capital Improvement Program, leaving a ``net surplus'' of $400,000.
By Aug. 27, the incredible shrinking surplus of 1994-95 had worse than disappeared. It had become a $7 million deficit.
On Nov. 3, the line-item mess the school system called a budget hit bottom. Schools are actually $12.1 million in the hole from school year '94-'95, according to a special audit by KPMG Peat Marwick with an indispensable assist from the city's finance office.
Lucky for schools, city government was frugal enough to produce a surplus that can more than cover this deficit. Unlucky for all, the school system is already short more than $6 million for school year '95-'96. How much will '96-'97 fall short, in its turn? Maybe as much as $8 million.
How did this happen? Generally because somebody or other(s) over-guesstimated revenues, under-guesstimated expenses and apparently thought it didn't matter. This report is short on the gory details. Yet it's the gory details that will flesh out the story, and flush out the culprits.
The School Board could dig up those details, but hasn't. So before City Council strokes a $12.3 million check, it should one way or another get the answers to specific questions about school-budget deficits, and the details on specific instances of school-budget problems at which this audit hints. Getting to the bottom line may be sufficient for accounting purposes. For accountability purposes, and systemic repair, somebody - council? special grand jurors? - needs to hunt those hints like hogs after truffles.
For instance: The audit report notes that the school system's internal controls on the number and salaries of personnel are, to put it mildly, inadequate. Projecting personnel for Special Ed seemed particularly difficult in '94-'95. Just look at the budget books.
The unit code for Special Ed personal services is 0500. The superintendent's proposed budget includes these three line items:
01300/compensation for elementary teachers, $11,516,263
01350/compensation for middle-school teachers, $4,458,728
01400/compensation for senior-high teachers, $2,861,001
That seems to reflect closely what personnel responsible for projecting these numbers requested. Yet in the board-approved budget, an even $400,000 has been lopped off each of these line items. Why? Who decided? And who neglected to lop from the budget's corresponding ``position control'' line items however many teacher positions were unfunded by those $400,000 cuts?
Here's another specific instance: Funds in the Capital Improvement Program for complying with the Americans with Disabilities Act should be spent on ADA projects. Yet according to school system memos, in '94-'95 then Chief Financial Officer Mort Smith transferred more than $270,000 in a CIP account for ADA expenses to the operating budget.
Most of that amount was used for asbestos abatement at Great Neck Middle School, and the rest for improvements to Celebration Station. Neither has anything to do with ADA needs, moving CIP funds to the operating budget is generally a no-no anyway, and Mr. Smith was advised so by two school officials, one of whom discovered the transfers only because he oversaw the CIP account for ADA projects and noticed it was inexplicably short.
In one sense, it makes no difference: That $1.2 million requested for teacher compensation got spent somewhere, and the bill must be paid. But the public's right to know how its money is spent includes where it went, whodunnit and why as well as how much. The Board can lead that parade, or somebody else will. ILLUSTRATION: Drawing
An unusual provision of the reorganization (above) which
then-Superintendent Sidney Faucette instituted and followed until
his departure may hold a clue to the school-budget mess; No
finanacial personnel had direct, independent access to the School
Board. by CNB