THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, February 1, 1996 TAG: 9602010296
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY TOM HOLDEN, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 130 lines
Nearly two months after the first witness testified before a special grand jury investigating school finances, the stage is set for the man many believe is the most important witness of all - former school superintendent Sidney L. Faucette.
Faucette is scheduled to answer questions behind closed doors today about his role in the school district's disastrous 1994-95 fiscal year, which ended with a $12.1 million deficit, a violation of state law.
Faucette left Virginia Beach last summer after four years to become superintendent of Gwinnett County, Ga., schools, outside Atlanta. He led the Beach district during a turbulent period in which the district's financial operations were reorganized and key administrators retired or were fired.
Faucette's critics say this reorganization and subsequent brain drain were key factors as to why the district overspent its 1994-95 budget by $6.4 million while overestimating its income by $5.7 million.
``For Dr. Faucette, `shared decision making' was more a slogan than a way of doing business,'' said Anne Meek, the assistant to the superintendent for community and school relations.
``Dr. Faucette knew what he wanted and wasn't much interested in opposing views. He didn't trust the organizational structure to give him information. He relied on the grapevine.''
Meek was hired in May 1992 to be Faucette's executive assistant at a time when the district was attempting to give principals more decision-making authority.
In paring the administrative staff, Faucette also oversaw the loss of many key people who had helped build the fiscal and academic reputation of the state's second-largest school district.
``The organization lost a great deal of financial expertise and any checks and balances on the administration of the budget,'' Meek said, adding that this was an important factor in the loss of financial control.
``For one thing, the financial services department was short-handed,'' she said. ``In the time period in which Dr. Andrew Carrington (the former assistant superintendent for administrative support services) was on administrative leave with pay, his duties were divided up. That, too, reflected a loss of centralized control.''
Carrington oversaw the district's transportation, food services, school plant and maintenance facilities and construction services.
Faucette is among at least 17 witnesses who have been called before the special grand jury. The 10-member panel began its investigation Dec. 4. It cannot issue indictments. But if it concludes that someone violated the law, it can recommend that the commonwealth's attorney seek a regular grand jury.
The jury cannot require out-of-state witnesses to testify, but Faucette voluntarily complied with the panel's request. He has hired Virginia Beach attorney Kenneth V. Geroe to represent him.
Faucette will be reimbursed for travel expenses by the court, but the Virginia Beach School Board has refused to pay his legal fees.
The grand jury's proceedings are secret, although the panel must file a report on its findings. Although not required, the report can be made public.
Commonwealth's Attorney Robert J. Humphreys said last week that he expected the special grand jury's inquiry could end ``fairly shortly,'' adding that his was an optimistic projection because the jury still must complete its report.
While time remains to call more witnesses, several key people who helped run the district during Faucette's tenure - people who have intimate knowledge of its finances - have not been called. Among them:
Fred G. Benham, a former deputy superintendent who was considered an authority on school finance and helped successfully guide the district's finances through a series of superintendents.
A. Sammy Cohen, who before his recent return to the district as the director of accounting and payroll served from April 1989 to June 1993 in the same capacity. Cohen left briefly to take jobs with the Chesapeake Housing Authority and the Currituck County (N.C.) Schools.
Hal Canary, the school district's former chief financial officer. Canary, who lives in Tennessee, said he was contacted by the commonwealth's attorney's office in December about his availability to return to testify but has not been asked to.
Andrew Carrington, a 17-year school administrator and former assistant superintendent, who was suspended by Faucette in 1993 and who later filed a lawsuit for damages. Carrington, who is now superintendent of Hertford County (N.C.) Schools, said he has made it known he is available to testify.
``I was surprised (not to be called), but I guess I was not in during that time (under investigation),'' he said. ``I figured they (Canary, Cohen, et. al) would be called . . . to see how things were done before. I was quite surprised (that they weren't).''
Nine of the 11 current School Board members have been called before the special grand jury. Donald F. Bennis and Karen O. O'Brien were not called because they were appointed to the board last March by the court to fill midterm vacancies.
School Board member Tim Jackson said he hopes the jury will still hear from some of the key people involved who have not yet testified.
``I don't know that (Humphreys) is not going to call them,'' Jackson said.
What's important, he said, is that the key witness, Faucette, has been called and his testimony could point the grand jury to other witnesses.
``I think (former board chairman James) Darden can add some insight into it,'' Jackson said. ``I think Canary can add insight, too. ``I hope they would talk to them about it.''
Among the first people to appear before the jury was Susan P. Reed, an auditor with KPMG Peat Marwick, the accounting firm that performed the expanded audit of the district's finances and uncovered the $12.1 million deficit.
Board member Bennis said he wondered if perhaps Reed's testimony was all the jury needed.
``Those people (at Peat Marwick) could really give the grand jury a good feeling for what took place,'' he said. ``I'm happy to see it's progressed as quickly as it has.'' MEMO: Staff writer Aleta Payne contributed to this report.Staff writer Aleta
Payne contributed to this report.
ILLUSTRATION: Color photo
Former superintendent Sidney L. Faucette
KNOWN TO HAVE TESTIFIED:
Susan P. Reed, auditor for KPMG Peat Marwick
Patricia A. Phillips, city finance director
James K. Spore, city manager
James L. Pughsley, interim superintendent
Mordecai L. Smith, schools' chief financial officer and budget
development director
HAVE NOT TESTIFIED:
Fred G. Benham, a former deputy superintendent considered an
authority on school finance
A. Sammy Cohen, schools' director of accounting and payroll
Hal Canary, schools' former chief financial officer
Andrew Carrington, former assistant superintendent
James R. Darden, former School Board chairman
KEYWORDS: VIRGINIA BEACH SCHOOLS GRAND JURY by CNB