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

DATE: Tuesday, December 19, 1995             TAG: 9512190254
SECTION: LOCAL                    PAGE: B1   EDITION: FINAL 
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER 
DATELINE: VIRGINIA BEACH                     LENGTH: Medium:   54 lines

CITY OFFICIALS WRESTLE WITH MERGER QUESTION SCHOOL BOARD, COUNCIL TODAY WILL DISCUSS THE ISSUE OF SCHOOLS IN SEPARATE MEETINGS.

The conflicts between the City Council and the School Board could reach a head today.

The council wants to force the School Board to merge payroll, accounting and finance departments to save money and increase fiscal control.

The board has never taken a formal vote on consolidation but is opposed to moving forward with it now.

Both the School Board and City Council will hold public meetings beginning at 2 p.m. today.

The bodies have been at odds since late August, when the city discovered that the school system had overspent its 1994-95 budget. Some School Board members say the city should have notified them of the problems earlier. Council members say school officials ignored their warnings and didn't keep tabs on the bottom line.

Because of overspending and lower-than-expected revenues, the school system finished the 1994-95 school year $12.1 million in the hole. The school system is also expected to have trouble making ends meet this school year and has already initiated cutbacks. It is illegal in Virginia for public bodies to overspend their budgets.

The council basically has no choice but to make up last year's school deficit. The city had a $14 million budget surplus last year because of its conservative revenue estimates, and so could make up the deficit without much trouble; but city officials say they don't expect to be as lucky this year.

Council members have said they want the School Board to agree to consolidation before handing over the money. Board members have declined so far to make that arrangement, but are scheduled to discuss the funding agreement at a meeting this afternoon.

Last week, board members said they were in no hurry to vote on consolidation. They already approved a reconciliation agreement that did not include the merger.

The board members decided they needed more time to consider a merger.

Several said they did not have enough details about the proposals the city says could save hundreds of thousands of dollars. The likelihood of changes in the board makeup in the May election left them hesitant to lock new members into an agreement, they said. MEMO: Staff writer Aleta Payne contributed to this report.

KEYWORDS: VIRGINIA BEACH CITY COUNCIL VIRGINIA BEACH SCHOOL BOARD by CNB