The Virginian-Pilot
                             THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Wednesday, November 15, 1995           TAG: 9511150273
SECTION: LOCAL                    PAGE: B3   EDITION: FINAL 
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER 
DATELINE: VIRGINIA BEACH                     LENGTH: Medium:   53 lines

BEACH REJECTS SCHOOL BOARD OFFER FOR REPAYING $12.1 MILLION DEBT

A frustrated City Council Tuesday called the School Board's remedies for a $12.1 million deficit ``unacceptable,'' and said the board must do more to restore public confidence in the school district.

In a strongly worded resolution, the council condemned a promise the board made last week to ``make its best effort'' to repay the city. The School Board should have made more meaningful and specific promises, according to the resolution, and acknowledged that it has a ``moral obligation'' to repay the citizens and council.

The council also demanded that the School Board agree to combine the district's payroll, purchasing and accounting departments with the city's. If the board fails to approve consolidation at its next meeting, the council said it will go over the board's head and ask the General Assembly to give the city authority to merge the departments.

The council supported the resolution unanimously with no discussion.

``The School Board has in essence taxed the citizens because we will have to . . . pay the debt,'' said Councilman W.W. Harrison Jr., who drafted and presented the resolution, the third version considered by council members during their all-afternoon meeting Tuesday. ``We have to make certain we put into place budgetary processes to ensure repayment and avoid a repeat (of the problems).''

Last week, the board approved a three-page agreement with the city, pledging to do its best to repay the debt by June 30, 2000, by selling school assets, making cutbacks and returning any surplus funds to the city.

But Harrison, who highlighted parts of the agreement he considered unacceptable, said the School Board had ``diluted'' the plan proposed by the city.

Harrison and the other council members said consolidating the financial departments under the city's control will save money on duplicated services and ensure greater financial oversight.

The council is frustrated because it must raise taxes to fund the school district but does not have any control over how the district spends its money. With consolidated financial departments, the city should be able to detect fiscal problems - like those that led to the deficit - sooner, council members have said.

The School Board has resisted the council's efforts to exert control over the district's spending habits, and has blamed the council for playing politics, ignoring the needs of the classroom and not acting quickly enough to avert the financial disaster.

KEYWORDS: VIRGINIA BEACH CITY COUNCIL by CNB