THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 31, 1995 TAG: 9512290279
SECTION: VIRGINIA BEACH BEACON PAGE: 09 EDITION: FINAL
SERIES: 1995: YEAR IN REVIEW
LENGTH: Medium: 56 lines
For months during the 1994-95 school year, the Virginia Beach Public Schools had operated under a shadow of painfully tight finances, but always with the assurances that all would be solid at the end of the fiscal year.
It didn't turn out that way.
In late August, school and city officials announced that the district had finished the year with a $7.4 million budget shortfall, which is illegal under state law. An independent audit later boosted that figure to $12.1 million. A special grand jury is now trying to figure out all that went wrong in the district's finance system.
Some problems have become clear - the district entered into a cycle of spending money it had not budgeted; revenue was overestimated; so much money was transferred between line items that the budget document became essentially useless for tracking dollars.
Still open to speculation is who was ultimately responsible for the largest financial crisis in the district's history.
Mordecai L. Smith, the district's chief financial officer who simultaneously served as the director of budget developement and director of accounting, has been on paid administrative leave since September, but some of the problems preceded his tenure.
Increasingly, former superintendent Sidney L. Faucette has been the focus of questions. Faucette served in the Beach district's top job for four years before leaving to head up schools in Gwinnett County, Ga. Faucette has said from Georgia that he relied on information from his financial staff and that a board budget committee cut him out of the loop.
The budget committee, however, had no policy making authority and was never designed to limit the superintendent. Critics say Faucette ultimately is responsible as the district's chief executive officer when many of the problems reached the crisis point.
The district's financial problems are not over yet. Tough spending measures are in place to keep this year's budget in line. Administrators discovered after Faucette left that the same problems that created last year's crisis had occurred in this year's budget. District officials hope to know in January if their cost-cutting measures will balance the budget or if they will have to go back to city council to request additional money.
Relations between the board and city council have been rocky, particularly over conditions set by city officials for covering the debt. The board adopted a reconciliation agreement in December explaining how the $12.1 million will be repaid to the city. However, board members have said they will not rush a decision on consolidating some financial services with the city, another condition of the repayment.
- Tom Holden
KEYWORDS: BUDGET VIRGINIA BEACH SCHOOL BOARD by CNB